Big Rapids Nat. Bank v. Peters
| Decision Date | 05 July 1899 |
| Citation | 120 Mich. 518,79 N.W. 891 |
| Court | Michigan Supreme Court |
| Parties | BIG RAPIDS NAT. BANK v. PETERS. |
Error to circuit court, Manistee county; James B. McMahon, Judge.
Action by the Big Rapids National Bank against Richard G. Peters. From a judgment for plaintiff, defendant brings error. Affirmed.
C. H Gleason (Fletcher & Wanty and Arthur Lowell, of counsel), for appellant.
M Brown (McAlvay & Grant, of counsel), for appellee.
The plaintiff's action was brought to recover a balance alleged to be due upon eight promissory notes. The plaintiff obtained a verdict. Peters, the appellant, was a member of a co-partnership styled Arthur Meigs & Co. These notes were signed by Carman. and were payable to Arthur Meigs & Co., and were by them indorsed and negotiated. Carman appears to have made the notes as an accommodation to Meigs & Co., who received $10,000 in money from the plaintiff upon them, or similar notes which these renewed. The earliest note sued upon was dated September 9, and the latest October 10, 1890. In October, 1890, Meigs & Co. became pecuniarily embarrassed, and sold their shingle mill to Carman, who promised to assume and pay the outstanding notes, as a portion of the consideration. Of this the plaintiff was at once informed. The notes were not paid at maturity, and this action was brought against the maker, Carman, and indorsers, Meigs & Co. Service was not obtained upon Carman or Meigs. The defendant claimed that, through Carman's assumption of the debt, Meigs & Co. became his sureties, and that they were released by reason of an extension of time given to Carman by the plaintiff. To establish this defense, they proved that after the maturity of these notes the bank received other notes from Carman, signed by Carman, Bromley, and Childs, from time to time, for a period of two or three years or more; discounts being regularly paid thereon. It appeared that the plaintiff was asked to receive other paper in lieu of the original notes, but refused, saying that it should not give them up until paid. There is testimony to the effect that, when the arrangement was made by which the subsequent notes were agreed to be taken, it was accompanied by a refusal to surrender the original paper or release the indorsers until the same was fully paid.
The court instructed the jury that, by the agreement for the purchase of the shingle mill, Carman became the principal debtor, and Meigs & Co. sureties; and he directed the jury to inquire whether, in the subsequent arrangement between Carman and the bank, it reserved the right of action against the sureties. Counsel for the defendant allege error upon the last proposition, claiming that the court should have directed a verdict for the defendants, upon the ground that the undisputed testimony showed that they were discharged by an extension of time to the principal debtor. It is not every extension of time that discharges a surety. "If the creditor, at the time he releases the principal reserves his remedies against the surety, such release amounts to a covenant not to sue only, and does not discharge the surety." Brandt, Sur. � 147. In Corporation v. Overend, 7 Ch. App. 142, Lord Hatherly said: "It is competent to the creditors to reserve all their rights against the surety, in which case the surety is not discharged; and for this reason: that the contract made with the principal is then preserved, because the creditors have engaged with the principal not to sue him for a given time, but subject to the proviso that the creditors shall be at liberty to sue the surety, and so turn the surety upon the principal without any breach of the engagement with the principal." The opinion of Mr. Justice Andrews in the case of Calvo v. Davies, 73 N.Y. 217, is to the same effect. It was there said: ...
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