the acceptor, they are not as between themselves cosureties, liable for contribution to each other in the event that any one should pay the amount for the acceptor; but each prior party is a principal as between himself and each subsequent party. Thus, if the bill were payable to the drawer's order, and accepted, and then indorsed by the drawer and two subsequent indorsers successively, to the holder, the drawer and indorsers would be sureties of the acceptor to the holder. But as between the holder and the drawer, the drawer is principal debtor, and the indorsers sureties. As between the holder and second indorser, the second indorser is principal, and the third indorser is surety.2

If the drawer and indorser of a bill for the acceptor's accommodation agree that each shall pay one-half the bill, if the acceptor fail to pay, they are joint sureties; and if either one pay the whole amount, he may recover half from the other.3

§ 1304. In New York it has been held, that while an indorser is in the nature of a surety, he is answerable upon an independent contract, and it is his duty to take up the bill when dishonored; and that the rule, adopted in that State, that a surety may call upon the creditor to prosecute the principal, did not extend in its privilege to an indorser, though he could show any act impairing his right to resort against the principal in exoneration of himself from his engagement to the creditor.*

§ 1305. Fixed indorsers are sureties. The fact that the liability of the drawer or indorser is fixed by due demand and notice, does not alter their relation as sureties of the debt; it simply fixes their liability as sureties for its payment, provided nothing is done by the creditor to exonerate them. This view is established by great

2. Newcomb v. Raynor, 21 Wend. 108; Byles on Bills (Sharswood's ed.) [*2361, 379; Edwards on Bills, 565.

3. Edelen v. White, 6 Bush, 408.

4. Trimble v. Thorn, 16 Johns. 152 (1819); Beardsley v. Warner, 6 Wend. 613 (1831); Gibson v. Parlin, 13 Nebr. 292. In the case of a nonnegotiable note, the assignee must sue the maker before he can resort to the assignor. Lee v. Love, 1 Call, 497; Bronaugh v. Scott, 5 Call, 78; Perrin v. Broadwell, 3 Dana, 596; Huntington v. Harvey, 4 Conn. 125; Bishop v. Yeazle, 6 Blackf. 127; Ricketson v. Wood, 10 Mo. 547. These and other cases are quoted by Professor Parsons (2 Parsons on Notes and Bills, 244) for the doctrine, that the indorsee of a negotiable note loses his recourse against the maker by neglect to sue. But they do not so hold, their application being limited to the resort of an assignee of a nonnegotiable note against his assignor. There are, however, statutory provisions in some of the States which require prompt recourse against the principal before pursuing the indorser.

Professor

weight of authority, and may be regarded as settled. Parsons regards some New York cases as maintaining a different doctrine that after demand and notice the drawer and indorser become definitely liable as principals. This view is a just deduction from these cases, but they did not so expressly decide, but only that the indorser is not a surety entitled to require the holder to sue as sureties might do under the New York law.7

When, however, a final judgment has been entered against the drawer or indorser, the relation of suretyship ceases, and his liability is merged in that of a principal judgment debtor.

§ 1306. Whatever discharges acceptor or maker discharges drawer and indorsers. As a general rule, whatever discharges the acceptor of a bill or maker of a note discharges the drawer and indorsers who are sureties, for the contract which they undertook to assure thus passes out of existence by the act of the beneficiary. He cannot discharge the party primarily bound for the performance of an engagement, and then insist that another shall stand responsible for its performance. Besides, the drawer or indorser, on making payment for the maker or acceptor, would be entitled to the holder's remedies against him; and if the holder has discharged him from his obligation, the drawer or indorser would be remediless and have no resort for reimbursement.9

5. Clark v. Devlin, 3 Bos. & P. 365; English v. Darley, 2 Bos. & P. 61; Gould v. Robson, 8 East, 576; Veazie v. Carr, 3 Allen, 14; Bank of United States v. Hatch, 6 Pet. 250; Burrill v. Smith, 7 Pick. 291; Lobdell v. Niphler, 4 La. (O. S.) 295; Hefford v. Morton, 11 La. (O. S.) 117; Millaudon v. Arnons, 15 Mart. 596; Wood v. Jefferson County Bank, 9 Cow. 194; Hubbly v. Brown, 16 Johns. 70; Priest v. Watson, 7 Mo. App. 578; Story on Notes, § 413; Story on Bills, § 425; 2 Parsons on Notes and Bills, 243, 244; Edwards on Bills, 569; Tanner v. Gude, 100 Ga. 157, 27 S. E. 938, citing text.

6. 2 Parsons on Notes and Bills, 243.

