112 Rights of Creditor against Principal. existing debt; it was held upon the bankruptcy of the partners, that the bankers might prove the bond against the separate estate of C., for the whole amount of the principal and interest secured by it, there being due from the partners, at the time of their bankruptcy, a much larger sum than the sum secured by the bond (k). (k) Ex parte Walker, 3 Deac. 672. 113 PART III. OF THE SURETY. CHAPTER I. OF THE RIGHTS AND REMEDIES OF THE SURETY, WITH RELATION TO THE CREDITOR. A SURETY, upon payment to the creditor of the debt of the principal, is entitled to the benefit of all securities which the creditor has, and can render available against the principal debtor (a); and if any of those securities have been lost, or have become lessened in value, in consequence of the neglect or default of the creditor, the surety's liability to the creditor will be diminished to that extent (b). And the surety's right upon payment to a transfer of the securities will be the same, whether the surety (a) Parsons v. Briddock, 2 Vern. 608; S. C. 1 Eq. Ca. Ab. 93; Mayhew v. Crickett, 2 Swanst. 185; S. C. 1 Wils. C. C. 418; Praed v. Gardiner, 2 Cox, 86; Earl of Rosse v. Sterling, 4 Dow, 442; Beckett v. Micklethwaite, 6 Madd. 199; Capel v. Butler, 2 Sim. & S. 457; Lord Harberton v. Bennett, 1 Beat. 386; and see ex parte Rogers, 4 Deac. & Ch. 623; S. C. 2 Mont. & Ay. 153; and the observations of Lord Brougham, C., in Hodgson v. Shaw, 3 Myl. & K. 183; of Sir I William Grant, M. R., in Wright v. Morley, 11 Ves. 12; of Lord Eldon, C., in Copis v. Middleton, T. & Russ. 224; and of Lord Hardwicke, C., in ex parte Crisp, 1 Atk. 133. (b) The surety's right to be relieved, where the securities received by, or deposited with, the creditor, have been lost, or become lessened in value, through the creditor's neglect, will be considered in a subsequent part of this book. (See post, Chap. V. "Of the Surety's Discharge.") knew of the existence of those securities or not (c); or whether the securities have been deposited by the principal with the creditor at the same, or at different times (d). However, it would seem, that to entitle the surety to avail himself of the securities which the creditor has, the securities must have been deposited (e), assigned (ƒ), or made chargeable (g), in respect of the same transaction in which the surety became liable. Where a husband was entitled, in right of his wife, to a sum of Bank Annuities standing in the names of trustees, the dividends of which he assigned to secure an annuity, but which Bank Annuities had not been reduced into possession, the Court of Chancery, upon a bill filed by the surety to have the fund made available for his indemnity, he having been called upon and made some payments in respect of the annuity, decreed that with regard to the payments the surety had actually made of the annuity, he was entitled to stand in the place of the creditor, and to be reimbursed out of the dividends; and that he had also an equity to have the fund applied in his exoneration: the dividends arising from the annuities being sufficient to keep down the annuity, besides affording a provision for the maintenance of the wife, who had been deserted by her husband (h). Where a principal in a bond, being arrested, gave bail, and judgment was recovered against the bail, and the surety was afterwards called upon and paid the debt it was held, that he was entitled to an assignment of the judgment against the bail; for though the bail themselves were but sureties as between them and the principal debtor, yet, coming in the room of the principal debtor as to the creditor, it was held, that they likewise came in the room of the principal debtor as to the surety (i). "But the rule" (which entitles the surety, upon paying off the debt of his principal, to call upon the creditor for a surrender of all the securities which he has belonging to the principal, for the purpose of obtaining his reimbursement), "must be qualified, by considering it to apply to such securities as continue to exist, and do not get back upon payment to the person of the principal debtor "(j); thus, if P. and S. are obligors in a bond, the one as principal, and the other as surety, and no other assurance is executed to the creditor, and the surety, upon being applied to by the obligee for payment, pays the money due upon the bond, the bond thereby becomes extinguished, and all remedy upon it is at an end (k); and an assignment of it to the surety, who pays it, is of no use (1), since even the principal might plead payment to an action brought against him in the name of the obligee (m), and consequently the surety cannot insist upon its assignment. So where the principal and surety gave to the creditor a joint and several promissory note, and the creditor brought separate actions against the principal and surety, and recovered judgment in both actions; and upon execution issued upon the judgment obtained against the surety, the surety paid the debt and costs: upon bill filed by the re (i) Parsons v. Briddock, 2 Vern. 608; S. C. 1 Eq. Ca. Ab. 93; see, however, the observations of Lord Brougham, C., upon Lord Cowper's decision in this case, in the former learned Lord's judgment in Hodgson v. Shaw, 3 Myl. & K. 189. Copis v. Middleton, T. & Russ. 224. (k) Gammon v. Stone, 1 Ves. 339; Woffington v. Sparks, 2 Ves. 569; Copis v. Middleton, T. & Russ. 224. (1) Jones v. Davids, 4 Russ. 277. (m) Woffington v. Sparks, supra. presentatives of the surety, for the purpose of obtaining an assignment of the judgment, which had been recovered against the principal debtor, it was held, that the creditor having been paid his debt, the judgment was satisfied, and the creditor would not have been permitted to have proceeded upon it at law against the principal; and it not being available at law in his hands, neither was it available in equity in the hands of the surety, and consequently that the surety could not compel an assignment of it (n). If, however, the principal debtor mortgages an estate to the creditor, as a collateral security for his debt, in addition to a bond given to the creditor by the principal, and to which the surety is a party, and the surety pays the creditor the money due on the bond, although the surety cannot call upon the creditor for an assignment of the bond, yet he has a right to stand in the place of the mortgagee, and to have the benefit of the mortgaged estate, which has not "got back" to the debtor, and which the surety may compel the creditor to assign to him (0). A surety may, in equity, be entitled to that relief which he could not obtain in a court of law. If the creditor have both a personal remedy against the surety in respect of his demand, and also a fund to which he may resort for payment, and to which fund the surety, even upon payment to the creditor of what is due to him, cannot have access, a court of equity will, when it is satisfied that the creditor has the clear means of making his demand effectual against the fund, and upon the surety's indemnifying the creditor against the consequences of all risk, delay, and expense, compel the creditor to make the fund available towards satisfaction of his debt before he proceeds personally against the surety: (n) Dowbiggen v. Bourne, 1 You. 111; S. C. 2 You. & Coll. 462. (0) Per Lord Eldon, C., in Copis v. Middleton, T. & Russ. 224. |