The plaintiffs in error entrusted to' the maker of the promissory notes, the said notes with their names on them -as sureties. They were payable to Neal or bearer.
The maker did not get the money from Neal, as perhaps -was expected, but got it from the bank .on a bankable -.paper of his own secured by these notes as collateral. Thus they were put in circulation by the maker and got into the ■hands of the bank.' The sureties claimed to be discharged ■because their contract was broken and their risk increased.
Their contract was to pay these notes unless the maker -.paid them to whomsoever might be their bearer. The bank tbecame legally the bearer and entitled to be paid. It received them before due, and knew nothing of any agreement outside of the face of the paper. The sureties put '.the notes in the hands of their brother, the maker, for the ■purpose of getting money on them. If from -Neal, well; if not, then from bearer. The bank became bearer and let the brother have the money.- The sureties ought ex aequo et bono to pay them, and the law makes It their legal duty, we think, to do so. Code, §2785.
If they did expect the brother to borrow from Neal, and instead of doing so he got the money from another who knew nothing of their expectation, it can make no *655difference. Their contract is to pay bearer. The notes are the same as if generally to bearer. Daniel on Neg. Ins., §105.
1 The very terms are in the alternative — Neal or bearer— and the meaning is to pay either.
That the bank took the notes as collateral, does not affect their right to collect. It is on the same footing as -a purchaser still. Code, §2788.
The contract was not then changed so as to release the sureties. Was anything done -by the bank to increase their risk? Their failure to sue did not legally increase it so as to discharge them. They could have paid the notes and sued them, or given notice to the bank to sue. It is no answer that they did riot know that the bank had them. There is no proof that they tried to pay them to Neal, or called on him to pay them, or made inquiry of their brother touching what had become of the notes, or whether they were paid, or who held them. The bank had six years within which to sue the notes, and no laches or neglect of legal obligation is chargeable to it, unless it had notice to sue.
On the contrary, the laches is that of the sureties. They neglected to look after their paper, which they had authorized to be put in circulation by the maker to raise money for him, who was their brother; they put it in his power to use their names as sureties to borrow from bearer; he did so borrow by virtue of the notes as cob lateral thus given by them; and even if he deceived them and had actually contracted by word of mouth with them not to borrow except from Neal, (which would have been a queer contract, by the way, for it is hard to see without proof why they cared from whom he got the money), even if he deceived them the bank was innocent, and conceding their innocence too, yet they put it in his power to use the notes, and they must suffer rather than the bearer of the paper, because where one of two innocent parties puts it in the power of a third to do wrong to one of them, he must suffer rather than him who was wronged without any fault at all.
*656Therefore, it seems "to us that these sureties are not discharged either by alteration of their contract or by any increase of their risK by the conduct of the bank. Their contract has not been at all changed, either in amount, interest, or time of payment.
■ It stands as they made it in writing without jot or tittle of change. The bank never indulged the maker a moment , for any consideration, nor did it do any other act or neglect any legal obligation which increased the risk of the sureties so as to release them on that ground.
The verdict is right and the judgment must be affirmed.
Judgment affirmed.