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by a surety in general terms, to secure the payment of such goods as the creditor shall supply to the principal, although no period of credit be specified, such a guarantee is not to be taken as a guarantee for an unlimited period, but to be restrained by the usual course of trade, and the principal having accepted bills for the amount of the goods delivered, which the creditor permits him to renew when payable, without any communication to the surety on the subject of such renewal, the surety will be discharged from his guarantee, by virtue of the rule, that a creditor giving time to the principal without the consent of the surety, releases the surety (a); thus, where the course of the creditor's business was to give credit for six months, and then to extend the credit by a bill at two months, and the creditor allows three months to elapse after the six months, and then accepts the note of the principal payable at two months (thereby virtually giving a credit of eleven months instead of eight), the surety was held exonerated (b). And although it will be presumed that the surety knew the creditor's course of dealing at the time he gave the guarantee (c), yet the creditor who sets up the custom of his trade to justify the indulgence given to the principal, in order to withdraw himself from the general principle above stated, will, it seems, not only be bound to prove the custom of his trade, but also to prove that that custom has been uniform and invariable (d). But a dealing, though according to the custom of the trade, if at variance with the express language of the guarantee (the guarantee being silent with regard to the custom), will discharge the surety (e);
(a) Combe v. Woolf, 8 Bing. 156; Samuell v. Howarth, 3 Meriv. 272.
(b) Combe v. Woolf, 8 Bing. 156.
(c) See Howell v. Jones, 1 Cr.
M. & Ros. 97.
(d) Howell v. Jones, 1 Cr. M. & Ros. 97.
(e) Holl v. Hadley, 5 Bing. 54; and see Allan v. Kenning, 9 Bing. 618.
thus, where a coal merchant had been in the habit of supplying P. with coals, on a credit of two months from the delivery, and being required to furnish coals to an increased amount, had declined to do so without having some security, and accordingly S., as P.'s surety, engaged to pay such sums of money as might thereafter become due to such merchant for coals supplied to P., in case P. should not pay the same within one month after the expiration of the credit of two months. The delivery of the goods to P. was proved to be according to the custom of the trade, which was, that coals were supplied to the dealer daily during the course of a month, and that on the last day of the month the dealer gave a bill at two months for the amount of the coals supplied in the course of that month, so that he had a credit of three months from the delivery of such of the coals as were supplied on the first day of the month, and more than two months' credit for every parcel of coals supplied, except such as might be delivered on the last day of the month. It was urged on behalf of the surety, that a large quantity of the coals might be delivered on the first day of the month, the dealer might be solvent at the end of two months from that day, and insolvent before the expiration of three, so that by extending the credit in this way to three months, the surety's responsibility would be enlarged greatly beyond what he had stipulated for: and the coalmerchant was nonsuited (f). In Simpson v. Manley (g), the question was, whether the credit which had been given to the principal, was within the terms of the guarantee. The guarantee given to the plaintiffs by the defendants, was as follows:May 26, 1830.
"Our relation, Mr. Thomas Manley, having intimated to us that he is about to make some pur(f) Holl v. Hadley, 5 Bing. 54. (g) 2 Cr. & J. 12.
chases of goods from you, we beg to say that if give him credit, we will be responsible that his payments shall be regularly made, to the extent of 1000l. from this period, to the 1st of June, 1831:" it was proved at the trial, that before the guarantee was given, Thomas Manley had dealt with the plaintiffs, at a credit of seventy-three days, and that after the guarantee was given, wishing to extend the credit as much as he could, he proposed to the plaintiffs, and they agreed, that he should have credit until the Saturday following the 73rd day, which happened also not to be the exact credit which was customary in the trade: the defendants were not mercantile men, and were not cognizant of the terms of the prior dealings between Thomas Manley and the plaintiffs; and it was held, that the word "credit," meant a fair and reasonable credit, according to terms to be agreed upon, and settled between the parties, and was not intended to be confined to dealings according to the strict customary credit of the trade. And where by the terms of the guarantee six months' credit was to be given, and the creditors at the time they sent the goods, sent with them a bill of parcels entitled in this wayTo Messrs. C." (the creditors), "at three and three months' credit," the surety was held not discharged (h).
