Part perform ance. 2822. The acceptance, by a creditor, of anything in partial satisfaction of an obligation, reduces the obligation of a guarantor thereof, is the same measure as that of the principal, but does not otherwise affect it. NOTE.-Ogden vs. Rowe, 3 E. D. Smith, p. 312; see note to Sec. 2819; Ellis vs. McCormick, 1 Hilt., p. 313. 2823. Mere delay on the part of a creditor to proceed against the principal, or to enforce any other guarantor. remedy, does not exonerate a guarantor. Delay of creditor does not discharge Guarantor indemni fied by the debtor, not 2824. NOTE.-Williams vs. Townsend, 1 Bosw., p. 411; Albany Dutch Church vs. Vedder, 14 Wend., p. 165; Sailly vs. Elmore, 2 Paige, p. 497; Daniels vs. Patterson, 3 N. Y., p. 47; Scroepwell vs. Shaw, 3 N. Y., p. 446, aff"g S. C., 5 Barb., p. 580; Goldsmith vs. Brown, 35 Barb., p. 484; Miller vs. Stem, 2 Penn. St., p. 286; Shook vs. State, 6 Ind., p. 113; Nichols vs. McDowell, 14 B. Monr., p. 6; Hoyt vs. French, 4 Foster, N. H., p. 198; Hunter vs. Jett, 4 Rand., p. 104; Sawyer vs. Patterson, 11 Ala. (N. S.), p. 523; Clarke Co. vs. Covington, 26 Miss., p. 470; Hunt vs. Bridgham, 2 Pick., p. 581. It has been held that a mere neglect to sue the principal will not exonerate a surety.-Humphreys vs. Crane, 5 Cal., p. 173. And neglect to sue a contractor for his first breach of contract does not operate so as to release his sureties for subsequent breaches.-City of Sacramento vs. Kirk, 7 Cal., p. 419; see, also, Sec. 2807. A guarantor, who has been indemnified by the principal, is liable to the creditor to the extent of exonerated the indemnity, notwithstanding that the creditor, without the assent of the guarantor, may have modified the contract or released the principal. Discharge of principal by act of law does not discharge guarantor. NOTE.-Moore vs. Paine, 12 Wend., p. 123; Pratt vs. Adams, 7 Paige, p. 615; Ten Eyck vs. Holmes, 3 Sandf. Ch., p. 428; Smith vs. Steele, 25 Verm., p. 427. 2825. A guarantor is not exonerated by the discharge of his principal by operation of law, without the intervention or omission of the creditor. NOTE.-Bowery Savings Bank vs. Clinton, 2 Sandf., p. 113; Storm vs. Waddell, 2 Sandf. Ch., p. 494. CHAPTER II. SURETYSHIP. ARTICLE I. WHO ARE SURETIES. II. LIABILITY OF SURETIES. V. LETTER OF CREDIT. ARTICLE I. WHO ARE SURETIES. SECTION 2831. Surety, what. 2832. Apparent principal may show that he is surety. what. 2831. A surety is one who at the request of an- Surety, other, and for the purpose of securing to him a benefit, becomes responsible for the performance by the latter of some act in favor of a third person, or hypothecates property as security therefor. NOTE. The common definition of a surety (see Webster's, Wharton's, and Burrill's Dictionaries,) cannot be distinguished from that of a guarantor, and clearly covers the case of an indorser. But an indorser is not necessarily a surety (Pitts vs. Congdon, 2 N. Y., p. 352; Hurd vs. Little, 12 Mass., p. 502), nor is a guarantor, although their rights are in some important respects alike. The distinction between a surety and a mere guarantor is, that the former enters into the contract primarily for the benefit of the debtor, while with the latter the benefit of the principal debtor is no material part of the inducement to him to contract. "Hypothecates property as security therefor."-Vartie vs. Underwood, 18 Barb., p. 561; Gahn vs. Niemcewicz, 11 Wend., p. 312; 3 Paige, p. 614; see note to Sec. 2787, and cases cited therein. 2832. One who appears to be a principal, whether by the terms of a written instrument or otherwise, may show that he is in fact a surety, except as against per sons who have acted on the faith of his apparent character of principal. Apparent principal may show that he is surety. 7 NOTE. So held as between the parties themselves (Rouse vs. Whited, 25 N. Y., p. 170; Barry vs. Ransom, 12 id., p. 446; Griffiths vs. Reed, 21 Wend., p. 502); and so as to third persons in equity.-Hollier vs. Eyre, 9 Clark & Fin., p. 1; Davies vs. Stainbank, 6 De G., M. & G., p. 679. At common law the rule excluding oral evidence to vary a written contract excluded evidence to show that the apparent principal was a surety (Harrison vs. Courtauld, 3 B. & Ad., p. 36; Fentum vs. Pocock, 5 Taunt., p. 192; see, however, Artcher vs. Douglas, 5 Denio, p. 509); and upon the authority of these cases alone—the decisions in equity not being cited by counsel on either side-the same rule has been followed in a recent case in the State of New York.-Howard Banking Co. vs. Welchman, 6 Bosw., p. 280. The fusion of law and equity in this State has superseded the common law rule. In England, since equitable defenses have been admitted in common law Courts, the equitable rule has been followed and defined as in the text, by all the Judges.