The plaintiff in error, with others, executed to the Bank of
Mount Pleasant a sealed obligation for the payment of the sum of
$2,100, at the expiration of sixty days, and in the instrument each
of the parties to it acknowledged himself bound as principal. The
money was loaned on the instrument to and for the exclusive benefit
of one of the parties to it, and after the time of payment arrived,
the bank gave a farther credit to the borrower, receiving from him
the discount for the extension of payment. No notice was given to
the other parties of this fact. The amount loaned not having been
repaid, this suit was instituted on the obligation, and the
defendant pleaded several pleas, alleging he was discharged from
all liability under the obligation. The plaintiff replied that each
of the obligors having acknowledged himself as principal in the
instrument, all were estopped from setting up any defense in
opposition thereto.
By the court:
"This case is to be governed by rules applicable to proceedings
in courts of law, and upon this point the rule seems to be well
settled that when principal and surety are bound jointly and
severally on a bond, although there is no express admission on the
face of the instrument that all are principals, yet the surety
cannot aver by pleading, that he is surety only."
When one who is in reality only surety is willing to place
himself in the situation of principal by expressly declaring upon
his contract that he binds himself as such, there cannot be any
hardship in holding him to the character in which he assumes to
place himself. As to that particular contract, he undertakes as a
partner with the debtor, and has no more right to disclaim the
character of principal than the creditor has to treat him as
principal if he had set out in the obligation that he was only
surety.
In this case, the fact of the defendant's being surety is not
only admitted, but it is alleged that he is estopped from setting
it up by his own admission in his obligation that he is principal.
And we are not aware of any case giving countenance to such a
defense at law under such circumstances.
It is an established rule in demurrers that although the
pleading demurred to may be defective, the court will give judgment
against the party whose pleading was first defective in
substance.
It is the settled rule of law in relation to sureties that
extending to principals further time of payment will discharge the
surety.
The defendant in error instituted in the circuit court an action
of debt on the following obligation, executed by the plaintiff in
error, and others.
"Know all men by these presents, we, Peter Yarnall & Co.,
Samuel Sprigg, Richard Symms, Alexander Mitchell and Z. Jacobs,
Page 35 U. S. 258
as principals, are jointly and severally held and firmly bound
to the President, Directors and Company of the Bank of Mount
Pleasant for the use of the said Bank of Mount Pleasant in the just
and full sum of $2,100 lawful money of the United States, to the
payment of which sum well and truly to be made to the said
president, directors and company, for the use aforesaid, within
sixty days from the date hereof, we jointly and severally bind
ourselves, our heirs, &c., firmly by these presents. Signed
with our hands, and sealed with our seals this 20 of February, A.D.
1826."
"PETER YARNALL & CO. [SEAL]"
"SAMUEL SPRIGG [SEAL]"
"RICHARD SYMMS [SEAL]"
"ALEXANDER MITCHELL [SEAL]"
"Z. JACOBS [SEAL]"
To the declaration on this obligation the defendant pleaded the
general issue and six special pleas. The questions which were
discussed and decided by the Court were presented on the second
plea and sixth.
The second plea was as follows:
"2. And for further plea in this behalf, by leave of the Court
here for that purpose first had and obtained according to the from
of the statute in such case made and provided, the said Samuel, by
his said attorney, comes and defends, &c., and says, that the
said plaintiffs ought not to have or maintain their action
aforesaid against him because he says that the President, Directors
and Company of the Bank of Mount Pleasant constitute an
incorporated banking company, located at Mount Pleasant, in the
County of Jefferson, in the State of Ohio, doing and transacting
business in the usual manner of a bank, and that the said $2,100
mentioned in the said writing obligatory was a loan made by the
plaintiffs as such banking company, in the ordinary way of making
such loans at said bank, to the said Peter Yarnall & Co. and
for their accommodation, and that the said writing obligatory was
given to said bank for the sole and only purpose of securing the
payment of the said loan at the expiration of thirty days from the
date thereof, and that the said Samuel Sprigg, as also the said
Richard Symms, Alexander Mitchell and Z. Jacobs, were in truth and
in fact securities for the said Peter Yarnall & Co. for the
payment of the said loan in sixty days as aforesaid, and were so
received and treated by the said plaintiffs, and that the said
Peter
Page 35 U. S. 259
Yarnall & Co. received for their own exclusive benefit and
accommodation the entire amount of the said $2,100, and were so
entered and charged on the books of the plaintiffs in their said
bank, and the defendant further avers that at the time the said
writing obligatory became due, to-wit, on 21 April, Anno Domini
1826, the said plaintiffs, for and in consideration of $22.48
cents, paid by the said Peter Yarnall & Co. to the said
plaintiffs for the discount or interest in advance on the said
$2,100 for sixty days then next following, undertook and agreed
with the said Peter Yarnall & Co., without the knowledge or
consent of the said Samuel Sprigg, Richard Symms, Alexander
Mitchell and Z. Jacobs, or either of them, to give a further credit
on the said loan of sixty days and to extend the time of payment
thereof for sixty days, from and after the said 21 April last
aforesaid, and the defendant avers that the said plaintiffs did
give to the said Peter Yarnall & Co. the further credit and
time of payment thereof for sixty days as aforesaid, and without
the knowledge or consent of the said Samuel Sprigg, Richard Symms,
Alexander Mitchell and Z. Jacobs, or either of them, and against
their will; by means whereof the said Samuel Sprigg says that he is
discharged from all liability on or by virtue of the said writing
obligatory; and this he is ready to verify, wherefore he prays
judgment, &c."