Where a creditor, whose debt is secured by bond, takes a less rate of interest by anticipation than the rate of interest payable on the bond, the anticipation of such interest in advance amounts to giving time, and will discharge the surety; since equity would restrain any action by the obligee on the bond, to recover the principal money, until the time had expired for which the obligee had received the interest on the principal money (i).
(h) Simmons v. Keating, 2 Stark. 426.
(i) Blake v. White, 1 You. & Coll. 420.
The acceptor of a bill of exchange, or the maker of a promissory note, is, as regards all parties to the bill or note, the principal debtor; and the drawer of the bill of exchange, and each indorser of the bill, or note, is in the nature of a surety for the payment of such bill or note by the acceptor or maker and each subsequent indorser is, as regards a former indorser, the surety for such former indorser giving time, therefore, by the holder of a bill of exchange, or promissory note, to any of the parties to such bill, or note, without the consent of the subsequent parties, will discharge such parties; thus, if the holder of a bill of exchange, or promissory note, give time to the acceptor, or maker, without the consent of the intermediate parties to the bill, or note (j), or allow the acceptor, or maker, to renew it, without consulting the other parties to the bill, or note (k), he thereby discharges them from its payment:—or, if after taking part payment from the acceptor of the bill, or maker of the note, he take a new acceptance, or note, from him for the remainder payable at a future day, and agree that in the meantime, the holder shall keep the original bill or note in his hands as a security; such agreement (which is in effect that in the meantime the original bill or note shall not be enforced), amounts to giving time, and a new credit, to the acceptor, or maker, and discharges the parties who were no parties to the agreement (1). But where a bill of exchange was drawn by D. upon, and accepted by, A. in favour of I., the payee, who discounted it with his bankers, and
(j) Ex parte Smith, 3 Bro. C. C. 1; ex parte Wilson, 11 Ves. 410; Gould v. Robson, 8 East, 576; English v. Darley, 2 Bos. & P. 61; S. C. 3 Esp. 49; Lee v. Levi, 1 Car. & P. 553; Hall v. Cole, 4 Ad. & Ell. 577; and see the observations of Lord Alvanley, C. J., in Clark v. Devlin, 3 Bos. & P.
363; and of Lord Eldon, C. J., in Smith v. Knox, 3 Esp. 46; and the judgment in Dunn v. Slee, Holt, N. P. C. 399.
(k) See Withall v. Masterman, 2 Camp. 179; and Tindal v. Brown, 1 T. R. 167.
(1) Gould v. Robson, 8 East, 576.
the bill having been dishonoured, the acceptor afterwards transmitted to I. a new bill for a larger amount, but had no communication with him respecting the first, and I. discounted the second bill also with his bankers, who returned to him the first bill, together with the difference between the two, and the first bill was afterwards indorsed to the plaintiff by I., for a valuable consideration; it was held, that the second bill was merely a collateral security, and that the receipt of it by I., did not amount to giving time to the acceptor of the first bill, so as to exonerate the drawer (m).
In like manner, if time has been given by the holder to the drawer of the bill, without the knowledge of the indorser, the indorser will be discharged and so where time has been given to a prior indorser, without the knowledge of a subsequent indorser, the subsequent indorser will be discharged. But giving time to the drawer, or indorser, is no discharge to the acceptor (n): nor is any prior indorser discharged, in consequence of time for payment having been given to a subsequent indorser(0); unless indeed it was known to the party holding the bill, when time for payment was given by him to the drawer, that the acceptance was an acceptance for accommodation:-or where time for payment was given by him, to a subsequent indorser, that the indorsement of a prior indorser was an indorsement for accommodation; in which case the accommodation acceptor, or indorser, will be held discharged (p).
And the surety is discharged, where the creditor
(m) Pring v.Clarkson, 1 B.&Cress. 14; and see the section "where the creditor receives further security from the principal," post.
(n) See the judgment of Lord Eldon, C. J., in English v. Darley, 3 Esp. 49; and see Smith v. Knox, 3 Esp. 46.
(0) Hayling v. Mullhall, 2 Blk.
(p) See ex parte Carstairs,
Buck. 560; Maltby v. Carstairs, 7 B. & Cress. 735; Mawson v. Stock, 6 Ves. 300; Ashbee v. Pidduck, 1 Mees. & W. 564; and note, post.