Gipson v. Ogden

• Court: Indiana Supreme Court
• Writing for the Court: Elliott, J.
• Citation: Gipson v. Ogden, 100 Ind. 20 (Ind. 1885)
• Decision Date: 24 January 1885
• Docket Number: 9990
• Parties: Gipson et al. v. Ogden

100 Ind. 20

Gipson et al. v. Ogden

No. 9990

Supreme Court of Indiana

January 24, 1885

From the Hendricks Circuit Court.

Judgment reversed.

C. A Dryer, T. J. Cofer and N. M. Taylor, for appellants.

L. M Campbell, for appellee.

OPINION

Elliott, J.

The appellee alleges in her complaint that she is the owner of real estate upon which a judgment owned by Eliza J. Gipson, as the assignee of James Gipson, constitutes a cloud which she has a right to have removed. It is alleged that the judgment was recovered against Moses Luckey and the appellee, before a justice of the peace; that, as the payee of the note on which the judgment was rendered and his assignee well knew, the appellee was the surety of Luckey; that a transcript of the judgment was filed in the clerk's office and thus became an apparent lien on the appellee's land. It is further alleged that, on the 22d day of July, 1879, Luckey was the owner of personal property subject to execution, of the value of $ 140; that an execution was issued on the judgment and delivered to a constable, and the judgment was then assigned to Eliza J. Gipson. The complaint, after making the allegations we have summarized, proceeds thus: "On the 22d day of July, 1879, without the knowledge or consent of the plaintiff, the defendants entered into a new contract and agreement with said Moses Luckey, by which they agreed to and did extend the time of payment of said judgment until November 1st, 1879, and did take from said Moses Luckey a chattel mortgage on said personal property, which was recorded, and suffered and permitted said Luckey to retain and dispose of said property, without making any levy of execution upon the same, and suffered said execution to remain in the hands of said constable until October, 1879, relying upon the chattel mortgage aforesaid."

In the attack upon this pleading, counsel for appellants argue that it appears that there was mere passive inaction on the part of the creditor, and that this did not release the surety. We concur with counsel in their statement of the general principle, that mere inaction does not release the surety, for we think it well sustained by authority. Vance v. English, 78 Ind. 80; Philbrooks v. McEwen, 29 Ind. 347; Brandt Suretyship, sec. 374. But while the rule of law is well stated, the conclusion reached by counsel is radically wrong, for the reason that the complaint shows a new contract extending the time of payment of the judgment for a fixed period. There is more than inaction; there is action of a positive nature materially changing the rights of the contracting parties.

It is established law that a contract made with the principal debtor, without the consent of the surety, extending the time of payment for a definite period, releases the latter from liability. The pleading before us shows such a contract. The execution of the chattel mortgage was a sufficient consideration for the agreement of extension, and the agreement did extend the time of payment for a definite period. The authorities are well agreed that in such cases the surety is discharged. In Wingate v. Wilson, 53 Ind. 78, a judgment was rendered upon an agreement giving to the principal an extension of six months time, and this was held to release the surety. The case cited is one of many, differing only in the particular facts but identical in principle. Menifee v. Clark, 35 Ind. 304; Jarvis v. Hyatt, 43 Ind. 163; Hamilton v. Winterrowd, 43 Ind. 393; Huff v. Cole, 45 Ind. 300; White v. Whitney, 51 Ind. 124; Bucklen v. Huff, 53 Ind. 474; Buck v. Smiley, 64 Ind. 431; Lemmon v. Whitman, 75 Ind. 318; Cates v. Thayer, 93 Ind. 156.

Many authorities are cited to prove that where the creditor does nothing more than accept additional security, the surety is not released, and we have no disposition to run counter to this well settled doctrine. 2 Am. Leading Cases, p. 391. But, while granting the existence of this general doctrine, we deny its applicability here, for the reason that the facts pleaded show that there was a new contract and an extension of time until the 1st of November, 1879. It can not, therefore, be justly asserted that there was nothing more than the acceptance of additional security. There are few principles better settled than that a surety has a right to stand upon the strict letter of his contract, and that a change in its terms, whether beneficial or injurious, releases him from liability.

It is argued that there was no release of the levy, and, therefore, no injury done the surety. This argument does not meet the case. If there had been mere passiveness, and no release of the lien, there would have been much force in counsel's contention. But there was more than mere passiveness; there was a radical change in the terms of the contract. The case does not turn upon the question whether there was a release of a lien; the pivotal point is whether there was or was not a change in the terms of the contract. Where, as here, there is a change in the terms of the contract, the courts are bound to hold the surety discharged without inquiring whether the change was or was not beneficial to him. The conclusion to which all the cases lead is, that a surety is released if the creditor fetters himself by a contract extending the time of payment, and judicial investigation ends with the ascertainment of that fact, without prosecuting an inquiry as to whether the surety lost or gained by the change. Counsel wander from the real question in quest of authority to prove, what is not denied, that mere passiveness working no injury does not operate to release the surety; for the question is, did not the change in the terms of the original contract by the new agreement, founded on the additional security supplied by the chattel mortgage, operate to discharge the surety?

It is strenuously contended that the appellee can not avail herself of the fact that she was surety, because she did not litigate that question in the action before the justice of the peace. The case of Reissner v. Dessar, 80 Ind. 307, does not decide the question here involved, for there a third party had acquired rights upon the faith that all the judgment debtors were principals; while here the question is between parties having full knowledge of all the facts. It is obvious that parties possessing ample information are not so favored as those who are induced to alter their position upon the faith of the record. In Boys v. Simmons, 72 Ind. 593, the party claiming to be surety paid the judgment, and then sought to enforce it against his co-debtor, upon the ground that the latter was the principal, but the court held that he was not entitled to do this, because the question of suretyship was not determined in the original action. The decision, as the reasoning in the opinion shows, was put upon the ground that the remedy sought by the surety was a purely statutory one, and as he had not pursued the course prescribed by the statute, he was not entitled to the remedy he invoked. That decision, it is quite clear, does not govern this case, for here the surety is not seeking the benefit of the statute, but is relying upon the rights vested in him by the general principles of law and equity. Neither of these cases decides the point which here demands consideration, and we must look elsewhere for principles and authorities.

In our judgment, the statutory method of determining the question of suretyship is only exclusive in cases where the surety seeks to avail himself of a purely statutory remedy. In cases where the surety seeks to avail himself of the benefit of...