Prout v. Branch Bank at Decatur

GOLDTHWAITE, J.

1. It must be conceded, that here there has been a valid contract between the Bank and one of the drawers of the bill, for indulgence; and, therefore, the principal question is, whether the reservation in the deed is effectual, to continue in force the right of the bank to enforce payment from these defendants as indorsers, after the expiration of the time for which indulgence was stipulated. We say after the time, because no question arises whether the suit could be brought during the period for which delay was agreed to be given. To determine this question, it is necessary to ascertain what the parties contracting meant and intended by this reservation; for it cannot at this day be doubted, that contracts are so to be construed as to give effect, if it legally can be done, to the intention of the parties. It is said that if a deed can operate two ways, one consistent with the intention, and the other repugnant to it, courts will ever be astute so to construe it as to give effect to the intent.— [Earl of Clanrickard’s case, Hob. 277; Sally v. Forbes, 2 B. & B. 38.] The intention is made apparent upon the face of this deed, that time .shall be given to the drawer, unless some party *312subsequent in liability on the bills or notes, should see proper to direct a suit to be instituted.

It is said, however, that the deed does not contemplate that one standing in this relation to the bill, might defeat the indulgence by paying it, and suing on it in his own name, or for the money paid. The cases of Gould v. Robson, [8 East, 576,] and Boultbee v. Stubbs, [18 Vesey, 20,] have been much relied on to show, that reservations of a right, of this nature, are construed strictly. The first -was the case of tbe holder of a bill after it became due, receiving part payment from the acceptor, and taking from him another bill, payable at a future short date for the remainder ; but agreeing to keep the original bill in the interim, as a security. It was held the indorser was discharged. The other was the case of a creditor giving time to the principal, in a bond for a part of the debt, but expressly, without prejudice to any security which the creditor then held. An injunction was allowed upon a suit by the creditor against a surety to the bond. In the case where the original bill was retained as a security, the court considered the implied agreement to be that it should not be sued on until after the dishonor of the new one. In the case of the bond, the lord chancellor conceded that a reservation of the right against a surety could be made, provided the surety’s remedy against his principal was notimpaiied: how, after this concession, the injunction was allowed, the report does not explain. It seems to us that neither of these cases warrant the principle contended for here, because it is perfectly clear upon this deed that the giving of time was entirely dependent upon the action of the parties who were subsequent in liability upon the notes or bills. If they required suit to be brought the bank was at liberty to bring it, and it is not too much to say for the effect of such a reservation, that it had no tendency whatever to impair or defeat the right or remedy of any surety. The doctrine of our court as well as of others, is, that there is no obligation upon the creditor, of active diligence; all that is required of him is, that he shall make no contract to suspend his remedy, to the prejudice of those who are secondarily liable. [Inge v. Branch Bank of *313Mobile, 8 Porter, 108; Wright v. Simpson, 6 Vesey, 734: Trust Navigation Co. v. Harley, 10 East, 40; American Cases to the same effect, cited in Chitty on Bills, ed. 1836,442, n. 1.]

In the case of Boultbee v. Stubbs, before cited, Lord Eldon seems to have been impressed with the idea that stipulations of this kind were, in many cases, so absurd, that the intention should be seen plainly to give it effect; but even in England it has never been held, so far as we can ascertain that such a reservation is not effectual when made. Indeed, it has been repeatedly held, both before and since that decision, that the right against a surety or joint debtor, was not gone when there was such a reservation. [Sally v. Forbes, 2 B. & B. 38, Ex parte Carstairs, Buck. 560; Ex parte Clendening, ib. 517.] To the same effect is Bailey v. Baldwin, [7 Wend. 289,] a case very similar in the terms of the reservation, to the one we are now considering.

We conclude, therefore, that the reservation in the deed was effectual to continue the right of action against the defendants, after the expiration of the term given for delay to the drawer; and therefore, that they are not discharged by reason of the contract between the bank and Rhea.

2. The question, whether the deed itself is void, in consequence of the stipulation that such sureties as may require suit to be brought, should not be benefitted by it, and that Rhea should remain in possession, with power to sell, until default, does not arise here, inasmuch as those defendants could, by becoming judgment creditors of Rhea, have tested the legal sufficiency of the deed by a levy. Even if the deed is conceded to be void, by reason of these stipulations, as against a creditor of Rhea, it is no discharge to the parties to the notes or bills.

Upon the whole, we think there is no error in the judgment, and it is therefore affirmed.