torney was given to confess judgment for the balance, but expressly without prejudice to any security Stubbs now holds for the said sum, or any part thereof. The surety, being afterwards sued, filed the bill, and moved for an injunction. LORD CHANCELLOR [ELDON]. The law in this case is perfectly clear. The circumstances upon the face of the bond are these: The defendant, a banker, unwilling to give Thomas Boultbee credit to the amount he wished upon his own personal security, or upon the credit and security of the different bills and notes which he should pay into the bank in the course of his dealing, required a bond for £10,000 from him, and from his brother, as surety, under which the surety was to be liable only to the extent of £6,000, if upon the account that amount should be due. On the settlement of accounts a balance of £9,500, appearing to be due, it is clear that, if Thomas Boultbee, the principal debtor, had given a mortgage for £3,500, that security might have been. given and taken, without prejudice to the bond; but a mortgage was given for £4,000, reducing the debt therefore below £6,000, and as to the residue of the debt it was provided that it should be paid by certain instalments, fixed by the instrument. The consequence of this transaction in equity is that, the surety continuing liable for the sum of £5,500, remaining due upon the settlement of accounts, and the creditor agreeing with the principal debtor to postpone his remedy, changing his immediate right to sue to a right to call for certain installments, the effect of that agreement is that in equity the right against the surety is gone. It is vain to say the indulgence to the principal by taking the mortgage, and giving time, may be for the benefit of the surety. It is in most cases for the advantage of the surety; but the law takes so little notice of that circumstance that, if the acceptor of a bill becomes bankrupt, the holder must give notice to the drawer, as another person has no right to judge what are his remedies, and the original implied contract being that, as far as the nature of the original security will admit, the surety, paying the debt, shall stand in the place of the creditor. The cases that have been alluded to, and there is a great variety of them, are those of a creditor entering into a composition with the person liable in the first instance, with a stipulation that it shall not prejudice his remedies against others, who are liable as sureties. The ordinary case is that of compositions upon bills. The answer given is that by the agreement, reserving the creditor's remedy against sureties, the situation of the surety is not varied; and this doctrine has been held at law as well as here. But I agree that a stipulation of that kind is in many cases so very absurd that it must be seen plainly; and the true question is whether these words in the warrant of attorney, "without prejudice to any security," mean that this bond was to be saved against the surety, the demand upon which was intended to be arranged by that very transaction, or whether the meaning of those words is not that, the principal debtor being in the habit of giving securities to the creditor from time to time, this transaction should liquidate the matter of the bond, but should not prejudice the banker's right as to other securities in his hands. If that is the meaning of this transaction, it puts an end to the right against the surety. If, on the other hand, the object was to give as extensive a remedy as was given in Mr. Burke's Case (cited by the Lord Chancellor, ante, 6 Ves. 809, Ex parte Gifford), then that case and many others must govern this. BAU.& DIL.B.L. My opinion is that it was not intended to save this bond among other securities, the saving of which securities will give a reasonable interpretation to these words in the warrant of attorney. 1811, January 23. The motion to dissolve the injunction was renewed. LORD CHANCELLOR [ELDON]. This question is now presented to me in quite a new point of view. Upon the former occasion it was argued as if the immediate right of action against Thomas Boultbee, the principal debtor, was gone. It is clear that, if he might have been forthwith sued, and execution had against him as the fruit of that suit, the surety is not injured; and, on the other hand, that in general, if time is given to the principal, the surety is discharged. The objection to the reserve of remedy against the surety consists in the interest the principal has that the surety shall not be applied to. It is said that the principal cannot by contract deprive himself of the benefit derived from that forbearance; and there certainly have been decisions that, if time is given to the principal, reserving the right to go against the surety, the principal cannot raise the objection upon his right to time as against the surety, as there is the contract of the principal, arising out of the contract for reserve against the surety, that the latter, if the creditor goes against him, shall not be deprived of the benefit of the contract as against the principal. That was Burke's Case, as to which I will look. at the note I have. If the contract for reserve against the surety prevents his remedy against the principal, that contract for reserve will not do; but the question is whether it does in law deprive the surety of that benefit. It may in many cases be a very rational provision that the principal shall have time, provided he can have it without prejudice to the benefit of the remedy against the security, which, though worth nothing at present, may in a year's time be very valuable; and the creditor may very reasonably mean to secure the benefit of that contingency. 