SURETYSHIP, contracts. An accessory agreement by which a person binds
himself for another already bound, either in whole or in part, as for his
debt, default or miscarriage.
2. The person undertaken for must be liable as well as the person
giving the promise, for otherwise the promise would be a principal and not a
collateral agreement, and the prommissor would be liable in the first
instance; for example, a married woman would. Not be liable upon her
contract, and the person who should become surety for her that she would
perform it would be responsible as a principal and not as a surety. Pitm. on
P. & S. 13; Burge on Sur. 6; Poth. Ob. n. 306. If a Person undertakes as a
surety when he knows the obligation, of the principal is void, he becomes a
principal: 2 Id. Raym. 1066; 1 Burr. 373.
3. As the contract of suretyship must relate to the same subject as the
principal obligation, it follows that it must not be of greater extent or
more onerous' either in its amount, or in the time or manner, or place of
performance, than such principal obligation; and if it so exceed, ii will be
void, as to such excess. But the obligation of the surety may be less
onerous, both in its amount, and in the time, place and manner of its
performance, that of the principal debtor; it may be for a less amount, or
the time may be more protracted. Burge, on Sur. 4, 5.
4. The contract of suretyship may be entered into by all persons who
are sui juris, and capable of entering into other contracts. See Parties to
contracts.
5. It must be made upon a sufficient consideration. See Consideration.
6. The contract of suretyship or guaranty, requires a present agreement
between the contracting parties; and care must be taken to observe the
distinction between an actual guaranty, and an offer to guaranty at a future
time; when an offer is made, it must be accepted before it becomes binding.
1 M. & S. 557; 2 Stark. 371; Cr. M. & Ros. 692.
7. Where the statute of frauds, 29 Car. II., c. 3, is in force, or its
principles have been adopted, the contract of suretyship "to answer for the
debt, default or miscarriage of another person," must be in writing, &c.
8. The contract of suretyship is discharged and becomes extinct, 1st.
Either by the terms of the contract itself. 2d. By the acts to which both
the creditor and principal alone are parties. 3d. By the acts of the
creditor and sureties. 4th. By fraud. 5th. By operation of law.
9.-Sec. 1. When by his contract the surety limits the period of time
for which he is willing to be responsible, it is clear he cannot be held
liable for a longer period; as when he engages that an officer who is
elected annually shall faithfully perform his duty during his continuance in
office; his obligation does not extend for the performance of his duty by
the same officer who may be elected for a second year. Burge on Sur. 63,
113; 1 McCord, 41; 2 Campb. 39; 3 Ad. & Ell. N. S. 276; 2 Saund. 411 a; 6
East, 512; 2 M. & S. 370; New R. (5 B. & P.) 180; 2 M. & S. 363; 9 Moore,
102.
10.-Sec. 2. The contract of suretyship becomes extinct or discharged by
the acts of the principal and of the creditor without any act of the surety.
This may be done, 1. By payment, by the principal. 2. By release of the
principal. 3. By tender made by principal to the creditor. 4. By compromise.
5. By accord and satisfaction. 6. By novation. 7. By delegation. 8. By set-
off. 9. By alteration of the contract.
11.-1. When the principal makes payment, the sureties are immediately
discharged, because the obligation no longer exists. But as payment is the
act of two parties, the party tendering the debt and the party receiving it,
the money or thing due must be accepted. 7 Pick 88; 4 Pick. 83; 8 Pick. 122.
See Payment.
12.-2. As the release of the principal discharges the obligation, the
surety is also discharged by it.
13.-3. A lawful tender made by the principal or his authorized agent,
to the creditor or his authorized agent, will discharge the surety. See. 2
Blackf. 87; 1 Rawle, 408; 2 Fairf. 475; 13 Pet. 136.
14.-4. When the creditor and principal make a compromise by which the
principal is discharged, the surety is also discharged. 11 Ves. 420; 3 Bro.
C. C. 1; Addis. on Contr. 443.
15.-5. Accord and satisfaction between the principal and the creditor
will discharge the surety, as by that the whole obligation becomes extinct.
See Accord and satisfaction.
16.-6. It is evident that a simple novation, or the making a new
contract and annulling the old, must, by the destruction of the obligation,
discharge the surety.
17.-7. An absolute delegation, where the principal procures another
person to assume the payment upon condition that he shall be discharged,
will have the effect to discharge the surety. See Delegation.
18.-8. When the principal has a just set-off to the whole claim of the
creditor, the surety is discharged.
19.-9. If the principal and creditor change the nature of the contract,
so that it is no longer the same, the surety will be discharged; and even
extending the time of payment, without the consent of the surety, when the
agreement to give time is founded upon a valuable consideration, is such an
alteration of the contract as discharges the surety. See Giving Time.
20.-Sec. 3. The contract is discharged by the acts of the creditor and
surety, 1. By payment made by the surety. 2. By release of the surety by the
creditor. 3. By compromise between them. 4. By accord and satisfaction. 5.
By set off.
21.-Sec. 4. Fraud by the creditor in relation to the obligation of the
surety, or by the debtor with the knowledge or assent of the creditor, will
discharge the liability of the surety. 3 B. & C. 605; S. C. 6 Dowl. & Ry.
505; 6 Bing. N. C. 142.
22.-Sec. 5. The contract of suretyship is discharged by operation of
law, 1. By confusion. 2. prescription, or the act of limitations. 3. By
bankruptcy.
23.-1. The contract of suretyship is discharged by confusion or merger
of rights; as, where the obligee marries the obligor. Burge on Sur. 256; 2
Ves. p. 264; 1 Salk. 306; Cro. Car. 551.
24.-2. The act of limitations or prescription is a perfect bar to a
recovery against a surety, after a sufficient lapse of time, when the
creditor was sui juris and of a capacity to sue.
25.-3. The discharge of the surety under the bankrupt laws, will put an
end to his liability, unless otherwise provided for in the law.
26. The surety has the right to pay and discharge the obligation the
moment the principal is in default, and have immediate recourse to his
principal. He need not wait for the commencement of an action, or the issue
of legal process, but he cannot accelerate the liability of the principal,
and if he pays money voluntarily before the time of payment arrives, he will
have no cause of action until such time, or if he pays after the principal
obligation has been discharged, when he was under no obligation to pay, he
has no ground of action,.
27. Co-sureties are in general bound in solido to pay the debt, when
the principal fails, and if one be compelled to pay the whole, he may demand
contribution from the rest, and recover from them their several proportions
of their common liability in an action for money paid by him to their use. 6
Ves. 807; 12 M. & W. 421 8 M. & W. 589; 4 Scott, N. S. 429. See, generally,
15 East, R. 617; Yelv. 47 n.; 20 Vin. Ab. 101; 1 Supp. to Ves. jr. 220, 498,
9; Ayliffe's Pand. 559; Poth. Obl. part 2, c. 6; 1 Bell's Com. 350, 5th ed.;
Giting time; Principal; Surety.
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