Morgan v. Martien

Surety. — Although the contract into which the security has entered cannot be varied without his assent by any agreement between the creditor and principal debtor, yet the creditor may properly take additional securities from the principal, not changing the terms of but collateral to the original contract. Where, therefore, the defendant had become security upon notes given in consideration of lands sold to the principal, and the principal subsequently executed a deed of trust to secure payment of the same notes, which deed contained a proviso that in case of default for thirty days in the payment of any one of the notes, all the notes should become due and payable, and that the trustees might proceed to sell the lands and pay all of said notes, whether due on their face or not. Held, 1. That by the terms of the deed the notes became due only so far as to authorize a payment from the proceeds of sale, and that no suit could be prosecuted upon them until they matured. 2. That the taking of such deed of trust operated to the benefit of the security, and did not change the effect of his contract.

Error to Callaivay Circuit Court. This suit was instituted in the Callaway Circuit Court against defendant in error, on a note, dated May 23,1857, payable two years after date, for four hundred and fifty-two dollars and fifty cents, with interest from date till due-at six per cent-um, and after due ten per centum. Defendant executed the note as security to Joseph G-. Martien, as to whom the suit was dismissed for want of service of writ. Defendant, James M. Martien, put in an answer averring his release from all liability, upon the following statement of facts : That on the 23d day of May, 1857, Joseph G-. Martien bought of William T. Christy and Calvin Morgan, owners in joint interest — the former three fourths and the latter one fourth — of about fifteen hundred acres of land in Audrain county, for about nineteen thousand dollars ; nine thousand of it paid in hand, the balance on time, secured by promissory notes as follows : seven notes were given to Christy and seven to Morgan, embracing their respective interests in the unpaid purchase money. Joseph G-. Martien, with defendant in error as his security, gave two notes to Morgan, one to be due in one year, and the other in two years, which latter note is the one in suit, and like notes in time he gave to Christy, with the same security. The other ten notes, falling duo at later periods, were given by Joseph G. Martien alone. On the 23d day of June, 1857, Christy and wife executed to Joseph G. Martien a deed in fee simple to his interest in the lands, which was acknowledged the 6th of July, 1857, and filed for record the 16th of July, 1857. That on the 23d of June, 1857, Morgan and wife executed to Joseph G. Martien a like deed, which was acknowledged the 1st of July, 1857, and recorded at the time of the other deed. That' on the 23d of May, 1857, Joseph G. Martien and wife executed to certain trustees a deed of trust to said lands to secure the payment of said notes upon this condition: “ If any one of said notes become due and remain for thirty days unpaid after dye, then, by virtue of such default in the payment of any 'of the said notes, all the notes remaining unpaid shall forthwith become due and payable, as though due by the face thereof; and if said notes or either of them shall become clue by their tenor, or the provisions of this trust, and be unpaid, then this deed shall remain in full force,” and the said trustees may proceed to sell, for cash in hand, on the terms and conditions as expressed in the deed of trust. This deed of trust was acknowledged 9th of June, 1857, and filed for record at the same date as the other deeds. Defendant in error, by his answer, claimed there was a change of contract to his prejudice and without his knowledge or consent; denied any consent to the execution of the deed of trust, by which the contract embraced in the note sued on was changed, and desired to be released from all liability for the same. The trial was had before a-jury, whose verdict was for the defendant in error. The evidence adduced tended to show that James M. Martien was present at negotiation of a sale of the lands by Morgan and Christy to his brother, Joseph G. Martien, and that he was cognizant of and assented to the giving and taking of the deed of trust. I. The object of the provision in the deed of trust making certain notes mature upon the contingency expressed, was to enable the trustees to sell the property upon the happening of such contingency. The provision effected no other purpose, nor did it contemplate any change or alteration of the contract as contained in the several notes themselves. It applied alone to the powers of the trustees, and not to the duration of the notes as notes. It provided for accelerated remedies against the specific property of the purchaser, and not for a disturbance of the particular contract as contained in the several notes. It neither extinguished nor suspended any remedy the plaintiff had on the note sued on, against either obligor. He could not have sued either obligor till the maturity of the note, as expressed by the note itself. If this be true, there was no variation of the note in the time of its maturity. Plaintiff could not, upon the supposed change and alteration of the rate of interest, as alleged to have been effected by the deed of trust, have recovered ten per cent, interest from the expiration of thirty days next succeeding the maturity of the first note, instead of interest according to the terms of the note sued on in this cause. If this be true, there was no variation of the note in the rate