« ΠροηγούμενηΣυνέχεια »
ditor's rights to go against the surety, should be upon the face of the instrument itself; as evidence cannot be admitted to explain, or vary, the effect of the instrument (n): and such reservation should be clearly and unequivocally expressed, and not open to any manner of doubt (0).
The principle that a surety no longer remains liable to the debt, when a creditor, without giving notice to the surety, gives time of payment to the principal debtor, was first adopted in equity (p):
(n) Ex parte Glendinning, Buck, 517.
(0) Boultbee v. Stubbs, 18 Ves. 20 (5).
(p) See the judgment of Gibbs, C. J., in Orme v. Young, Holt,
N. P. C. 84; and see Moore v. Bowmaker, 6 Taunt. 379; S. C. 2 Marsh, 81; Samuell v. Howarth, 3 Meriv. 272; Melvill v. Glendining, 7 Taunt. 126; and Hawkshaw v. Parkins, 2 Swanst. 539.
(5) In this case the defendant Stubbs, who was a banker, being unwilling to give his customer Thomas Boultbee credit to the amount he wished upon his own personal security, or upon the credit and security of the different bills and notes which he should pay into the bank in the course of his dealing, required and procured a bond for 10,000l. from him and from Thomas Boultbee's brother, Charles Boultbee, as his surety, under which it was stipulated, that Charles Boultbee was to be liable only to the extent of 6,000l., if upon the account, that amount should be due. Upon a subsequent settlement of the accounts, the balance due to the banker appearing to be 9,500l., Thomas Boultbee gave his banker a mortgage for 4,000l., reducing the debt therefore below 6,000l.: and it was further agreed between the banker and his customer, that the residue of the 9,500l. should be paid by instalments, and a warrant of attorney was given to confess judgment, but expressly "without prejudice to any security Stubbs now holds for the said sum or any part thereof." Charles Boultbee, the surety, filed his bill in equity to be discharged from his liability, and moved for an injunction to restrain the creditor from proceeding against him upon the bond, and Lord Eldon granted the injunction, observing, that the consequence of the transaction which had taken place between the creditor and principal (namely, the security continuing liable for the sum of £5,500 remaining due upon the settlement of accounts, and the creditor agreeing with the principal to postpone his remedy, changing his immediate right to sue to a right to call for certain instalments), that in equity the creditor's right against the surety was gone, and the question therefore to be considered was, what was intended by the words in the warrant of attorney "without prejudice to any security," and his lordship was of opinion, that it was not intended by those words to save the bond among other securities, but rather that the principal being in the habit of giving securities to the creditor from time to time, the meaning was, that that transaction should liqui
courts of law subsequently acted upon the same principle, and applied it to the case of bail (g) : and now, the same principles which have been held to discharge a surety in equity, will operate to discharge him also at law (r). But though the same relief may be obtained in a court of law, as well as in a court of equity, a court of equity will not send a party who is suing there, to a court of law for the discharge to which he is equally entitled in equity (s).
In order, however, that the surety may avail himself of a defence at law, it must appear upon the face of the instrument that he is such surety; for if he is bound as principal, he cannot, at law, aver by pleading that he is bound as surety (t) (6),
(q) Stat. 11 Geo. 2, c. 19; Moore v. Bowmaker, supra.
(r) Samuell v. Howarth, supra ; and see the judgment of Best, C. J., in Philpot v. Briant, 4 Bing. 717.
(s) Samuell v. Howarth, 3 Meriv. 272; Mayhew v. Crickett, 2 Swanst. 185; S. C. 1 Wils. C. C. 418; and see the observation of Lord Eldon, C., in Hawkshaw v. Parkins, 2 Swanst. 539.
(t) Per Lord Loughborough, C., in Rees v. Berrington, 2 Ves. Jun. 540; and see Lewis v. Jones, 4 B. & Cress. 506; and see the judgment of Abbott, C. J., in Davey v. Prendergrass, 5 B. & Ald. 187; and the observations of Bayley, J., in Pease v. Hirst, 10 B. & Cress. 122; and of Lord Abinger, C. B., in Ashbee v. Pid duck, 1 Mees. & W. 564.
date the matter of the bond, but should not prejudice the banker's right as to other securities in his hands, the saving of which securities would give a reasonable interpretation to those words in the warrant of attorney.
