First National Bank v. Smith

25 Iowa 210

• Court: Supreme Court of Iowa
• Decided: June 26, 1868
• Status: Published

Opinion

Beck, J.

This case involves the construction of the following sections of the Bevision:

1. pbotcupai, discharge of' surety under the statute, “ Sec. 1819. When any person bound as a surety for another for the payment of money or the performance of any other contract in writing, apprehends that his principal is about to become insolvent or * . , to remove permanently from the btate without discharging the contract, if a right of action has accrued on the contract, he may, by writing, require the ■creditor to sue upon the same, or to permit the surety to commence suit in such creditor’s name, and at the surety’s cost.

“Seo. 1820. If the creditor refuse to bring suit, or neglect so to do for ten days after the request, and does not permit the surety so to do and furnish him with a true copy of the contract, or other writing therefor, and enable him to have the use of the original when requisite in such suit, the surety shall be discharged.”

When the surety, under these provisions, requires the creditor to sue., or asks permission to bring the suit himself, nothing more is required of him, and the creditor is left to act in response to the demand. It is obvious that the permission referred to in section 1820, which, if withheld by the creditor, operates to discharge the surety, is the permission demanded by the writing provided for in the preceding section. Having been once demanded, the demand need not be repeated. When permission is thus demanded, and refused, and the creditor does not sue within ten days, the surety is discharged. It follows that after this demand in writing is given, the surety hap-nothing more to do, .unless he be authorized to bringv®ie ^ suit. If the creditor takes the ten days in which to e|é$t.^ whether he will himself sue, or permit the surety to InSpg^, the action, he must, within that time, at his peril, q|tM?bring the suit or notify the surety of his permission so tb d^

.nsoivency. -apprehension of principal» insolvency. II. It is argued that the surety must show that he U4$y apprehend the principal was about to become insolvent or remove out of the State at the time the notice was given. The existence of the fact 0£ insoiTenCy or removal was not necessary to give defendant the right to make the demand upon plaintiff. His apprehension only, of such fact was necessary; it might, in fact, not have been even well grounded, or for such cause as would create it in the minds of others. If the fact of defendant’s apprehension can be put in issue it would involve an inquiry into his fears and thoughts — a vain thing, which will not be required.

3._official surpty to°f piamtiff. III. It is claimed that inasmuch as defendant is a director of plaintiff, it was his duty, upon the notice being given, to have taken steps for the institution of the suit or the granting to himself of permission to sue. In other words, defendant being a party to both sides of the transaction, he had the power in himself to do all that he demanded of plaintiff, and the omission or neglect of plaintiff is defendant’s own wrong for which he can claim no relief. This position is not tenable. The personal right of defendant to be discharged from the note upon failure of plaintiff to comply with the written demand, cannot be taken away by his official relation to plaintiff. It does not appear that it was his official duty to institute the suit, .or that he had custody of the note, or that as an officer of the bank he was guilty of any negligence or fraud in respect to the 'transaction.

We are of the opinion, therefore, that the judgment of the District Court is erroneous, and it is therefore

Keversed.