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an insane person, or an infant, though in these cases the contract is voidable instead of absolutely void. However, where an infant bought land, and, on, reaching his majority, elected to avoid the contract and offered to return the land, his surety was not held liable for the price, because the court said the creditor could get the land back and this extinguished the consideration for the contract (2). In case the performance of a contract by the principal is guaranteed and the creditor fails to perform his part of the contract, there is failure of consideration, and therefore the surety is not liable (3). Other cases of absence of liability of the principal have arisen when a partner executes a bond in the name of the partnership, without authority. In such a case the partnership is not bound by the contract. When a corporation makes a contract which is wholly ultra vires, the corporation is not liable on the contract, yet a surety on it is bound. The principal contract is void because the corporation had no power or capacity to make it. Whether the surety is liable in case of a contract void because it is illegal, depends on the law as to illegality. If the creditor knows of the illegality, the surety is not liable, for the creditor is in pari delicto; but, if the creditor is innocent, the surety can be held to his agreement even though the principal is not liable.

§ 22. Payment of debt discharges surety. Payment of the debt discharges the surety. Whenever the principal debtor is released, the surety or co-sureties are also dis

(2) Baker v. Kennett, 54 Missouri, 82.

(3) Sawyer v. Chambers, 43 Barbour (N. Y.) 622.

charged, and it is immaterial by whom the debt is paid (4). Thus, when the obligation is in the form of a note, and a third party gives the principal money with which to buy the note from the creditor and the principal pays the note with this money, the creditor receiving it as payment, the surety is thereby discharged (5). When the liability of the principal is discharged, that of his surety is also extinguished. The liability of the latter cannot exceed that of the former, except where the principal is discharged by operation of law, as by a discharge in bankruptcy, in which case the surety is not discharged.

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§ 23. Fraud and duress by creditor in securing contract. person is not allowed to take advantage of his own misconduct; so, if a creditor secures his contract by means of fraud or duress as to the principal debtor, one who becomes surety for the performance of such contract can set up such fraud or duress against the creditor and escape liability, unless the surety at the time he entered into the contract of suretyship knew of the fraud or duress practiced on the principal debtor. Thus, when the defendant was accommodation endorser of some promissory notes, which were secured by the payee by duress upon the maker, and was sued by the payee, it was held the fraud could be pleaded by the defendant and that the plaintiff could not recover on the notes. The defendant signed the notes without any knowledge that they were secured from the maker by duress (6). In accordance with the rule above stated, if the defendant had

(4) Crawford v. Beall, 21 Maryland, 208.

(5) Eastman v. Plummer, 32 New Hampshire, 238. (6) Griffith v. Sitgreaves, 811⁄2 Pennsylvania, 378.

known when he indorsed the notes that the creditor had procured their execution by duress as to the principal, there would be no defense available to him, for he became surety of a note knowing the circumstances of their execution, and was not in any way defrauded or deceived by the creditor.

§ 24. Creditor not bound to press his claim against principal debtor. The fact the creditor might have recovered the money due him, had he been diligent in pressing his claim against the principal, is no defense to the surety, for the creditor is not obliged to sue the principal. He may wait as long as he pleases before pressing his claim, so long as he does no affirmative act which is prejudicial to the surety's rights. The surety, if he considers the creditor is not diligent enough in pressing his claim, always has the privilege of paying the claim and then proceeding against the principal to secure reimbursement. In an Illinois case, a surety on a promissory note filed a bill in equity to enjoin a suit against him, brought by the holder of the note, alleging that the principal was deceased, that the owner of the note had neglected to file his claim against the principal's estate within two years, so that his right was bared as to the principal's estate; and claiming that the surety was thereby discharged. The court held, however, that there is no duty of active diligence incumbent on the creditor in such a case, and all the surety has a right to require is that the creditor does no affirmative act that will operate to his prejudice. It is the duty of the surety to see that the principal pays (7).

(7) Villars v. Palmer, 67 Illinois, 204.

In this case the obligation as to the principal's estate was completely barred by a statute of limitations, but this fact did not affect the surety's liability. The same rule is generally applied when a surety, after making a contract, moves to another state; and is sued there after the statue of limitations has run against the principal in the state where the contract was made. As a rule the statute of limitations stops running against a party while he is out of the state. The surety being out of the state the statute does not run as to him and he still remains liable, though the principal has a good defense. There is some authority, however, that when the right is barred as to the principal the surety is no longer liable. Likewise, the surety remains liable when the right against the principal is suspended, because of war between his country and the country in which the surety resides, as is shown by a Maryland case where the surety had to pay interest on the debt of a British subject during the Revolutionary war (8).

§ 25. Effect of acts of creditor due to fraud or judicial error. If the creditor accepts payment from the principal, and the payment proves to be made in fraud of creditors of the principal so that the creditor is forced to return it, he may still proceed against the surety, unless he knew the payment was fraudulently made; for the creditor has to accept payment when offered, and no act of his injures the surety in such case. The rule is the same where the creditor gives up the original note or bond and takes in its stead a forged note or bond, not knowing of

(8) Paul v. Christie, 4 Harris and McHenry, 161.

the forgery. In such cases, since the creditor is innocent of the wrong of the principal, any injury to the surety is through no fault of his. Where a creditor gets a judg ment against a surety, and later sues the principal and loses in his suit against the principal; the surety, it is held, may have the judgment against him set aside, because he is no longer liable when the principal is released by a judicial decision (9). This, however, it seems should not be true, where the defense the principal set up in the suit brought by the creditor against him was one not available to the surety, as, for instance, the defense of infancy or ultra vires; for, as we saw in a preceding section (10) the fact there is no valid principal obligation does not release the surety.

§ 26. Discharge of surety by affirmative act of creditor. It is well settled law that when the creditor does an affirmative act which prejudices any right of the surety, the surety is thereby released from his obligation to the creditor. It may be well briefly to state some of the rights of the surety, before proceeding to discuss how such rights may be prejudiced by acts of the creditor. It is apparent that the surety's contract is made for the benefit of the principal debtor, and therefore the principal debtor is bound to see that his surety suffers no loss; and, though there be no express promise on the part of the principal to indemnify the surety for any loss he may suffer, the law implies such an obligation. The surety then can sue the principal at law for any damage he may suffer. Be

(9) Ames v. Maclay, 14 Iowa, 281.

(10) See § 21, above.

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