Neff's Appeal , 9 Watts & Serg. 36 ( 1845 )

The opinion of the Court was delivered by

Kennedy, J.

A number of judgments, of various dates, in favour of different persons, had been obtained against Isaac Neff and Neff and Walker, which bound their respective real estates, which were afterwards sold by the sheriff by virtue of judicial process sued out on some one or more of said judgments. The money arising from the sale was brought into court by the sheriff and not being sufficient to satisfy all the judgments, a contest arose about the appropriation of it. Among the judgments which bound the property sold, was one in favour of Patrick Givin’s executors, assigned to Rosanna Wilcox, upon which a balance of debt and interest, amounting to §2203.92, remained due and unpaid, besides §4.35 costs. This judgment was joint against David Miller, S. Miller and Isaac Neff, Isaac Neff being admitted to be a mere surety for the Millers. The judgments posterior in date to it were, in amount, more than sufficient to absorb all the residue of the money after paying the judgments prior thereto, without applying any portion thereof to it. It was offered also to be proved in the court below, before the auditor appointed by it to ascertain the facts, and to make and report the appropriation that .ought in his opinion to be made of the money, that the Millers, the principals in the judgment, were perfectly solvent, and that their real estate, bound by the judgment, was of amply sufficient value to satisfy the amount thereof. The auditor, however, considering this evidence immaterial, did not receive it, and in this he was sustained by the court, as it approved and confirmed his report. But it was shown that Rosanna Wilcox had released thirty acres, part of a tract of land bound by her judgment belonging to David Miller, one of the principals in it, from the lien thereof, in consideration of the thirty acres having been sold for §1050, a sum equal to the full value of the same, which was agreed to be applied to the payment and discharge of a mortgage of the same amount, which was a prior incumbrance on the whole tract to the lien of her judgment, and that the §1050 were so applied, and the mortgage thereby discharged and satisfied. Isaac Neff as it seems, had sold other land bound by the judgments against him to a John Henry, to whom John Neff and Daniel Neff became bound as the sureties of the said Isaac Neff, to keep and save harmless the said Henry from the said judgments. And again, John Neff and Jacob Neff were bound as co-defendants and as sureties for Isaac Neff in a judgment of subsequent date to Mrs Wilcox’s, in favour of James Smith. John Neff, Daniel Neff and Jacob Neff, in order that they might be protected from being made liable to the payment of money as sureties for Isaac Net!', claimed, first, that Rosanna Wilcox should be compelled to go against the property of the Millers, the principal debtors, for the amount of her judgment, and not be permitted to take the same out of the money made by the sale of the estate of Isaac Neff who was a mere surety and derived no benefit whatever from the debt; and that this ought more especially to be done, because otherwise it would not only leave them liable to pay moneys for Isaac Neff, for which they had never received any benefit, but most likely leave some of Isaac Neff’s creditors without the means or the power of getting anything towards satisfying their claims. But if this be done, every one may receive what is justly due or corning to him or her; but if not, it is pretty certain that one or more will lose and must suffer. Equity and justice would therefore seem to require that Mrs Wilcox should be compelled to look to the property of the Millers, the real debtors, for payment. But it has also been argued, if she cannot be compelled to do this, that she has, by the release of the thirty acres from the lien of her judgment, released Isaac Neff and his property from all liability to pay her judgment. The court below, however, as well as the auditor, decided against the Messrs Neil's on both points; from which decision they have appealed to this court.

