« ΠροηγούμενηΣυνέχεια »
and to stay the proceedings, Lord Abinger, C. B., considered (notwithstanding the original bond remained in the possession of the obligee), that the latter bond operated as a satisfaction of the first, and consequently that the former could not be enforced (c).
In general, where a simple contract security is given for a debt, it is extinguished by a specialty security, if the remedy given by the latter is coextensive with that, which the creditor had upon the former; for the specialty security gives a remedy of a higher nature than the party had upon the simple contract security, and the simple contract security becomes merged in the higher security (d) (3). But if the original security be a specialty, and the second a mere simple contract security, the latter cannot operate as an extinguishment of the former, unless it produce the fruit of a judgment (e). And even where the second security would otherwise have operated at law as an extinguishment of any remedy the party might have on the original security, yet, if the creditor's remedy against the principal has not been diminished, but accelerated (f):or, the second security is taken with the consent of the surety (g):-or, it can be collected, that it was the intention of the parties that the former security should continue an existing security, and the latter
(c) Clarke v. Henty, 3 You. & Harwood, 2 Ves. 267. Coll. 187.
(e) Drake v. Mitchell, 3 East, (d) See the judgment in Twopenny v. Young, 3 B.& Cress. 208; (f) Hulme v. Coles, 2 Sim. 12. and the judgments of Lord Ellen- (9) Tyson v. Cox, T. & Russ. borough, C. J., in Drake v. 395; Clarke v. Devlin, 3 Bos. & chell, 3 East, 251 ; and of Sir
P. 363. John Strange, M. R., in Jacomb v.
(3) A debt, however, of the principal, which is a simple contract debt, is not extinguished by operation of law, in a case where a surety gives the creditor a bond or other instrument under seal to secure that debt, unless the principal is a party to the latter security. (See White v. Cuyler, 6 T. R. 176; S. C. 1 Esp. 200 ; and the observations of Lord Abinger, C. B., in Clarke v. Henty, supra.)
should be a further, or collateral security (h), the surety is not discharged; for the principle upon which the surety is entitled to be discharged, is, that the remedies of the surety have been, or by possibility might have been, prejudiced by the conduct of the creditor, without the surety's consent.
Where the creditor receives from the principal, without the knowledge of the surety, another security which is not strong enough to operate by law, in destruction of the former security, (as where it does not give a remedy of a nature as high as, or higher, than the original security, or where it appears from the second instrument, that it is intended as a further, or additional security only, and consequently that the former security should remain an existing security,) a dealing by the creditor with the principal in respect of the second security, will not at law, have the effect of discharging the surety on the original security, although the surety might have been discharged, had the creditor dealt with the principal in the same manner with respect to the original security ().
6. Of neglect by the creditor in regard to the securities.
It has been already stated, that a surety is entitled to the benefit of all securities in the hands of the creditor (j), whether he knows of the existence of those securities, or not (k), and if any of those securities should be lost ), or be allowed to get into the possession of the principal (m), the surety will to that extent be discharged; and it is imma
(h) See the observation of Lord Eldon, C., in The Bank of Ireland v. Beresford, 6 Dow, 233; and see Twopenny v. Young, 3 B. & Cress. 208; and Gordon v. Cal vert, 4 Russ. 581; S. C. 2 Sim. 253.
(i) See Twopenny v. Young, 3 B. & Cress. 208.
(1) See ante, p. 113. (K) See ante, p. 114. (1) Ex parte Mure, 2 Cox, 63 ; Williams v. Price, i Sim. & S. 581.
(m) Capel v. Butler, 2 Sim. & S. 457; Law v. The East India Company, 4 Ves. 824.
terial whether it happens in consequence of the creditor's wilful neglect, or want of due diligence (n), or from an erroneous impression as to a fact(o), or through the mistaken advice given to him by his counsel (m); but in all these cases the creditor must have (9), or might have had (r), full power and dominion over the security.