The sixth plea was:
"6. And for further plea in this behalf, by leave of the Court
here for that purpose first had and obtained according to the form
of the statute, the said Samuel, by his attorney, comes and
defends, &c., and says that the said plaintiffs ought not to
have or maintain their aforesaid action against him because he says
that the said plaintiffs are an incorporated banking company, doing
and transacting business in the usual way and manner of banks, and
that the said $2,100 mentioned the said writing obligatory in the
plaintiff's declaration described, and of which oyer is craved, and
the same is set out in the said Samuel's first plea, was a loan
made by the said plaintiffs at their banking house, in the Town of
Mount Pleasant, in the said County of Jefferson, in the usual way
of making loans at said bank, to and for the sole benefit and
accommodation of Peter Yarnall & Co., the first obligors in
said writing obligatory, and that the said writing obligatory was
given to the said bank for the sole and only purpose of securing to
said bank the payment of the said loan so made to the said Peter
Yarnall & Co. as aforesaid, in sixty days from the date
Page 35 U. S. 260
thereof, and that the said Samuel Sprigg, Richard Symms,
Alexander Mitchell, and Z. Jacobs were in truth and in fact merely
securities of the said Peter Yarnall & Co. for the payment of
the said loan in sixty days as aforesaid, and were so received and
accepted and treated throughout by the said "
brk:
plaintiffs in all the transactions in said bank relating to said
loan, and the said Samuel avers that at the time the said writing
obligatory became due, to-wit, on the 21 April, Anno Domini 1826,
the plaintiffs, in consideration of $22.40 cents, paid to them by
the said Peter Yarnall & Co. for the discount or interest in
advance on the said $2,100 for sixty days then next following,
undertook and agreed with the said Peter Yarnall & Co., without
the knowledge or consent of the said Samuel Sprigg, Richard Symms,
Alexander Mitchell and Z. Jacobs, or either of them, to give, and
then and there did give to the said Peter Yarnall & Co. the
further credit and further time of payment of the said loan and the
said writing obligatory for sixty days from and after the said 21
April aforesaid, and the said Samuel further avers that afterwards,
to-wit, at the expiration of the said sixty days, further credit
and time of payment as aforesaid, and at the expiration of each and
every sixty days successively thereafter until 24 March, Anno
Domini 1829, the said plaintiffs did receive at their bank in the
said town of Mount Pleasant, of and from the said Peter Yarnall
& Co., the sum of $22.40 for the discount or interest in
advance of the said loan of $2,100, and at each consecutive day of
discount and payment of interest in advance as aforesaid, until the
said 24 March, Anno Domini 1829, that said plaintiffs did, without
the knowledge or consent of the said Samuel Sprigg, Richard Symms,
Alexander Mitchell and Z. Jacobs, or either of them, and in
consideration of the said sum of $22.40 so paid to them by the said
Peter Yarnall & Co. on each of the said days of discount, and
payment of interest in advance as aforesaid, agreed with the said
Peter Yarnall & Co. to give, and did then and there give to the
said Peter Yarnall & Co. the further credit and time of payment
of said loan of sixty days from and after each consecutive day of
discount and payment of interest in advance as aforesaid until the
said 24 March aforesaid, and the said Samuel further avers that
afterwards, to-wit, on or about the said 24 March, Anno Domini
1829, the said Peter Yarnall & Co. failed in business, became
insolvent, and unable to pay their just debts, and that the said
Samuel Sprigg, Richard Symms, Alexander Mitchell and Z. Jacobs
Page 35 U. S. 261
had not, nor had either of them, any notice of the nonpayment of
the said loan or of the outstanding of the said writing obligatory
from the time the same became due, to-wit, on 21 April, Anno Domini
1826, until after the failure and bankruptcy of the said Peter
Yarnall & Co. as aforesaid, by reason whereof he, the said
Samuel, says he ought not to be charged with the said debt, or any
liability on or by virtue of the said writing obligatory, all which
he is ready to verify, wherefore he prays judgment, &c.
