Sprigg v. Bank of Mount Pleasant
39 U.S. 201 (1840)

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U.S. Supreme Court

Sprigg v. Bank of Mount Pleasant, 39 U.S. 201 (1840)

Sprigg v. Bank of Mount Pleasant

39 U.S. 201

Syllabus

The principles decided in the case of Sprigg v. The Bank of Mount Pleasant, reported in 10 Pet. 257, examined and affirmed.

It is equally well settled in courts of equity as well as in courts of law as a rule of evidence, that parol evidence is inadmissible to contradict or substantially vary the legal import of a written agreement. And this is founded on the soundest principles of reason and policy, as well as authority. The case of Hunt v. Rousmanier, 8 Wheat. 211, cited.

Extending the time of payment of a bond and a mere delay in enforcing it will not discharge a surety unless some agreement has been made injurious to the interest of the surety.

It is a sound and well settled principle of law that sureties are not to be made liable beyond their contract, and any agreement with the creditor which varies essentially the terms of the contract without the assent of the surety will discharge him from responsibility. But this principle cannot apply where the surety has by his own act exchanged his character of surety for that of principal and then applies to a court of equity to reinstate him to his character of surety in violation of his own express contract.

Courts of equity will permit independent agreements which go to show a deed on its face absolute was intended only as a mortgage to be set up against the express terms of the deed only on the ground of fraud. Considering it a fraudulent attempt in the mortgagee, contrary to his own express agreement, to convert a mortgage into an absolute deed. And it is equally a fraud on the part of a debtor to attempt to convert his contract as principal into that of a surety only.

This case was brought before the Court at January term, 1836, on a writ of error prosecuted by the present appellant, seeking to reverse the judgment of the circuit court in an action instituted against him on a joint and several bond, under seal, made by him and others to the Bank of Mount Pleasant for the payment of a sum of money stated in the bond, to the bank, upon which obligation the bank had loaned the sum of twenty-one hundred dollars and had paid the same to Peter Yarnall & Company, one of the co-joint and several obligors. The bank, after the loan, had continued to renew it for some years, the discount and interest on the same having been paid to the bank every sixty days until, when Peter Yarnall & Company, having been insolvent, suit was brought on the obligation, against Samuel Sprigg, and a judgment obtained against him for the amount of the obligation.

The object of the writ of error was to have the judgment of the circuit court reversed on the ground that the indulgence for the payment of the debt had been given to Peter Yarnall & Company, without the privity or knowledge of the plaintiff in error; that he was only a surety in the obligation, which was, he alleged, known to the bank, and he was discharged from the liability

Page 39 U. S. 202

for the debt to the bank. These allegations were denied by the Bank of Mount Pleasant.

The court in that case held that all were principals in the obligation, and were equally and fully bound to the payment of the debt, and the continuation of the loan on the bond, whether the same was to one or all the obligors did not impair the claim of the bank to recover from all and each of them. The judgment of the Circuit Court of Ohio was affirmed. 35 U. S. 10 Pet. 257.

In December, 1838, the appellant in this case, Samuel Sprigg, filed a bill in the Circuit Court of Ohio, praying to have the judgment which had been affirmed in the Supreme Court, perpetually enjoined on the ground that all the parties to the bond held by the bank, except Peter Yarnall & Company, were sureties for the loan made on the bond, and that the bank, on the maturity of the bond, having re-discounted it from time to time, at the request of Yarnall & Company without the consent of the sureties, they, the complainant being one, were discharged.

The circuit court, after the testimony of many witnesses had been taken and a full hearing, refused the injunction and ordered the bill to be dismissed, and from this decree the complainant prosecuted this appeal.

The counsel for the appellant contended that his case is made out as stated in the bill, and referred the court to the depositions, and particularly to the letters of Yarnall to the bank, and the account of the bank with Yarnall & Company, taken from the bank books. He contended that there is no estoppel in equity, especially as a rule of evidence, though there may be some cases in its popular sense, as a broad rule of right.

He contended that though the sureties made themselves principals to pay in sixty days, yet they are not principals without their consent, as long as the bank might choose to renew the loan.

He contended that if he has made a case which would entitle him to relief, supposing the words "as principals" were not in the obligation, that then he is entitled to the relief he seeks, notwithstanding the insertion of these words, "as principals." He contended that the existence of the words "as principals" in the bond does not deprive him of that equity which the like conduct of the bank would give him in the common case of a joint and several obligation. The plaintiff also contended that to so give time and enter into new agreements without the surety's assent is, though none may have been intended, a fraud upon him notwithstanding the insertion of the words "as principals," when the bank knew that the discount was for the sole benefit of Yarnall & Company.

He further insisted that the insertion of the words "as principals," when the bank knew the true relations of the parties, did not give the bank the right to renew the loan, to make new agreements, or to give further day of payment at its pleasure without the assent of the sureties. That if the defendants intended to gain such a

Page 39 U. S. 203

power or advantage, fair dealing required them to ask or demand it from the sureties in a plain way, as by a direct insertion of such a power in the obligation, a practice which this same bank has long since adopted. And that the decree of the court below ought to be reversed and one entered perpetuating the injunction with costs.

The counsel for the appellee contended that the appellant, having acknowledged himself in the bond to be a principal debtor, is estopped from alleging that he is only a surety, as between him and the appellee. Also that the testimony excepted to is entirely inadmissible, so far as it is sought by the same to contradict, &c., the bond, there being no allegation in the bill, or proof, that there was any fraud, surprise, or mistake, in the making or executing the same. Also that the appellant, upon his own showing, admitting all in his bill stated to be true, is not entitled to the relief prayed for. And that as the appellant was accustomed to transact business with the bank, and as the payment of the bond was deferred according to her usages, he is bound by those usages, such usages, under such circumstances, forming a part of the bond or contract.

Also that the appellant has legally and equitably waived all his rights as surety, if he were such, by acknowledging himself to be a principal debtor, and so contracting with the bank, and has thereby at least authorized the bank to treat him according to the character voluntarily assumed by him, until such time as he might give notice that he was but a surety, and require the bank to prosecute the collection of the bond. And that the court ought not to permit the appellant to disclaim the character of a principal debtor, and thereby violate his contract and good faith, and thus perpetrate a fraud upon the appellee. And that the appellant has failed, even if the testimony is admissible, to sustain by proof the material allegations of his bill.

The appellee also contended that the bank is entitled to a decree, and that decree should include, if the injunction in this case should be dissolved, damages according to the statutes of Ohio which may be recognized as rules &c., by this Court, and which require the courts of that state, on the dissolution of an injunction to stay the collection of money, to render a decree for ten percent damages on the amount due, in favor of the defendants, and if an appeal should be taken to a superior court, and the injunction there dissolved, that court is required to render a decree for fifteen percent damages.

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