7. Trimble v. Thorn, 16 Johns. 152; Beardsley v. Warner, 6 Wend. 613; Warner v. Beardsley, 8 Wend. 202, Seward, Senator, quære.

8. Bray v. Manson, 8 M. & W. 668, Parke, B.; Baker v. Flower, 5 Jur. 655. It is otherwise in Texas by statute. Pasch. Dig., art. 4789; Parke v. Nations, 33 Tex. 210.

9. Sargent v. Appleton, 6 Mass. 85; Couch v. Waring, 9 Conn. 261; Byles on Bills (Sharswood's ed.), 378, 386; Broadway Sav. Bank v. Schmucker, 7 Mo. App. 171; Gunnis v. Weigley, 114 Pa. St. 194; Shutts v. Fingar, 100 N. Y. 539, citing the text. But if the indorser himself joins in the contract, and together with the indorsee releases the maker, the rule has no force, and the indorser may still be held upon his indorsement. The reason for the rule is that the indorsee may not impair the indorser's right of action against the maker after VOL. II-21

Upon this principle, where the holder of a note sued the maker and recovered judgment, and afterward sued the indorser for a balance of interest, it was held that the latter suit could not be maintained; for the maker was discharged by the first suit from all further liability, on the principle nemo debet bis vexari eadem causa, and, therefore, there could be no remedy against the indorser. 10 A mere surety may plead in bar to an action on a note the discharge of the principal on account of its illegality."1

§ 1306a. Cases in which surety is bound although principal is not. There are some cases, however, in which the principal may be discharged and the surety be still bound. Thus, if a party became surety for a married woman whose note is void because she could not make such a contract, the surety will nevertheless be bound, there being no fraud, duress, or deceit in the procuration of the note; 12 but it would be otherwise if either of these elements entered into the transaction.13 How far an indorser is bound, though the maker may not be, has been elsewhere considered.14

§ 1307. Discharge of prior indorser discharges subsequent indorsers. -We have already seen that whatever discharges a prior indorser discharges all subsequent indorsers, for the reason that he stood between them and the holder, and on making payment each one could have had recourse against him, but from which his discharge precludes them.15 It follows from the same reasoning that discharge of a subsequent indorser can discharge no prior party; for such subsequent indorser could, under no circumstances, be liable to such prior party.16 The contracts of the several indorsers

having paid the note, but when the indorser himself releases this right, the reason having ceased to exist, the rule fails also. Mulnix v. Spratlin, 10 Colo. App. 391, 50 Pac. 1078; Brown v. Croy, 74 Mo. App. 462; Bernd v. Lyles, 71 Conn. 734.

10. Couch v. Waring, 9 Conn. 261.

11. Gill v. Morris, 11 Heisk. 614.

12. Davis v. Staaps, 43 Ind. 103; Hicks v. Randolph, 3 Baxt. 352; Jones v. Crosthwaite, 17 Iowa, 393; Allen v. Berryhill, 27 Iowa, 531. See § 1314; Lee v. Yandell, 69 Tex. 36, citing the text.

13. Osborn v. Robbins, 36 N. Y. 365. See Gist v. Feitz, 43 Nebr. 238, 61 N. W. 621.

14. See vol. I, §§ 669-679, especially § 675.

15. Newcomb v. Raynor, 21 Wend. 108; Shutts v. Fingar, 100 N. Y. 539, citing the text. But it is not necessary to notify a prior indorser in order to hold a subsequent one.

16. Claridge v. Dalton, 4 Maule & S. 232; English v. Darley, 2 Bos. & P. 61; Smith v. Knox, 3 Esp. 46; Bank of United States v. Hatch, 6 Pet. 250;

are like so many links of a pendant chain: if the holder dissolves the first, every link falls with it. If he dissolves an intermediate link, all after it are likewise dissolved. But the last link supports nothing, and its dissolution injures no one.17

SECTION II.

WHAT ACTS OF CREDITOR DISCHARGE A SURETY FOR THE Debt.

§ 1308. We may enumerate as matters which will discharge a surety (1) Misrepresentation or concealment to induce his becoming surety. (2) Diversion of the instrument from the agreed purpose. (3) Alteration of the instrument. (4) Payment. (5) Release. (6) Satisfaction. (7) Covenant not to sue a prior party. (8) Parting with security for the debt. (9) Agreement to indulge prior party by extension of time or forbearance of suit.