Where P. agreed with C. for the sale to C. of an annuity, subject to redemption by P. at a certain sum upon giving notice, and for securing which annuity, P. and S. as his surety, bound themselves in a joint and several bond, and as a further security, P. assigned to a trustee for the grantee certain vessels belonging to P., and the grantee not having registered the vessels according to the form, and in the mode required by the several Acts of Parliament for the registry of ships or vessels, acting under the opinion of counsel, that the assignment was valid without the registry, in consequence of which, P. was enabled to dispose of the vessels to other persons: it was held, upon bill filed by S. to redeem the annuity at the stipulated price of redemption, that he was entitled to deduct the value of the vessels sold (s). So where P., who had been appointed one of the officers of the East India Company, and S., as his surety, became bound that P. should duly account for all monies received, laid out, or expended by him on account of the Company, and P. dying, the officers of the Company in India, under an erroneous settlement with P.'s representative there, permitted P.'s representative in India to remit through the treasury of the Company, the effects of
(n) Ex parte Mure, supra ; Williams v. Price, supra ; Philips v. Astling, 2 Taunt. 206.
(0) Law v. The East India Company, 4 Ves. 824.
(p) Capel v. Butler, supra,
Williams v. Price, i Sim. & S. 581.
(9) See Capel v. Butler, 2 Sim. & S. 457; Halford v. Byron, Pre. Ch. 178; S. C. 2 Eq. Ca. Ab. 188.
(8) Capel v. Butler, 2 Sim. & S. 457.
P. in India, to P.'s representative in England: the permitting of the effects of P. to be withdrawn from India (which could not have been done without the concurrence of the Company), was held a discharge to the surety to that extent (t). So where S. had become responsible to the grantor of a mansionhouse and land, for the payment by the grantee and his heirs of the rent reserved, and of the performance of a covenant to keep the premises in repair, and the grantee having suffered the rent to run in arrear, and the premises to fall into a ruinous state, the grantor in consideration of ten shillings, took a reconveyance of the estate to him and his heirs from the grantee : it was held, that the surety was discharged from his liability by the act of the grantor, who, by accepting a reconveyance of the estate, had deprived the surety of his remedy against the subsidiary fund, to which, upon payment of what was due to the grantor, the surety had a right to resort for his indemnity (u). So where J. S. gave a warrant of attorney and his bond to D., conditioned for the payment of the whole interest annually of the money due from J. S. to D., and of £500 annually in discharge of the principal, until the whole was paid, and D. assigns to C., his creditor, the bond and warrant of attorney, and all powers for recovering the money thereby secured, for securing the payment of money owing by D. to his creditor, and makes his creditor his attorney; and the creditor fails to enter up, and enforce a judgment, by virtue of such warrant of attorney, in consequence of which, upon the obligor's decease, other creditors of the deceased obligor obtain a priority, but which, if the creditor had used due diligence, he might have (by making his debt of a higher nature) secured in his own favour, both upon the real and
(t) Law v. The East India Company, 4 Ves. 824.
(u) Lord Harberton v. Bennett, i Beat. 386.
personal estate of the obligor : C. is chargeable for wilful default, in forbearing the obligor to the amount of the loss incurred by such forbearance (v). So where D. deposits with the creditor, a bill of exchange, and the creditor fails to present it for payment when due, and the acceptor afterwards becomes bankrupt (w) :or, where having tendered it for acceptance, it is refused to be accepted :
-or, having been accepted, it is, when presented for payment, dishonoured, and the creditor fails to give due notice of its non-acceptance, or dishonour (x), to the several parties to the bill, whereby any one of them becomes discharged; the creditor is chargeable to the amount of the loss incurred by such forbearance, or neglect. But where a bill of exchange is in the hands of the creditor, which it is obyious will not be paid by the acceptor, the same strictness of proof of the presentation of the bill is not necessary to charge the surety, as would have been necessary to support an action upon the bill itself, as the surety insures, as it were, the solvency of the principal; therefore, if the principal accept a bill of exchange drawn by the creditor, for the price of goods sold to the principal (the payment of which goods is also guaranteed by the surety), and the principal becomes bankrupt (y), or notoriously insolvent (2), before the bill becomes due, it is the same thing as if he were dead, and it is nugatory to go through the ceremony of making a demand upon him: however, it would seem that in such a case, it is competent for the surety to show (if he can do so), that notwithstanding the insolvency of the prin
(0) Ex parte Mure, 2 Cox, 63. (w) Philips v. Astling, 2 Taunt. 206.
(a) Blesard v. Hirst, 5 Burr. 2670; Goodall v. Dolley, 1 T. R. 712; Philips v. Astling, 2 Taynt.
(y) Warrington v. Furbor, 8 East, 242; S. C. 6 Esp. 89; and see Bickerdike v. Bolman, 1 T. R. 405.
(z) Holbrow v. Wilkins, 1 B. & Cress. 10.