Johnston v. Paltzer

Me. Justice Seabs delivered the opinion of the court.

The only ground upon which the court denied relief by way of deficiency decree against Paltzer and McIntosh, the makers of the promissory note secured by the mortgage foreclosed, was that by an extension of time, given by the mortgagee to Turkington, who had bought the premises and assumed the mortgage debt, Paltzer and McIntosh were released from their personal liability.

Upon the assuming of the mortgage debt by Turkington, it is doubtless true that, as between themselves at least, he became the principal in matter of obligation to pay the mortgage debt, and in relation to him his grantors, the original mortgagors, were but sureties. And it has been held in a number of cases that an extension of the time of payment of the mortgage debt, made by the mortgagee to such grantee of the mortgagor, after the assumption of the mortgage debt by the grantee, will operate to release the mortgagor from obligation as surety for the payment of the debt. Calve v. Davies, 73 N. Y. 211 ; 17. M. Life Ins. Co. v. Hanford, 143 U. S. 187 .

But in no one of these decisions is it held that such an extension of time of payment will thus release the surety, where the extension is consented to by him. On the contrary, the same rule applies to this species of suretyship as to any other, in that it is only the change in the terms of „ the obligation, made without the consent of the surety, which operates to release him. If he consent to the extension, he is still bound by the obligation, changed in its terms with his consent. And wherever our courts have held that a release of a surety has been effected by extension of time of payment, it has been distinctly put upon the ground that the surety did not assent to the extension. Meyers v. First Mat. Bank, 78 Ill. 257 ; Williams v. Gooch, 73 Ill. App. 557 .

And the consent of the surety to the change in the terms of his obligation need not be by express agreement; it may be established by evidence of his tacit acquiescence or ratification. First Mat. Bank v. Whitman, 66 Ill. 331 ; McHard v. Ives, 5 Ill. App. 400 ; Kerns v. Byan, 26 Ill. App. 177 ; Williams v. Gooch, 73 Ill. App. 557 .

In the case last noted, the court said :

“ The rule of law which relieves from liability a surety on a promissory note, where an extension of time for payment has been granted, the principal was designed to protect a surety ignorant and innocent of any purpose to extend his liability beyond the time fixed in the note. It was never intended to relieve from liability a surety who had induced the extension or had connived at it; and such seems to have been the attitude of appellant.”

Here the extension was not only agreed to by defendant in error, the surety, but it was his undertaking to secure the extension. By his contract, made before Turkington assumed the payment of the mortgage debt and as a condition precedent to such assumption, he and McIntosh undertook to obtain the extension.

Moreover, the extension was in fact obtained before the deed was delivered, by the acceptance of which defendant in error was relieved of primary obligation in relation to Turkington and made a surety only for the payment by Turkington. It can scarcely be held that a change in the terms of the obligation effected before defendant in error became a surety, can operate to relieve him of his liability as surety. It was, as to the mortgage debt, extended by agreement that he become surety. The evidence so shows and the decree so finds in effect. The fact that the written indorsement of the extension upon the back of the note was made later does not, in our opinion, make the prior oral agreement any the less effective. After the oral agreement was made and the deed of conveyance accepted by Turltington in reliance upon the agreement, Johnston could not have avoided its force because it was not expressed in writing. It was in force.and effect by consent of defendant in error when he became surety.

The findings of the decree to the effect tha t defendant in error and McIntosh contracted to obtain the extension, and that it was in fact obtained before the deed of conveyance was delivered, are inconsistent with the order denying the relief sought by plaintiff in error.

The decree must be reversed and the cause remanded.