of interest. If, then, the plaintiff could not have sued on the note in this cause earlier than the date of its maturity as expressed in the note, nor recovered greater interest than as therein expressed, no alteration of the terms of the note was had, and no rights or remedies of the surety were prejudiced. II. The deed of trust did not, though a specialty, extinguish or suspend any right of action the obligee had on the note, or the obligors thereof, nor any remedy or right accorded by law to the surety. There is not a covenant in it that will bear the construction that it does. On the contrary, it expressly acknowledges, by its reference to the existence of such notes, that plaintiff holds certain securities on the obligors separate and apart from it. The law provides for collateral security, a principle as firmly fixed as any. When taken, shall it be construed to have extinguished the original debt without an admitted agreement between the parties to that effect, or some well-defined act leading to this conclusion and none other ? The deed of trust does not stipulate to be, nor does it in law operate as, a satisfaction of the notes, nor does it disable plaintiff from suing on them any more than if it had not been taken. If it can be collected from the deed of trust that it was the intention of the parties thereto, that the notes should continue an existing security, and that the deed of trust should be a further, or collateral, security, the sxirety is not discharged. (Pittman on Principal and Surety, 200-8, and the authorities there cited ; Ireland v. Beresford, 6 Dow. 233 ; 2 Story on Cont., 428-9 ; Twopenny v. Young, 5 Dow. & Ry. 259 ; same case, 3 B. & O. 208 ; Ernes v. Widdowson, 4 Car. & Payne, 151; Price v. Edmonds, 10. B. & C. 578 ; Hulme v. Coles, 2 Sim. 12; Gorden v. Calvert, 4 Rus. Ch. 581; 5 Howard, Miss., 631; 3 Binney, 520; 5 Barbour, S. Ct. 408-9 ; 11 Wend. 320-1.) III. If these conclusions be correct, the court committed error in overruling plaintiff’s demurrer, in its rulings as to giving and refusing instructions, and in not granting to plaintiff a new trial. A new trial should have been granted, as the vordict is unsupported by any evidence at all. If the deed of trust varied the terms of the contract, it was with the entire consent of the defendant in error. He was an active party in, and listener to, the whole land transaction, which took several days to accomplish; heard and joined in all the discussions ; read and handled all the papers, including the deed of trust, and signed a part of them; and subsequently, after re-examining, at his own residence, the deed of trust as often as twice, he gave a written authority for the notes in which he was surety, the note in suit being one, to be given up to the proper owners. These facts allow but one conclusion, that defendant in error consented to all the stipulations in the deed of trust. (5 Robinson, 252-3; 1 La. An. R. 254.) I. The court did right in refusing to set aside the verdict and judgment in this cause, and in not granting a new trial on the motion of plaintiff, and in overruling said motion. In Miller v. Stewart, Judge Story says: Nothing can be clearer, both upon principle and authority, than the doctrine that the liability of a surety is not to be extended by implication beyond the terms of his contract; to the extent, and in the manner, and under the circumstances pointed out in his obligation, he is bound and no further. It is not sufficient that he may sustain no injury by a change in the contract, and that it may even be for his benefit. He has a right to stand upon the very terms of his contract; and if he does not assent to any variation of it, and a variation is made, it is fatal. (Miller v. Stewart, 9 Wheat. 680, 702 ; 5 Oond. R. 728.) The surety is discharged if, without his consent, the principal parties make a new agreement inconsistent with the terms of the original agreement, or if they agree to make any alteration either in the terms of the original agreement, or in the mode of performing them. (Theobold on Principal and Surety, p. 76, § 152.) In Writcher v. flail, 5 B. & C., 269, Mr. Justice Bayley said: “The new agreement was binding only on those persons who were parties to it. If it had been intended to bind the surety by it, he should have been consulted — he had a right to insist upon a literal performance of the original bargain. If a new bargain was made, he had a right to exercise his judgment whether he would become a party to it.” (5 B. & C. 269 ; Writcher v. Hall, Theobold, 76-7, § 152 2 Madd. 221; Theobold 77, § 153 ; 3 Price, 214; Theobold, 78, §155.) The real and only question in this case is, whether the surety was, in point of fact, placed in a different situation by what had taken place on the arrangement between the principal and the obligee, and whether by such change of sitúation he might have been prejudiced — not whether he did in fact actually sustain any injury in consequence. A creditor taking a surety is bound to notice the nature of his agreement, and to protect him. I am not at liberty, in such a case, to inquire whether any inconvenience did actually arise to the plaintiff in consequence of the agreement between Moore and sheriff; for if the plaintiff was discharged, he was discharged at the time when the agreement was entered into between them. (7 Price, 223 ; Theo. 79, § 155 ; 17 Johns. R. 384; 2 Johns. Chy. 554; 8 Pickering, 458, 130; 10 Johns. R. 180 ; 8 Bingham, 156; ' 2 B. & 0, 61; 3 Bos. & Pul. 366 ; 3 Kent’s Com. 124; Story’s Eq. § 567, 638, 639 ; 8 Pickering, 500 ; 2 Johns. Chy. 554; 2 Story’s Eq. 671, &c., § 1224, 1225, 1226, and notes at the bottom of pages 671 to 681, both inclusive.)