When the note in suit became due it was the duty of the defendant to pay it to the holders, and as this duty was not performed, both the maker and the indorsers (they having been duly charged as indorsers) were liable absolutely to the holders. This being the condition of the parties the maker gave the amount of the note to the payees, who had no authority from the holders to receive the money; and the holders having, after knowledge of this fact, taken from the payees a note on time for their indebtedness, including the amount of the note in suit, the maker now insists that he was thereby discharged. The principle of which he seeks to avail himself is that a surety shall be discharged by the creditor's giving time to the principal debtor. The ground on which that rule rests is, that by such an arrangement the surety may be prejudiced in respect to his remedy against the principal debtor. But the circumstances of this case show that it cannot be brought within the rule. The payees were not in any respect the agent of the holders. They had not title to receive the money from the maker, and were bound to restore it to him on demand. To his action for the money they could have interposed no defence, either before they had received time from the holders for the payment of their indorsement or afterwards. The maker could therefore sustain no legal prejudice by that agreement for time, and he cannot therefore be regarded as standing in the position of a surety for the indorsers.
The most favorable view which can be taken of the position *Page 140 of these parties is to consider the indorsers as agents of the maker to take up his note from the holders. An agent so situated might be accepted by the creditor as the debtor, and the principal discharged, but no such fact appears in this case. On the contrary, the evidence shows that the creditors insisted on retaining the liability of the principal debtor, the maker, and that they dealt with the indorsers only in respect to their own liability on the note, leaving the maker to settle his own rights with his agents as he should think fit.
The judgment should be reversed, and a new trial ordered.
SELDEN, J., was absent; all the other judges concurring,
Judgment reversed, and new trial ordered.