To the second and sixth plea the plaintiff replied, that the
said Samuel Sprigg, together with Peter Yarnall & Co., Richard
Symms, Alexander Mitchell and Z. Jacobs acknowledged themselves to
be jointly and severally held and firmly bound, as principals, to
the said President, Directors and Company of the Bank of Mount
Pleasant, for the use of the Bank of Mount Pleasant, in the sum of
2100 dollars as aforesaid.
The defendant demurred to this replication.
The circuit court gave judgment for the plaintiff on the
replication to the second and sixth pleas; from which judgment the
defendant prosecuted this writ of error.
Page 35 U. S. 263
MR. JUSTICE THOMPSON delivered the opinion of the Court.
This case comes up from the Circuit Court of the District of
Ohio upon a writ of error. It is an action of debt upon a single
bill or obligation executed by the plaintiff in error and several
others, bearing date the 20 February. 1826, for the payment of
$2,100 sixty days after date. The declaration is in the usual form.
The defendant pleaded the general issue and five special pleas. To
the second and sixth pleas the plaintiff replied, and the defendant
demurs to the replications, and to the third, fourth and fifth
pleas the plaintiff demurred. Judgment was rendered for the
plaintiff in the court below on both demurrers. The material
question in the case arises upon the second and sixth pleas and the
replications to them; oyer of the obligation having been craved and
spread upon the record. The second plea set up in bar of the
action, that the $2,100 dollars mentioned in the writing obligatory
was a loan made by the plaintiff to Peter Yarnall & Co. (the
first named obligors), and for their accommodation, and that the
writing obligatory was given to the bank for the sole and only
purpose of securing the payment of the said loan at the expiration
of sixty days from the date thereof, and that the defendant and
Richard Symms, Alexander Mitchell and Z. Jacobs, were sureties
only, and were so received and treated by the plaintiffs; that
Peter Yarnall & Co. received, for their own exclusive benefit,
the entire amount of the said $2,100, and were so entered and
charged on the books of the bank, and it is then averred that when
the writing obligatory became due, the plaintiffs, on payment of
$22, as the discount for sixty days then next following, agreed
with the said Yarnall & Co., without the knowledge and consent
of the defendant and his co-sureties, to give a
Page 35 U. S. 264
further credit of sixty days on the said loan, and did give such
further credit, by reason whereof the defendant alleges that he is
discharged from all liability on said writing obligatory.
The sixth plea is substantially the same, with an additional
averment of a further extension of credit on the loan and the
insolvency of Yarnall & Co. To the allegation in the pleas that
the defendant and the others named were sureties of Yarnall &
Co. the plaintiffs replied that the defendant ought not to be
permitted to plead the same, because they say that by the said
writing obligatory the defendant and the other obligors by the said
writing obligatory acknowledged themselves to be jointly and
severally held and firmly bound, as principals, for the payment of
the said $2,100 to the Bank of Mount Pleasant. To this replication
the defendant demurred, and the real question raised by these
pleadings is whether the defendant can set up in his defense that
he was only surety in the obligation for Yarnall & Co., in
direct opposition to his acknowledgement that he executed it as a
principal.