(6) A considerable degree of doubt has been entertained by many learned judges, as to the propriety of Lord Ellenborough's decision in the Nisi Prius case of Laxton v. Peat, 2 Camp. 185 (see the observations of Sir James Mansfield, in Raggett v. Axmore, 4 Taunt. 730; and in Fentum v. Pocock, 5 Taunt. 192; S. C. 1 Marsh, 14; of Sir Vicary Gibbs, in Kerrison v. Cooke, 3 Camp. 362; of Sir James Parke, in Price v. Edmunds, 10 B. & Cress. 578; and of Lord Tenterden, in Yallop v. Ebers, 1 B. & Ad. 698); in which case the learned judge permitted the acceptor of a bill of exchange to show, that as between himself, the drawer and the holder, the drawer was the principal, and the acceptor merely the surety and held the acceptor to be entitled to such relief, as a surety may claim, when his remedies have been affected by the creditor without the surety's consent.
From the observations of Sir James Mansfield, C. J., in Fentum v.
though, in equity, parol evidence is admissible to show who is principal, and who surety (u): thus,
(u) Craythorne v. Swinburne, 14 Ves. 160; Clarke v. Henty, 3 You. & Coll. 187; and see Lord Thur
low's judgment in Clinton v. Hooper, 1 Ves. Jun. 173; S. C. 3 Bro. C. C. 201.
Pocock (5 Taunt. 192; S. C. 1 Marsh. 14); and of Sir Vicary Gibbs, C. J., in Carstairs v. Rolleston (5 Taunt. 551); it would seem, that the point decided in Laxton v. Peat, was:-that where the holder of a bill of exchange has, at the time he receives it from the drawer, knowledge that it was accepted without consideration, and solely for the accommodation of the drawer, and afterwards gives time to the drawer without the consent of the acceptor, the holder shall not be permitted to proceed against the acceptor: it being necessarily to be collected, that the understanding between the parties to the bill must be, that the drawer is to be considered the person primarily liable, and in the first instance looked to for payment.
If it is admitted, that the judgment of Lord Ellenborough proceeded upon the ground, that the holder had knowledge of the accommodation acceptance at the time when he took the bill, without reference to the question, how far giving time to the drawer would have discharged the acceptor, if the holder had not notice at the time when he took the bill, that the bill was accepted for the accommodation of the drawer, but had notice of that fact afterwards, and before he gave time to the drawer, then, the cases usually referred to, as being opposed to the law as laid down in Laxton v. Peat, may perhaps be distinguished from the latter
In Raggett v. Axmore (4 Taunt. 730), there was no sufficient evidence of the fact, that the bill of exchange was accepted without consideration. In Kerrison v. Cooke (3 Camp. 362), it does not appear when the holder had notice, that it was an acceptance for accommodation only. In Fentum v. Pocock (5 Taunt. 192; S. C. 1 Marsh. 14), Carstairs v. Rolleston (5 Taunt. 551), and Perfect v. Musgrave (6 Price, 111), notice, that the transactions were accommodation transactions, was after the bill and notes were respectively received. In Price v. Edmunds (10 B. & Cress. 578), the Court determined that no time had been given, and consequently even if it had appeared upon the face of the instrument that the party was surety, he would not have been discharged. In Yallop v. Ebers (1 B. & Ad. 698), the question was not between the parties to a bill of exchange (for the defendant was neither acceptor, drawer, nor indorser), but arose upon the defendant's liability, notwithstanding his bankruptcy, to pay the balance due on a bill of exchange according to an undertaking which had been given by him. In Nicholls v. Norris (3 B. & Ad. 41 n.), there was a reservation in the deed of composition and release, of the holder's right to go against the maker of the promissory note, and therefore it was immaterial, whether the maker was a surety, or a principal. In Harrison v. Courtauld (3 B. & Ad. 36), the holder did not know, at the time when he took the bill, that it had been accepted for the accommodation of the drawer.
The reasons which influenced Lord Ellenborough, in coming to the judgment which he delivered, in the case of Laxton v. Peat, are stated
if two persons are jointly (v), or jointly and severally (w), bound to the creditor, the one as princi
(v) See Ashbee v. Pidduck, 1 Mees. & W. 564.
(w) See Rees v. Berrington, 2 Ves. Jun, 540.
by him in Collot v. Haigh (3 Camp. 281; a case decided by him two or three years afterwards, and involving the same principle as that in Laxton v. Peat); and which are as follow:-"The drawer of an accommodation bill must be considered as the principal debtor, and the acceptor only in the light of a surety. The reason why notice of the dishonour of a bill must in general be given to the drawer, is, that he may recoup himself by withdrawing his effects from the hands of the acceptor, and he is discharged by time being given to the acceptor without his consent, because his remedy over against the acceptor, may thus be materially affected: but where the bill is accepted merely for the accommodation of the drawer, he has no effects to withdraw, and no remedy to pursue when compelled to pay; he therefore suffers no injury, either by want of notice, or by time being given to the acceptor, and in an action on the bill he cannot defend himself upon either of these grounds."