1811, April 11. The Lord Chancellor granted the injunction. FIRST NAT. BANK v. DAVIS et al. (Kansas City Court of Appeals, Missouri, 1901. 87 Mo. App. 242.) SMITH, P. J. Defendants, John Davis as principal and Patrick Davis as surety, executed their promissory note to the plaintiff bank for $1,152, due in 12 months after date, and contemporaneously with the execution of said note the defendant John Davis executed to his codefendant and surety Patrick Davis a deed of trust on his land to secure the latter "against any loss he may sustain by reason of his said suretyship." The value of the security so given was in excess of the amount of the debt. When the debt fell due, neither of the defendants were in a condition to pay it. The time of payment was extended, but whether or not with the consent of the surety the evidence is sharply in conflict. Both of the defendants, after the giving of the note and mortgage, became insolvent. The object of this suit was to recover judgment against the principal debtor on the said promissory note, and to have said deed of trust declared a lien on the land therein described as of the date thereof, for the purpose of securing to the said creditor the payment of the amount. adjudged in said promissory note, to foreclose the equity of redemption of the surety and his wife, and that the same be sold clear of the right of the said surety under said trust deed for the purpose of satisfying the said judgment, etc. The question here for decision is whether or not the creditor can have recourse in equity to satisfy his debt to the mortgage security taken by the surety from the debtor for his indemnity. * The property of the principal debtor belongs to the creditor, which, under certain circumstances, the latter may subject in the hands of the surety to the satisfaction of his debt. The holder of such indemnity is a trustee for the creditor. *. * If the debtor gives his surety indemnity, the creditor may avail himself of it by subrogation, even though in the first instance it was unknown to him. *It is, as has been stated, at once clothed with a trust character and the creditor immediately acquires a right and interest in it that cannot be defeated by the surety. * * * * * But suppose it to be true, as the debtor here contends, that the creditor did extend or enlarge the time of payment of the debt; did that have the effect to discharge the surety and withdraw the security from the operation of the trust in which it had been placed? Where a surety, as here, is fully indemnified in property, he is estopped to set up against the creditor the defense that the time of payment has been extended in favor of the principal without his consent, because such surety is the virtual principal, and ought to be bound by every enlargement of the time of payment quite as much, or perhaps more than the principal debtor. A surety who has received an indemnity equal to the debt for which he is bound, and which he may, as here, convert into money, stands in about the same position as a surety who has received of the principal an amount of money. In such case the surety is a principal, and cannot be permitted to claim the privilege of a strict surety without indemnity. * And it is certainly clear that he can make no such defense while he holds on to the security. This is not a case where a stranger has chosen to bestow upon the surety a benefit and a preference from considerations personal, in order to make good to him exclusively any loss to which he might be subjected in consequence of his suretyship for another. Of course, in such case the creditor could not, upon any ground of priority in interest, claim. any share or interest in the benefit of such benevolence. Accordingly we think that the decree, which was for the plaintiff in conformity to the prayer of his petition, to which allusion has been made, should be affirmed; and it is accordingly so ordered. concur. * * * * * SECTION 2.-DISCHARGE OF PRINCIPAL DEBTOR JONES v. WARD. (Supreme Court of Wisconsin, 1888. 71 Wis. 152, 36 N. W. 711.) 1 LYON, J. Briefly stated, the case, so far as there is any controversy, is as follows: The defendant became surety for Cook's debt to the plaintiff, and Cook indemnified him by executing to him a chattel mortgage on certain property. The plaintiff released Cook from liability for such debt, without the consent of the defendant. Afterwards, defendant sold his security to McArthur, without the consent of the plaintiff, for the consideration (as the circuit court found) of $475. The only question in the case is: Did the release of Cook also release the defendant, his surety? The general rule undoubtedly is that the release of the principal debtor, without the consent of the surety, releases the surety. But if the surety is fully indemnified against loss by reason of having become such, a release of the principal without payment of the debt does not release the surety. This is the rule laid down in Fay