Sprigg v. Bank of Mount Pleasant (35 U.S. 257)/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 20th of February 1826, for the payment of 2100 dallars, 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 replies, and the defendant demurs to the replications; and to the third, fourth and fifth pleas the plaintiff demurs. 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 sets up in bar of the action, that the 2100 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 2100 dollars, 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 piaintiffs, on payment of 22 dollars, 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 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 reply: 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 2100 dollars to the Bank of Mount Pleasant. To this replication the defendant demurs; and the real question raised by these pleadings is, whether the defendant can set up in his defence 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 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. 352, a; Wils. Rep. 9. And in Stow v. Wise, 7 Conn. Rep. 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 Peters 83, this court, in speaking of the effect of recitals and their operation by way of estoppel, say, 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 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. Jun. 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 dase of The People v. Jansen, 7 Johns. 337. The question there turned entirely upon the pleadings; and the court let in the defence 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 defence 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, say the court, the averments and facts stated in the plea are 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 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 defence 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 be tween 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 says: 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 non-compliance 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 The 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 defence 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 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, that it discharges the surety, and that this defence 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, say 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 defence 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 defence is equally precluded here by the estoppel, as in the other pleas.

The judgment of the circuit court is accordingly affirmed with costs.