§ 1309. (I, II, and III.) As to misrepresentation, concealment, duress, diversion, and alteration. The contract of suretyship is a contract uberrimæ fidei. Therefore, where one is induced to become surety for another, as drawer of a bill, or indorser of a note for accommodation, or otherwise, and there is any misrepresentation or fraudulent concealment of a material fact, which, if known, would have induced the drawer or indorser or other surety not to enter into the contract, his contract is void from the beginning as between the surety and all parties privy to such misrepresentation or concealment.18 Any essential vice in the obligation of the principal which may suffice to annul it is as available to the surety as to him, unless the surety be also the assignor, in which case he is estopped from setting up the antecedent defect.19 If the White v. Hopkins, 3 Watts & S. 99; Lynch v. Reynolds, 16 Johns. 41; Thompson on Bills, 393; Story on Notes, §§ 420, 423, 434; Story on Bills, § 429. 17. See Edwards on Bills, 570.

18. Hamilton v. Watson, 12 Clarke & F. 109; North British Ins. Co. v. Lloyd, 10 Exch. 523; Solser v. Brock, 3 Ohio St. 302; Evans v. Keeland, 9 Ala. 42; Byles on Bills (Sharswood's ed.), 377; Melick v. First Nat. Bank, 52 Iowa, 94, where payee assured surety that payor was not indebted to him in any further amount. Jungk v. Holbrook, 15 Utah, 198, 49 Pac. 305, 62 Am. St. Rep. 921; Howard v. Johnson, 91 Ga. 319, 18 S. E. 132; Lewis v. Brown, 89 Ga. 115, 14 S. E. 881; Harrington v. Findley, 89 Ga. 385, 15 S. E. 483; First Nat. Bank of Stanford v. Mattingly, 92 Ky. 650, 18 S. W. 940; St. Louis Nat. Bank v. Flanagan, 129 Mo. 178, 31 S. W. 773, citing text.

19. Putnam v. Schuyler, 4 Hun, 168; Harrington v. Findley, 89 Ga. 385, 15 S. E. 483.

20

principal signed under duress, the holder guilty of the duress could not enforce the obligation against a surety." If the payee is neither cognizant of, nor participates in the fraud, he is not affected by it.21 Any fraud which deceives the surety after he has become a party releases him.22 And where a bill is drawn or ac cepted, or a note made or indorsed for accommodation, with an agreement that it shall be used for a particular purpose, any diversion in its use operates a discharge of the accommodation party as to all other parties who have knowledge of such diversion. But this subject is elsewhere more fully considered.24 So alteration is elsewhere treated.25

If the holder inform an indorser that the bill has been paid by the acceptor, which statement is untrue, he cannot afterward sustain an action against the indorser, though his liability was duly fixed, if in the meantime any party against whom the indorser could have had recourse for payment has become insolvent.26

§ 1310. (IV) Payment by the maker or acceptor, of course, discharges the drawer and indorsers,27 as will also a tender of payment which the holder refuses to accept.28 (V) So also does a release of

20. Griffith v. Sitgreaves, 90 Pa. St. 161.

21. Anderson v. Warne, 71 Ill. 20.

22. Harris v. Brooks, 21 Pick. 122; Denton v. Butler & Stevens, 99 Ga. 264, 25 S. E. 624; Harrington v. Findley, 89 Ga. 385, 15 S. E. 483. Where a surety, upon a promissory note on behalf of himself and cosurety, called upon the payee in relation to the liability of the sureties on such note, and was told by the payee that he would look to the principal for payment and never to either of the sureties, held, that it was competent to prove such conversation by the testimony of the cosurety, to whom the statements of the payee had been communicated by the surety, who had conversed with the payee, it appearing from the evidence that the latter surety was acting for both parties. See Wolf v. Madden, 82 Iowa, 114, 47 N. W. 981.

23. Dewey v. Cochran, 4 Jones, 184; Southerland v. Whitaker, 5 Jones, 5; 1 Parsons on Notes and Bills, 236.

24. See chapter XXIV, §§ 790, 796, vol. I.

25. See chapter XLIII, on Alteration, vol. II. And it follows that any material variation in the instrument without the consent of the surety will discharge him. See Stutts v. Strayer, 60 Ohio St. 384, 54 N. E. 368, 71 Am.

St. Rep. 723.

26. Petrie v. Feeder, 21 Wend. 171.

27. See chapter XXXVIII, on Payment.

28. Spurgeon v. Smiths, 114 Ind. 453. But a tender of goods which is refused will not have that effect. Wilson v. McVey, 83 Ind. 108. In Illinois, it has been held that an agreement between a third party and the grantors of lots sold to a minor, by which the former guarantees that the minor will