Smith v. Crease's Executors

22 F. Cas. 493, 2 D.C. 481, 2 Cranch 481

• Court: U.S. Circuit Court for the District of District of Columbia
• Decided: May 15, 1824
• Status: Published

Opinion

MoRSEll, J.,

at November term, 1849, after stating the case, delivered the opinion of the Court, as follows: —

Although the testimony of Mount is thus let in, it would be still insufficient, unless fortified by strong and pregnant circumstances, being contradicted by the oath of the defendants. Let us, then, examine what the circumstances are. Was there any previous engagement on the part of Mount to give this additional security, at the time it was given, for any other and different consideration ? None such appears in the proof in the case. In the absence of all proof on the subject, what is the common and oidinary understanding .in a case where the bond of another man is assigned as such collateral security ? Is it not universally and invariably implied that he shall use all necessary and legal steps to obtain payment from the obligor, (unless insolvent) first, and before he proceeds against the assignor ? And does not the law raise such an implied condition ? But this is a stronger case than the ordinary; for the bond of Bronaugb thus received, had actually a considerable lime to run, beyond the time when both the notes would fall due, before it could even be demanded. Can it, be supposed for a moment, that it was not understood between the parties, that Crease should at least indulge Mount on the bills until Bronaugh’s bond should become due, so that it might be ascertained whether that obligation would be paid or not ? And what has been the conduct of Crease and his executors ? Have they not actually waited, and indulged Mount for years after the bills became due, and until after the suit against Bronaugh had been prosecuted to a stage conclusively to show that no fruits were to be had from the judgment; that Bronaugh was a bankrupt ; their own actions thus strictly corresponding with what Mount states to have been the agreement.

It does seem to me, therefore, that these circumstances are strong and pregnant, and completely fortify and establish Mount’s testimony. Before, however, the legal effect is considered, I will notice some other parts of the case.

1. As to the time which was suffered to elapse between the time when the bills became due, and that of suits being brought against Mount and Smith; I should say that mere delay to call on the principal debtor, or mere forbearance to sue him would not amount to a discharge of the surety, unless gross laches were proved. I am not prepared to say that the negligence in this case did amount to such gross laches.

2. As to what is stated in the answer to have taken place between one of the defendants and the complainant, 'Smith, shortly before the bringing of the suit against him, the negotiation and the offer appear to have taken place with a view to prevent suit'being brought, and in a spirit of compromise; and there does not appear to have been any such clear binding promise or engagement on the part of Smith, as to revive and set up the claim, if the same was, at the time, extinguished as to him, and which will now be ■ considered by applying the law to what appears to be the proof in the case.

The law, as clearly laid down and settled, will, I think, be found to be this: — The surety being importantly interested in the contract, or agreement, there should be no transaction with the principal without acquainting him therewith. The original implied contract is, that as far as the nature of the original security will admit, the surety, paying the debt, shall stand in the place of the creditor; so also the surety has a right, the day after the bond is due, to come into a court of chancery and insist on its being put in suit against the principal debtor ; and finally the law seems to be clear, that if a creditor agree with his debtor to postpone the day of payment, or in any other way to change the terms of the contract, without the consent of the surety, the latter is discharged, even although the change should be for his advantage.

The last consideration will be, that admitting the arrangement thus to have operated a discharge, is the complainant in time, and before a proper court, with his defence ? Should not such a defence have been set up to the action at law ? especially as to the single bill which had not fallen due at the time of the agreement ? On this point, I confess I have felt considerable difficulty in the course of my examination into the subject. I have found the American authorities differing, some being on one side, and some on the other. The English authorities are pretty clear that the chancery forum is the proper one ; and I incline to think so also.

Let the decree, therefore, in this case, be for the complainant, making the injunction perpetual. The authorities relied on are, 7 Bacon, 506; 10 Johns. 180, 587; 6 Ves. 734; 18 Ves. 21; 2 Ves. 540.