It cannot be doubted that the decision of Lord Ellenborough meets the justice and equity of the case, and there can be as little doubt, that the party who received judgment in his favour in the case of LaxPeat, would have obtained relief in a Court of Equity (see the observations of Lord Eldon, C. in ex parte Glendinning, Buck, 517; the Bank of Ireland v. Beresford, 6 Dow, 233; ex parte Yonge, 3 Ves. & B. 31; S. C. nom. ex parte Young, 2 Rose, 40): but the question is, ought that relief, under the circumstances stated, to have been granted to the acceptor in a court of law? or, in other words, is it permitted in a court of law, to a person to show, that he stands in a different situation from that in which he is represented by the instrument, and that instead of being (as the party professed to be), the principal, he was in fact merely the surety? (see previous cases, and Ashbee v. Pidduck, 1 Mees & W. 564; Rawson v. Walker, 1 Stark. 361; and the observations of Bayley, J., in Ridout v. Bristow, 1 Cr. & J. 231; and Britten v. Webb, 2 B. & Cress. 483; and of Parke, J., in Price v. Edmunds, 10 B. & Cress. 578; and of Lord Loughborough in Rees v. Berrington, 2 Ves. Jun. 540).
It seems to be clear, that if an instrument is strictly an instrument of suretyship, and a party appears upon it to be bound as principal, he cannot at law plead that he is bound as surety (see cases supra) but is a bill of exchange or promissory note, an instrument of this description? or is it not rather a mercantile instrument, and subject as such, for its construction, to the laws which prevail among merchants?and not being an instrument under seal,-is it not competent for a court of law to receive parol evidence, showing what the real terms were on which such bill or note was given? (see the judgment of Abbott, C. J., in Davey v. Prendergrass, 5 B. & Ald. 187; and Thompson v. Clubley, 1 Mees. & W. 212).
Notwithstanding Lord Tenterden, in the case of Yallop v. Ebers, is reported to have said, that he considered the case of Laxton v. Peat,
pal, and the other as surety, and both appear upon the instrument as principals, such surety obligor, when time has been given to the principal debtor (r), or to the representatives of such principal debtor (y), may have relief in a court of equity, though he could not at law.
The agreement also by which it is attempted to be shown, that time has been given to the principal, must, at law, be as binding as the instrument creating the surety's liability, or it will not avail (≈); for the general rule of the common law requires,
(x) See Rees v. Berrington, supra.
(y) See Ashbee v. Pidduck, supra.
(z) Davey v. Prendergrass, 5 B. & Ald. 187; and see Field v. Robins, 8 Ad. & Ell. 90.
to have been long overruled (and which opinion, it is to be observed, is at variance with that expressed in Davey v. Prendergrass), yet, a modern case (Hall v. Wilcox, 1 M. & Rob. 58), decided by the same learned lord, seems to uphold the doctrine laid down in the case of Laxton v. Peat, and to support the opinion formerly, as it would seem, held by Lord Eldon (see ex parte Glendinning, Buck, 517; and the Bank of Ireland v. Beresford, 6 Dow, 233); that it was competent for the acceptor of a bill of exchange, or the maker of a promissory note, to prove in a court of law, that the bill or note was accepted or made without consideration, and so known to the holder.
The case of Hall v. Wilcox, above adverted to, was, as follows:Assumpsit by the payee against the maker of a promissory note for £50. The note was joint with Honeysett. It was proved on the plaintiff's evidence, that Honeysett, who was a publican, had applied to the plaintiff, a brewer, for a loan of £50, and on the plaintiff's requiring security, the defendant agreed to join with Honeysett in the promis sory note. Honeysett after some time fell into difficulties, and the plaintiff took half-a-crown in the pound, as a composition for this and other demands, having arrested him, and discharged him on payment of that sum. The sum paid reduced the plaintiff's demand on the note to £40. It was doubtful on the evidence whether this was not done with the defendant's consent. For the plaintiff it was contended, that the note being a joint note, without any mention of suretyship, the defendant must be considered as a principal:-that he could not be allowed to allege he held any other character than that which he assumed in the note. Lord Tenterden said he was of opinion, that as the note was made and given to the plaintiff, with the knowledge that the defendant was only a surety, the defendant would be discharged, unless the composition was taken with the express consent of the plaintiff. This question was left to the jury, who found a verdict for the defendant (and see Garrett v. Jull, Selw. N. P. 377, 7th ed.; and the observations of Abbott, C. J., in Adams v. Gregg, 2 Stark. 531).