v. Tower, 58 Wis. 286, 16 N. W. Rep. 558, as applied to a case in which an unauthorized extension of credit had been given to the principal. Manifestly, the same rule should be applied where the surety is absolutely released from the debt. The rule is founded upon a very plain principle of justice. To illustrate: A. becomes security for B. to C. for the payment of $1,000. B. puts, property into the hands of A., worth $1,000, to indemnify him against loss because of the obligation thus assumed by him. C. releases B., the principal debtor, from all liability on account of the debt, but receives no payment thereon. A., the surety, then sells the pledged property for $1,000 and retains the proceeds. It is entirely reasonable and just that, notwithstanding the release of the principal debtor, C. should have his remedy against the surety for the amount realized by him in the sale of the pledged property. Such, we think, is the law. It seems to us that we have here just such a case. The judgment of the circuit court must be affirmed. TROTTER v. STRONG. (Supreme Court of Illinois, 1872. 63 Ill. 272.) WALKER, J. This was an action of debt, brought by appellant in the Morgan circuit court against appellee, Charles D. Roberts, George W. Graves and Charles Chappell, on a judgment previously recovered in that court by appellant against appellee and his codefendants. The amount of the recovery was $2,039.58. There was no service, but appellee, Strong, appeared to the action and filed a plea that the foundation of the judgment sued upon was a promissory note given by defendants to plaintiff, and that Graves and Roberts were the principal debtors, and Chappell and appellee were only sureties thereon; that since the rendition of the judgment, and before the commencement of 1 The statement of facts is omitted. the suit, without notice to or the consent of, appellee, and without his subsequent ratification, entered into an agreement with Roberts, one of the principal debtors in the note and judgment, that, in consideration that he would pay $500 on the judgment, and would give security for its payment, he would never collect any portion of the judgment from him, and that the security was given according to the agreement; that Roberts was then insolvent; that appellee was and is thereby released from further liability. To this plea appellant filed a replication admitting the agreement by plaintiff not to enforce the judgment against Roberts, but averred that he did not agree that he would collect nothing more from the other defendants to the judgment, or to release them from its payment. To this replication appellee filed a demurrer, which was sustained by the court, and appellant standing by his replication, the court rendered judgment in favor of appellee, from which this appeal is prosecuted. And it is urged that the court should have sustained the demurrer to the plea, and not to the replication. It is urged that, as no release was executed, it had no binding effect on the parties to the agreement, and appellee is in nowise prejudiced by the arrangement. Had this contract been made in reference to the note upon which the judgment was recovered, there could be no doubt that it would have operated as a discharge of the sureties. In such cases, an extension of time by a binding agreement, capable of being enforced, not to sue, when made with the principal debtor without the consent of the sureties, operates to discharge them; or, such an agreement with the principal that the creditor will receive a part only of his debt, and would not sue for the remainder, would produce the same result. When a creditor receives a part of the claim from the principal debtor, under such circumstances as would constitute a satisfaction of his liability, the surety must be discharged. In such a case, the debt is satisfied, and the surety cannot be liable for the payment of a debt that is discharged. If he were held liable, he could not recover against the principal, because he is discharged from the debt and owes the creditor nothing, and the surety could not recover for money paid to the use of the principal, as he owes nothing, and when the surety makes the payment it cannot be for use of the principal debtor. To enforce payment from the surety under such circumstances, would be to deprive him his legal right to be reimbursed for the money thus paid. It would change the relations of principal and surety, deprive the latter of a legal right, and would operate unjustly. When the creditor, therefore, without the assent of the surety, discharges the principa! debtor, it must follow that the surety can no longer be held liable. His liability cannot survive that of his principal, unless it be by his own agreement. It is, however, urged that in this case there was no consideration to support the agreement. When Roberts gave Brown as surety for the payment of the $500, the contract was consummated, and the fact that appellant had obtained security for that sum, was a consideration sufficient in law to support the agreement. Had he sued on the note given by Roberts and Brown, they could not have interposed as a defence the want of consideration. The agreement to discharge Roberts from paying any further sum on the judgment, could have been effectually replied to such a defense. And should appellant attempt |