to be in satisfaction of the note if paid. The cheque is not paid when it comes due. The defendant is discharged from his liability on his indorsement, on the ground that presumptively the plaintiff agreed to extend the time of payment by the maker of the note for six days, and that there is nothing in the facts to overcome the presumption.1 Again: The defendant is indorser, and the plaintiff holder, of a bill of exchange overdue, upon which the usual steps have been taken. After the bill becomes due the plaintiff takes part payment of the acceptor, and agrees to take a new acceptance from him payable at a future day for the rest, meantime keeping the bill in suit as security. This is presumptively an agreement to give time, and there being no evidence to rebut the presumption the defendant is discharged."

As we have seen in the preceding chapter, the presumption appears to arise, if the collateral taken is due at a time subsequent to that of the paper so secured, whether the amount due in the collateral is as great as, or greater than, that of the paper secured. But the presumption is probably stronger where the amount is the same. Where the sum payable in the collateral is less than in the other, or where the new security is of a different character, as where the holder takes a mortgage for the payment of the sum thereafter, it is doubtful if any presumption for extension of time of the note or bill arises. So where the new security is not given in place or on account of the paper in suit, but as a mere pledge, the title being retained by the

1 Okie v. Spencer, 2 Whart. 253; L. C. 584.

2 Gould v. Robson, 8 East, 576. The later case of Pring v. Clarkson, 1 B. & C. 14, apparently contra, was not well decided, and has generally been repudiated. See Kendrick v. Lomax, Cromp. & J. 405; Okie v. Spencer, supra.

8 See Michigan Bank v. Leavenworth, 28 Vt. 209; Atkinson v. Brooks, 26 Vt. 569.

4 See United States v. Hodge, 6 How. 279.

debtor, so that the creditor in taking the security is a mere trustee or agent of the debtor for collecting it and applying the money on the note or bill in suit, the presumption, it seems, does not arise.1

Again, it is not enough that there is an agreement for extension of time (or for discharge); the agreement must, as has already been stated, have been valid, in order to work a discharge of the indorser. For example: The defendant is indorser and the plaintiffs are holders of a bill of exchange, the steps for fixing liability having been duly taken. Afterwards one of the plaintiffs applies to the drawer of the bill for payment, and threatens to sue immediately if an arrangement is not made to pay the bill. The drawer then proposes to the plaintiff that if the plaintiff will indulge him four or five weeks, he himself will certainly pay the bill. The plaintiff agrees, and does not inform the defendant, but the drawer does not pay the bill, though the time of indulgence has passed. The defendant is not discharged, the agreement being without consideration.2

Indeed it seems that the indorser is not discharged by an agreement for delay, though the agreement is valid, if still the indorser could not have had recourse against the party to whom the indulgence was given, for between those two the situation is not one of principal and surety. Such would be the case where the party granted indulgence was a bankrupt in law at the time. For example: The defendant is indorser, and the plaintiff holder, of a promissory note, steps being duly taken. At the maturity of the note. the plaintiff enters into a valid, binding agreement with the maker, then a discharged bankrupt, without the defendant's knowledge, by which the plaintiff agrees not to sue the maker for two months. The defendant is not dis

1 Austin v. Curtis, 31 Vt. 64.

2 McLemore v. Powell, 12 Wheat. 554; L. C. 589.

charged, because the indulgence could not prejudice him, the defendant having no recourse under the bankruptcy laws against the maker.1

Where the agreement, of whatever nature, made with the principal debtor is in writing, as usually it is, the reservation of rights must be in writing also, by reason of the rule which excludes parol evidence to vary a written contract.2 There appears to be no reason, however, why the whole agreement for discharge or giving time, together with the reservation of rights, where permissible, may not

be oral.

There can be no reservation of rights either in the cases already referred to, where there has been a payment, or where the party attempting to reserve would be liable over to the party discharged or indulged if that one were sued by the later party; or in any case in which the rights of the indorser might be prejudiced if he were to be held as still liable. A case of the kind would occur where the holder surrendered securities to which the indorser would be entitled on payment, a case already referred to.

§ 4. REQUEST TO SUE.

Another important rule of suretyship prevails in many States, but not in all, to wit, that the surety may request the creditor, when the time of performance comes on, to bring suit; failing to heed which request will have the effect to discharge the surety to the extent of any detriment he might thereby sustain, as where there was property of the debtor within reach at the time, which afterwards disappeared. That rule, it seems, applies to

1 Tiernan v. Woodruff, 5 McLean, 350; L. C. 593.

2 Hagey v. Hill, 75 Penn. St. 108.

3 Id.; Mayhew v. Boyd, 5 Md. 102.

indorsers; that is, an indorser whose liability has been fixed, or who had waived the taking of the usual steps, may, where the rule just stated prevails, require the holder to sue any prior party bound to pay, on pain of discharging such indorser to the extent of any loss he may sustain by failing to sue as requested.

§ 5. ACCOMMODATION CONTRACTS.

The foregoing doctrines govern not only indorsement, but all other engagements which are on their face, or are known to be, secondary, such as accommodation undertakings. For example: The defendant is one of two joint makers of a promissory note, having joined for accommodation, of which fact the plaintiff, holder of the note, was aware when he took it. Without the defendant's consent he has made a binding agreement with the principal joint maker for an extension of time. The defendant is discharged.1

Formerly, indeed, the situation of an accommodation party to a note, bill, or cheque was likened in general to that of an ordinary surety. But the later authorities show that the likeness is not general; they declare that an accommodation acceptor or maker will not be discharged by any agreement, however valid, to extend the time of payment or to give a discharge from liability to the party for whom the accommodation was given, where that party is liable under a distinct and different kind of contract, such as an indorsement. It makes no difference that the agreement was made with knowledge of the accommodation, at least if the holder had no notice of the fact when he took the paper. For example: The defendant accepts a bill of exchange for the accommodation of the

1 Barron v. Cady, 40 Mich. 259.

drawer, and the plaintiff becomes holder of the bill in due course, for value, and without notice of the accommodation. Afterwards he is informed of the nature of the acceptance, and later still enters into a valid agreement not to sue the drawer, discharging him from liability. That does not discharge the defendant.1

That proceeds upon the ground that the holder is entitled to treat the parties as liable according to the contract which they have actually made. The plaintiff, in such a case as that of the example, has presumably bought the paper in reliance upon the contracts as they appear thereon, and that has given to him a right which cannot be taken away without his consent. Consent he has not given. Indeed the case would appear to be the same in principle, though he had had knowledge of the accommodation when he bought the paper, for it would still be presumable that he bought it relying upon the several contracts as they stand on the paper. And so the modern authorities hold.2

§ 6. AGREEMENT FOR TIME WITH STRANGER.

An agreement for time or the like, if made with one not a party to the paper, and not with the person in whose favor it is made, would not in any case, it is held, have the effect to discharge later parties. The holder has, indeed, in such a case bound himself not to sue the particular party; but that party could not enforce the agreement or set it up in bar of an action against him.

1 Farmers' Bank v. Rathbone, 26 Vt. 19; L. C. 622. See note, p. 158. 2 Id.; Fentum v. Pocock, 5 Taunt. 192 (overruling Laxton v Peat, 2 Camp. 185, and Collott v. Haigh, 3 Camp. 281); Price v. Edmonds, 10 B. & C. 578, 584, Nichols v. Norris, 3 B. & Ad. 41; Harrison v. Courtauld, Id. 36; 3 Kent, 104.

3 Frazer v. Jordan, 8 El. & B. 303.