Scott v. Gaulding

• Decision Date: 09 March 1939
• Docket Number: 12500.
• Citation: 2 S.E.2d 69,187 Ga. 751
• Parties: SCOTT v. GAULDING et al.
• Court: Georgia Supreme Court

2 S.E.2d 69

187 Ga. 751

SCOTT v. GAULDING et al.

No. 12500.

Supreme Court of Georgia

March 9, 1939

Syllabus by the Court.

The mere failure of the payee of a note, who is the holder thereof, to institute suit to recover on the note against one of the sureties thereon, before the expiration of the period of limitation in which suit must be brought against this surety, does not amount to a release by the payee of the obligation to him of a cosurety on the note whose obligation is not barred by the statute of limitation, although the payee's act in refraining from instituting the suit as indicated was not procured by or consented or agreed to by the latter surety.

Shackelford & Shackelford, of Athens, and Miller & Lowrey, of Macon, for plaintiff in error.

Miller & Lowrey, of Macon, and Shackelford & Shackelford Clara E. Smith, and Robert A. Brown, all of Athens, for defendants in error.

REID Chief Justice.

The Court of Appeals certified the following question: 'Does the mere failure of the payee of a note, who is the holder thereof, to institute suit to recover on the note against one of the sureties thereon, before the expiration of the period of limitation in which suit must be brought against this surety, amount to a release by the payee of the obligation to him of a cosurety on the note whose obligation is not barred by the statute of limitations, where the payee's act in refraining from instituting the suit as indicated was not procured by or consented or agreed to by the latter surety? Code, § 103-203; Wilkinson v. Conley, 133 Ga 518(2), 66 S.E. 372; Comer v. Dufour, 95 Ga. 376 379, 22 S.E. 543, 30 L.R.A. 300, 51 Am.St.Rep. 89; Jones v. Whitehead, 4 Ga. 397; 50 C.J. 188, § 312; Camp v. Bostwick, 20 Ohio St. 337, 5 Am.Rep. 669; Martin v. Frantz, 127 Pa. 389, 18 A. 20, 14 Am.St.Rep. 859; Davis' Adm'r v. Auxier, Ky., 41 S.W. 767; People v. Whittemore, 253 Ill. 378(7), 97 N.E. 683.'

It is declared in the Code, § 103-203: 'Any act of the creditor, either before or after judgment against the principal, which injures the surety or increases his risk, or exposes him to greater liability, shall discharge him; a mere failure by the creditor to sue as soon as the law allows, or neglect to prosecute with vigor his legal remedies, unless for a consideration, shall not release the surety.' In Wilkinson v. Conley, 133 Ga. 518, 66 S.E. 372, the creditor brought an action against the principal and one of the several sureties on an administrator's bond, and upon payment by the surety of a sum less than the full amount of the debt the suit as to him was dismissed. Thereafter the creditor filed suit against another surety, who pleaded that he was discharged because of the conduct of the creditor in dismissing the suit theretofore instituted against the other surety. The court ruled: 'The dismissal as to one surety of a suit already brought, for a consideration paid by him, and not bringing any further action against him, constituted such conduct as released the other surety on the administrator's bond, especially if the first administrator had removed from the state and further action against him had become barred by the statute of limitations.' It is to be observed that the question certified does not involve the dismissal of a suit brought against a surety for a consideration, but on the other hand it involves a mere failure of the creditor to pursue another surety. We do not think that this case requires an affirmative answer to the question certified. In Comer v. Dufour, 95 Ga. 376, 22 S.E. 543, 30 L.R.A. 300, 51 Am.St.Rep. 89, it was ruled that an accommodation indorser of a check was discharged where there was a delay in the process of collection on the part of the collecting agent of the bank which cashed the check. This case also presents a different case from that involved in the question certified. The headnote in Jones v. Whitehead, 4 Ga. 397, is as follows: 'Where one of two sureties is discharged by any act or omission of the creditor, the other surety is also discharged.' It appeared in that case that one of several sureties on the obligation had given to the creditor the statutory notice to sue, and that the creditor had failed to comply therewith. The ruling just quoted must be considered in the light of the facts presented; and when so viewed it does not require a ruling that where a surety on a note is discharged from liability to the creditor because of the bar of the statute of limitations, the remaining sureties are also discharged, although as to them the statute had not run.

In 50 C.J. 188, the text is as follows: 'There is a conflict of authority as to whether a surety is discharged merely because the cause of action against the principal is barred, some courts holding that he is not discharged, others holding that he is. [In Reid v. Flippen, 47 Ga. 273, it was held that in such case the surety is not discharged.] A surety is not discharged because the statute of limitations has run in favor of a co-surety; but he remains liable for the whole debt.' In Davis' Adm'r v. Auxier, Ky., 41 S.W. 767, it was held that 'One of two sureties is not released because the creditor allows the action to become barred by the statute of limitations.' Similar rulings were made in McVean v. Scott, 46 Barb., N.Y., 379; Staples v. Gokey, 34 Hun, N.Y., 289. The cases of Camp v. Bostwick, 20 Ohio St. 337, 5 Am.Rep. 669, and Martin v. Frantz, 127 Pa. 389, 18 A. 20, 14 Am.St.Rep. 859, involved the question whether a surety who pays the debt, and as to whom the statute of limitations has not run, may seek contribution from a co-surety where, at the time of payment, the statute had run as to such co-surety. In both cases the question was answered in the affirmative. In People v. Whittemore, 253 Ill. 378, 97 N.E. 683, it was held: 'The facts that no suits were brought against certain of the solvent sureties on a State Treasurer's bond during their lifetime, and that the claims against their estates are barred by the Statute of Limitations, do not release a co-surety from a liability, which is otherwise enforceable, for a breach of such State Treasurer's bond.' It was further said: 'In the absence of any statutory provision, all that a surety has a right to require of his creditor is that no affirmative act shall be done that will operate to his prejudice.' We are of the opinion that the cases of Davis' Adm'r v. Auxier, McVean v. Scott, Staples v. Gokey, and People v. Whittemore, supra, correctly decide the question presented here, under the rule as it exists in this State, and therefore that the question certified should be answered in the negative.

The answer to the question presented can not be made to rest on whether or not the surety may enforce contribution against his co-surety as to whom the...