The argument of the appellants, in support of their first point, would be irresistible, perhaps, if the real estate of the Millers had been converted into money and brought into court for appropriation as Isaac Neff’s was. But this was not the case, and could, not be effected without some considerable delay, a delay most probably of six months at least, which might be very injurious to Mrs Wilcox, who had an undoubted right to receive the amount of her judgment immediately out of the moneys in court arising from the sale of Isaac Neffs estate. Her right, in this respect, was not only legal and perfect, but likewise consistent with every principle of equity. It would therefore have been wrong to have compelled her to give up her right to receive the amount of her judgment out of the money in court, or to have postponed the payment of it a single day after it was judicially ascertained that she was clearly entitled to have it paid out of the money in court. If the Messrs Neffs had any claim or right to have the appropriation made of the money in court, which they requested, it was purely equitable, and such as they could not ask to have carried into effect at the expense, or more properly, as it may be said, the sacrifice of either the legal or equitable rights due to others. To entitle themselves to relief or any benefit on the ground of equity, it was incumbent upon them to do equity, by placing Mrs Wilcox immediately in the possession of the money due and comino; to her on her judgment, that is, by paying it, instead of asking that she should be delayed, for some uncertain period of time, in the receipt of it. Had they paid or tendered her the amount of her judgment, and in case of her refusal to accept have brought it into court, they might then have been said to stand on ground that would most probably have entitled them to an order or decree of the court giving them the benefit and control of Mrs Wilcox’s judgment. But having done nothing of this sort, we think the court were right in deciding against them on their first point.

We also think that the second point of the appellants cannot be sustained. It is doubtless true, if the creditor, by a new agreement with the principal, without the assent of the surety, makes any material alteration in the agreement whereby the surety became bound as such, the surety will thereby be discharged, because the only contract that bound him is no longer in being; for the change and alteration of it by the operation of the new7 contract, made without, his consent, in effect annuls and sets aside the contract by which he bound himself, and the only one to which he w7as a party. So if the ci’editor releases the principal from the payment of the debt, he thereby releases the surety entirely. But if he release the principal from a part only of it, he only releases the surety pro tanto; and there is not even the shadow of reason wThy it should be considered a release for any more. So if the creditor give up to the principal or release a security which he has obtained from him for the whole of the debt, it will operate as a release or discharge of the surety from all liability as such; but if the security released be only for part of the debt, the surety will only be released pro tanto. The ground upon which the relinquishment or negligent losing of a security taken of the principal debtor by the creditor for the whole or part only of the debt, is held to be a release of the surety either for the whole or pro tanto, as the case may be, is, that the surety upon payment of the debt to the creditor, is entitled to the benefit of all securities which the creditor has, that he could have rendered available against the principal debtor; and if any of those securities have become lost, or have become lessened in value, in consequence of the neglect or default of the creditor, the surety’s liability to the creditor will be diminished to that extent. Vide Pitman on Principal and Surety 113-14; 40 Law Lib. 86; Theobald on Principal and Surety 84, 85, &c.; Commonwealth v. Miller, (8 Serg. & Rawle 452, 457-8); 2 Swanst. 189. When the real value of the security, lost by neglect of, or given up by the creditor, is capable of being ascertained with certainty, and it is less than the amount of the debt, it wrou!d not only be contrary to reason to extinguish the liability of the surety entirely, as a diminution equal in extent to the value of the security given up or lost is amply sufficient to protect him from any loss that could accrue from his not obtaining such security, which is the utmost that he can with reason claim; but it would likewise be repugnant to the ground or principle upon which the surety has a right to claim a discharge from his liability as such. But when it is impracticable to ascertain, wTith any degree of certainty, whether the security lost or relinquished might not have availed the surety to the full extent of the debt, in case he had paid it, it would seem to be right that he should be discharged entirely from all liability, and that the bur-Ríen of proving the value of the security should lie on the creditor. In the present case, however, although it appears that Mrs Wilcox released thirty acres of the land of the principal debtor from the lien of her judgment, yet it was done for the purpose of increasing the value of the security, and, in this respect, rendering it more certain, which she had for the payment of her debt, instead of lessening it; and in the opinion of the auditor, and according to the evidence given before him, this would seem to have been the effect of what she did ; that by making a small portion of the tract pay the mortgage debt, which was an incumbrance upon the whole tract, prior in date to the lien of her judgment, and might at a forced sale have swept away the whole tract to pay it. It was in fact a charge upon the whole tract of land, and from all that appears in the case, the land was the only resource from which payment of it could be obtained, so that Mrs Wilcox had no alternative which seemed so well suited to preserve at least a portion of the land as a security for the payment of her judgment, as that of releasing the thirty acres from the lien of it. It may, therefore, be very properly considered an improvement of her security, instead of a diminution of it.

Decree affirmed.