Dixon v. Spencer

• Decision Date: 25 January 1883
• Citation: 59 Md. 246
• Parties: JOHN T. DIXON v. JOSEPH SPENCER, and others, trading as SPENCER, MCKAY & Co.
• Court: Maryland Court of Appeals

59 Md. 246

JOHN T. DIXON v. JOSEPH SPENCER, and others, trading as SPENCER, MCKAY & Co.

Court of Appeals of Maryland

January 25, 1883

APPEAL from the Circuit Court for Allegany County.

The appellees sued the appellant in an action of covenant upon an agreement under seal, the nature of which, and the facts pertinent to the question involved, are stated in the opinion of the Court.

The cause was argued before ALVEY, ROBINSON, IRVING, and RITCHIE J.

Ferdinand Williams, for the appellant.

William Brace, and Benjamin A. Richmond for the appellees.

ROBINSON J., delivered the opinion of the Court.

The appellees agreed to furnish Jane A. Houck certain quantities of ale, beer and porter, on a credit of thirty days, in consideration of which the appellant agreed to guarantee the payment of all sums of money due and unpaid by her within said time.

The contract was in writing, under seal and signed by all the parties, the appellees, Jane A. Houck, and the appellant. Under this contract, Jane A. Houck, became indebted to the appellees in the sum of $263.53 and for which they took her two promissory notes, payable at sixty and ninety days.

The main question is whether the taking of these promissory notes by the appellees discharges the appellant from his liability as guarantor.

It can hardly be necessary to cite authorities in support of the general principle, that where the time of payment is, without the consent of the surety, extended for a definite time, by a valid contract between the creditor and the principal, the surety is thereby discharged. The subject and the many decisions in regard to it, are fully considered and discussed in 2 American Leading Cases, 431. See also Brandt on Suretyship and Guaranty, 401.

The surety, by his contract, merely guarantees the payment by his principal of a certain sum of money at a stipulated time. This he engages to do and no more. Upon the default of the principal he has the right to pay the money and to proceed at once against him for indemnity. If the creditor, however, makes a new contract with the principal--takes his promissory note, payable at another and further time--he is thereby precluded from suing on the original contract until the maturity of the note, and the surety is also deprived of the right to pay the money due on his contract, the payment of which is necessary to enable him to proceed against the principal. By his own act, the creditor has entered into a new contract with the principal, and for the time being has tied his own hands, and the hands of the surety so far as regards the original contract. In so doing without the consent of the surety, the law says the latter shall be discharged.

This well-recognized rule of law, it is said, however, does not apply to this case, because the agreement of the appellant as guarantor is under seal; and the mere taking of a promissory note of the principal for the indebtedness arising on such an agreement will not in an action at law discharge the appellant, although the time of payment be extended.

It has been held, it is true, in England, and by some of the Courts in this country, that, to enable a surety to avail himself of this defence at law, the instrument on the face of it must show that he is a surety. If it be a joint and several obligation under seal, or if a joint promissory note he is in the one case estopped by the seal from proving by a parol instrument...