It is unnecessary to enter into the inquiry whether it would not
have been more correct pleading for the plaintiff to have demurred
to the defendant's pleas instead of replying. The defendant craved
oyer of the obligation, and it is spread upon the record and is to
be taken as a part of the declaration. And if the replication
should be considered bad, the plea is open to examination. It is an
established rule in demurrers that although the pleading demurred
to may be defective, the court will give judgment against the party
whose pleading was first defective in substance. The question is
therefore to be considered upon the validity of the plea. If the
defendant can be let in to set up that he was surety only, the
matter alleged is sufficient to exonerate him from liability in the
present suit. It falls within the settled rule of law in relation
to sureties that extending to the principal further time of payment
by a new agreement will discharge the surety. This indeed has not
been denied on the argument. It has been contended that it
appearing expressly on the face of the bond that the defendant
acknowledged himself as principal did not vary the question, for
that all joint and several obligors in a bond are, in judgment of
law, considered principals. This is true as a
prima facie
presumption of law, but is not conclusive upon a party when drawn
in question before a proper tribunal.
But as matter of estoppel at law, it may stand on a different
footing, and is at all events as matter of fact more conclusive.
The doctrine of the law upon this point is plain and
Page 35 U. S. 265
explicit. And it does not require the multiplication of
authorities to show that the rule is well established. In
Huntington v. Havens, 5 Johns.Ch. 26, it is laid down that
a general recital in a deed will not conclude a party, though the
recital of a particular part may estop him. Coke Litt. 352a; Wils.
9. And in
Stow v. Wise, 7 Conn. 220, it is said by the
Supreme Court in Connecticut that when a party has solemnly
admitted a fact by deed under his hand and seal, he is estopped not
only from disputing the deed itself, but every fact it recites. And
in the case of
Carver v.
Astor, 4 Pet. 83, this Court, in speaking of the
effect of recitals and their operation by way of estoppel, said
that the recital of the lease in the deed was not only evidence
between these parties of the original existence of the lease, but
was conclusive evidence of that original existence.
An estoppel has sometimes been quaintly defined the stopping a
man's mouth from speaking the truth, and would seem in some measure
to partake of severity, if not of injustice. But it is in reality
founded upon the soundest principles as a rule of evidence. That a
party has by his own voluntary act placed himself in a situation as
to some matter of fact that he is precluded from denying it, and in
its application to the dealings and contracts of men in the affairs
of human life, it is a salutary practical rule that a man shall not
be permitted to deny what he has once solemnly acknowledged. In
ordinary cases, when sureties sign an instrument without any
designation of the character in which they become bound, it may be
reasonable to conclude that they understood that their liability
was conditional and attached only in default of payment by the
principal. And hence the reasonableness of the rule of law which
requires of the creditor that his conduct with respect to his
debtor should be such as not to enlarge the liability of the surety
and make him responsible beyond what he understood he had bound
himself. But when one who is in reality only surety is willing to
place himself in the situation of a principal by expressly
declaring upon his contract that he binds himself as such, there
cannot be any hardship in holding him to the character in which he
assumes to place himself. As to that particular contract, he
undertakes as a partner with the debtor, and has no more right to
disclaim the character of principal than the creditor would have to
treat him as principal if he had set out in the obligation that he
was only surety.
These observations are only made for the purpose of showing
there is no hardship in the case, for it is most generally from the
hardship of particular cases that attempts are
Page 35 U. S. 266
made to innovate upon general principles. And courts sometimes
too readily yield to considerations of this kind to attain what may
be considered the abstract justice of the particular case before
them.
But admitting that although the defendant has upon the face of
the obligation become bound as principal, yet a court of equity
might allow him to set up that he was only surety, and let him in
to all the protections that are usually extended to sureties; the
present case is to be governed by rules applicable to proceedings
in courts of law, and upon this point the rule seems to be well
settled that where principal and surety are bound jointly and
severally in a bond although there is no express admission on the
face of the instrument that all are principals, yet the surety
cannot aver by pleading that he is surety only. In the case of
Rees v. Barrington, 2 Ves.Jr. 542, Lord Loughborough held
that when two are bound jointly and severally in a bond, they both
appear as principals, and the surety cannot aver that he is bound
as surety, but if he could establish that at law, the principle at
law is that he has an interest in the condition, and if the time of
payment is extended, that totally defeats the condition, and the
consequence is that the surety is released from his engagement.
This point is directly adjudged in the case of
People v.
Jansen, 7 Johns. 337. The question there turned entirely upon
the pleadings, and the court let in the defense which discharged
the surety upon the sole ground that it appeared upon the face of
the bond that the ancestor of the defendant was surety only;
otherwise the defendant would have been estopped by the bond from
alleging that he was surety only. But the fact appearing upon the
face of the bond, the defense might be set up at law as well as in
equity. The case of
Paine v. Packard and Munson, 13 Johns.
