Cooper v. Wilcox, 22 N.C. 90, 2 Dev. & Bat. Eq. 90 (1838)

June 1838 · Supreme Court of North Carolina

22 N.C. 90, 2 Dev. & Bat. Eq. 90

GEORGE COOPER and HENRY ARRINGTON v. LITTLEBURY WILCOX, et al.

Between the creditor and a surety, the former is not bound to active diligence to protect the latter — but if by his act he deprives him of a security, the latter is pro tanto discharged; and where upon an appeal from the County to the Superior Court, the judgment was affirmed, and execution issued against the defendant and the sureties to the appeal bond, and was levied upon property of the principal debtor sufficient to satisfy it, and the plaintiff discharged the levy, he discharges the sureties.

After the plaintiffs had failed in establishing their de-fence at law, (vide the case of Binford v. Alston, 4th Dev. 351) they filed their bill praying that the money which they had been compelled to pay in satisfaction of the judgment, might be restored to them.

The material facts were, that an action was brought by the defendant Wilcox, in the name of Binford, against the defendant Alston, in the county court of Nash, and judgment being obtained against Alston, he appealed to the Superior Court of Nash, and the plaintiffs became his sureties for prosecuting the appeal. Alston having failed in the Superior Court, judgment was there rendered at the September Term of 1827 in favor of Binford against Alston and the plaintiffs his sureties, and an execution issued against the property of Alston and the plaintiffs returnable to the succeeding April Term. This execution was levied upon property of Alston sufficient to satisfy the judgment. When the return day of the execution was at hand, and the sale about to take place, the defendant Wilcox, upon the prayer of Alston, and without the knowledge of the plaintiffs, directed the sheriff to forbear the sale, and return the execution indulged upon Alston paying the costs, sheriff’s commissions, and $ 128-*- in part of the debt. Upon this arrangement being made the goods seized were left with Alston, and afterwards were either disposed of by him, or taken by other creditors and sold at execution. No further effort was made to collect v the judgment until the summer of 1831, when Wilcox sued out a scire facias in the name of Binford to revive the judgment, and Alston having left the State and being utterly insolvent, it was adjudged that execution should issue against the plaintiffs thereupon. Under this execution they had been compelled to pay the judgment (with the exception of the sum so paid by Alston) and interest and the costs of the scire facias.

Devereux for the plaintiffs.

Badger & B. F. Moore for the defendant Wilcox.

Gaston, Judge,

after stating the facts, proceeded:

There is nothing in the relation of principal and surety between two persons directly liable to the creditor, which imposes on him the duty of active diligence against the principal debtor. Mere forbearance or delay in collecting from the principal debtor, furnishes no ground on which the surety can ask for exoneration. . But if the credjtór do any act for the ease of the principal, without the privity of the surety, by which act the surety is injured or exposed to injury, that act may be laid hold of for the surety’s relief. One has not the right to be charitable at his neighbor’s cost. The creditor stepping forward to. relieve the principal should remember the situation of the surety, and not extend this relief to his injury without his assent — unless he choose to release the surety. Accordingly it is well settled that if the creditor from benevolence or favor to the principal debtor, relinquish a security which he has for the debt, or gives up funds in his hands applicable to its payment, the surety will be exonerated to the extent of that security or of those funds. Thus in Mayhew v. Crickett, 2 Swan 191, it was holden to be clear that if a creditor takes the goods of the principal debtor in execution, and afterwards withdraws that execution, he discharges the surety pro tanto. So in Law v. East India Company, 4 Ves. 829, it was considered as incontes-tible that where a creditor has a fund of a principal debtor sufficient for the payment of the debt, and gives it back to the debtor, the surety can never afterwards be called upon* creditor by virtue of the seizure in execution, or of the deposit, becomes a trustee of the security so acquired, or of tjle func[ for tPg benefit of all concerned, and is responsible to any party injured by unfaithfulness in execution of that trust. For it is a rule, that if he be not only creditor but trustee, then even his neglect, if it occasion the loss of that to the benefit of which the surety is entitled, will pro tanto discharge the surety. Capel v. Butler, 2 Sim. & Stew. 457, (1 Cond. Eng. Chan. Rep. 543.)

The rights to protecy tion are re-affcourts'if ter surety can as at law between th^holder of a bill, if releaseXe thereby discharges the latter.

The application of the principle to this case seems obvious. After Wilcox had levied his execution on Alston’s goods, these became a specific and full security for the payment of the debt — and this security, out of benevolence to Alston, he has relinquished, or at all events has by his act rendered ineffectual. In justice he must be regarded as having thus interfered with the collection of the debt at his peril, and not at the risk of those who neither consented to the course pursued, nor were consulted respecting it. The prin-c'P^e *s sP°ken °f as one' of equity — but it prevails in all courts where the relation of principal and surety can be recog-aised. It is in truth but a consequence of the moral injunction exercise one’s rights as not to injure others. Accordingly, where from the nature of the instrument it appears that one man is surety for the debt of another, if the obligee defeats ^ie condition of the bond, the surety is discharged. So where there is acceptor and drawer, and the holder releases the former, the latter cannot be held responsible. But the f°rm °f security frequently puts it out of the power of an^ a *''ourt °f Equity to apply the principle. Here there could not be relief at law, because by the form of the juc[gment rendered on the appeal bond, Alston and the plaintiffs were alike principal debtors. But in equity.it was competent for the plaintiffs to' show that they were sureties for Alston.

There must be a reference to inquire and report what moneys have been paid by the plaintiffs, and when, and to whom paid, an account of their liability, as the sureties of the defendant Alston, specifying how much was because of the debt and how much for costs. — Until the coming in of that report the Court reserves the question whether the plaintiffs shall recover back any, and if any, what part of the costs incurred by them at law upon the scire facias. The * t Court holds them clearly entitled to restitution of all they have paid for the debt and interest thereon, and to recover their costs in this suit.

Per Curiam. Decree accordingly.