-Pooley vs. Harradine, 7 El. & Bl., p. 431; Greenough vs. McClelland, 2 El. & El., p. 424; 6 Jur. (N. S.), p. 772; 30 L. J. (Q. B.), p. 15; Taylor vs. Burgess, 5 Hurlst. & N., p. 1. And see Mohawk and Hudson Biver R. R. Co. vs. Costigan, 2 Sandf. Ch., p. 306; Artcher vs. Douglas, 5 Denio, p. 509. Compare Casey vs. Brabason, 10 Abb. Pr., p. 368; Gahn vs. Niemcewicz, 11 Wend., p. 312; Elwood vs. Diefendorf, 5 Barb., p. 398; Chester vs. Bank of Kingston, 16 N. Y., p. 336. The same rule is established in Massachusetts.-Weston vs. Chamberlin, 7 Cush., p. 404; Carpenter vs. King, 9 Metc., p. 511; Harris vs. Brooks, 21 Pick., p. 195. Limit of surety's ARTICLE II. LIABILITY OF SURETIES. SECTION 2836. Limit of surety's obligation. 2836. 2837. Rules of interpretation. 2838. Judgment against surety does not alter the relation. 2839. Surety exonerated by performance or offer of per formance. 2840. Surety discharged by certain acts of the creditor. A surety cannot be held beyond the express obligation. terms of his contract, and if such contract prescribes a penalty for its breach, he cannot in any case be liable for more than the penalty. NOTE. "Surety cannot be held beyond the express terms of his contract."-Ludlow vs. Simond, 2 Caines Cas., p. 1; Walsh vs. Bailie, 10 Johns., p. 180; Penoyer vs. Watson, 16 id., p. 100; see, also, Manhattan Gaslight Co. vs. Ely, 39 Barb., p. 174; 25 How. Pr., p. 237; Schloss vs. White, 16 Cal., p. 65; People vs. Buster, 11 Cal., p. 215; People vs. Breyfogle, 17 Cal., p. 504. "Nor liable for more than the prescribed penalty."-Clark vs. Bush, 3 Cow., p. 151; Tunison vs. Cramer, 2 South., p. 498; see Fairlie vs. Lawson, 5 Cow., 424; Rayner vs. Clark, 7 Barb., p. 581; Dickerson vs. Cook, 3 Duer, p. 324. Rules of interpreta 2837. In interpreting the terms of a contract of suretyship, the same rules are to be observed as in the tion. case of other contracts. NOTE.-Gates vs. McKee, 13 N. Y., p. 232. See, also, Ruggles vs. Holden, 3 Wend., p. 216; Rochester City Bank vs. Elwood, 21 N. Y., p. 88. against 2838. Notwithstanding the recovery of judgment Judgment by a creditor against a surety, the latter still occupies the relation of surety. NOTE.-Lafarge vs. Herter, 11 Barb., p. 159; and see S. C., 9 N. Y., p. 241; Hubbell vs. Carpenter, 5 Barb., p. 580; and see S. C., 5 N. Y., p. 171; compare Bangs vs. Strong, 7 Hill, p. 250; Schroeppell vs. Shaw, 3 N. Y., p. 446; aff'g S. C., 5 Barb., p. 580; Bay vs. Tallmadge, 5 Johns. Ch., p. 305; Boughton v. Bank of Orleans, 2 Barb. Ch., p. 458; rev'g S. C., 2 id., p. 484; Storms vs. Thorn, 3 Barb., p. 314. But see, to the contrary, Jenkins vs. Robertson, 2 Drewry, p. 351. surety does not alter the relation. exonerated 2839. Performance of the principal obligation, or Surety an offer of such performance, duly made, whether by the principal or by another person, exonerates a surety. NOTE." By the principal."-Elmendorph vs. Tap- by per- formance perform ance. Surety discharged by certain acts of the creditor. 2840. A surety is exonerated 1. In like manner with a guarantor; 2. To the extent to which he is prejudiced by any act of the creditor which would naturally prove injurious to the remedies of the surety or inconsistent with his rights, or which lessens his security; or, 3. To the extent to which he is prejudiced by an omission of the creditor to do anything, when required by the surety, which it is his duty to do. NOTE.-Subd. 2.-Schroeppell vs. Shaw, 3 N. Y., p. 446, aff'g S. C., 5 Barb., p. 580; Gen. Steam Nav. Co. vs. Rolt, 6 C. B. (N. S.), p. 550; Pledge vs. Buss, H. R. V. Johns., p. 663. Subd. 3.-The rule seems to be that if a surety requests the creditor to proceed against the principal at a time when the latter is solvent, and the creditor neglects so to do, and the principal subsequently becomes insolvent, the surety is exonerated.—King vs. Baldwin, 17 Johns., p. 384; Remsen vs. Beekman, 25 N. Y., p. 552. And in the last mentioned case it is held that want of notice to the creditor of facts tending to show that the delay was likely to prove injurious to the surety, makes no difference. It has been said, in some cases, that a creditor is bound to deal in the highest good faith with a surety, and must, if consulted by one intending to become a surety for any claim of such creditor, actual or possible, make a full disclosure to him of all circumstances which would be likely to affect his determination.-Owen vs. Homan, 3 Macn. & G., p. 378. See Railton vs. Mathews, 10 Clark & F., p. 934; Pidcock vs. Bishop, 3 B. & Cr., p. 605; Etting vs. Bank of U. S., 11 Wheat., p. 59. But on a review of most of these authorities, this doctrine has been denied.-North British Ins. Co. vs. Lloyd, 10 Exch., p. 523; Pledge vs. Buss, H. R. V. Johns., p. 663. See Hamilton vs. Watson, 12 Clark & F., p. 109; Wythes vs. Labouchere, 5 Jur. (N. S.), p. 499. ARTICLE III. RIGHTS OF SURETIES. SECTION 2844. Surety has rights of guarantor. 2845. Surety may require the creditor to proceed against the principal. |