174, although the court admitted the surety to set up by plea at
law matter in discharge of his liability, is very distinguishable
from the present case. That was a suit upon a promissory note, and
the court, upon demurrer, sustained a plea interposed by the
surety, alleging a special request made to the plaintiff to
prosecute the principal, and averring a loss of the debt by reason
of his neglect to prosecute. The plea in that case was sustained on
the ground that there was no conflict between the note and the
averments in the plea. For, said the court, the averments and facts
stated in the plea were not repugnant or contradictory to the note.
That the fact of Packard having been surety only is fairly to be
presumed to have been known to the plaintiff, and he was in law and
equity bound to
Page 35 U. S. 267
use due diligence against the principal in order to exonerate
the surety. The plea averred that Packard signed the note as
surety, and the demurrer admitted the facts. Had it appeared upon
the face of the note that Packard signed it as principal, there is
no reason to conclude that the court would have let in the defense
then set up. It could not in such case have been said that there
was no repugnancy between the averments in the plea and the note,
which was the ground upon which the plea was sustained. But this
case has not, under any view of it, relaxed the rule with respect
to bonds or sealed obligations; which are not open to an inquiry
into the consideration.
The case of
Paine v. Packard was a suit between the
original parties to the note -- the payee against the makers.
Packard, although surety, signed the note as one of the makers, and
between the original parties to a note, the consideration may be
inquired into. In the case of
King v. Baldwin, 2 Johns.
Ch. 556, the chancellor said:
"I do not understand the supreme court as holding in the case of
Paine v. Packard that the averment would be admitted in
direct opposition to the terms of the note; that such evidence
would be entirely inadmissible. And as to this proposition, we do
not understand there was any difference of opinion between the
supreme court and the chancellor. The point of difference between
the two courts, related to the effect which a noncompliance by the
creditor, with the request of the surety to prosecute the
principal, would have upon the liability of the surety, the
chancellor holding that in order to discharge the surety, there
must be some new agreement between the debtor and creditor, varying
the contract by which the surety originally became bound."
The court of errors, on an appeal, 17 Johns. 384, from the
decree of the chancellor in the case of
King v. Baldwin
may be considered in some measure as affirming, by a divided court
(which very much weakens the authority of the case) the decision of
the supreme court in
Paine v. Packard. We are under no
necessity, however, of expressing any opinion upon the point of
difference between those courts. That point has no bearing upon the
question now before this Court.
The case of
Bank of Steubenville v. Administrators of
Carrol, 5 Hammond 207, in the Supreme Court of Ohio, has been
relied upon to support the pleadings and defense set up in this
case. But that case differs from the present essentially in the
main point. No oyer of the bond is there spread upon the record, so
that it does not appear upon the face of the bond that the
defendant signed as principal. The plea alleged
Page 35 U. S. 268
that the defendant signed as surety, and this the demurrer
admits, and the fact of surety being assumed as admitted, the court
only decided that if any change be made between the creditor and
the principal to the prejudice of the surety, it discharges the
surety, and that this defense may be set up at law as well as in
equity. That such was the ground on which this case stood is
evident from the manner in which the question is put by the counsel
to the court. The plea, said they, alleges that the defendant
signed and sealed the obligation as surety, and not as principal,
and this is admitted by the demurrer, and therefore the inquiry is
presented free from all embarrassment,
viz., is the surety
discharged by the creditors giving the principal further credit or
time of payment. And this would seem to be the light in which the
case was viewed by the court. And this conclusion is strengthened
by the circumstance that the authorities referred to in support of
the decision go to show that a court of law as well as a court of
equity can afford relief to the surety when the facts upon which
such relief rests are properly before the court. And in this view
of the case, it is not at variance with the admitted rule in courts
of law. But this does not meet the difficulty in the present case.
The fact of the defendant's being surety is not only not admitted,
but it is alleged that he is estopped from setting it up by his own
admission in his obligation that he is principal. And we are not
aware of any case giving countenance to such a defense at law under
such circumstances.
The fourth plea is admitted to be bad, and the objections to the
third and fifth are substantially the same as to the second and
sixth. They attempt to set up that the defendant was only surety in
the obligation. But this defense is equally precluded here by the
estoppel, as in the other pleas.
The judgment of the circuit court is accordingly
Affirmed with costs.
