Blackstone Bank v. Hill

The first objection, that an extension of credit was given to the principal without the consent of the surety, if made out, would be a good defence, but it is not supported in point of fact. The principle is stated in Oxford Bank v. Lewis, 8 Pick. 458, [2d ed. 459, note 1,] that to discharge the surety, the contract for new credit must be such as will prevent the holder of the note from bringing an action against the principal. The plaintiffs were not precluded, during such supposed renewed term of credit, from suing the principal, in the case under consideration. As to the understanding that the plaintiffs were not to collect the note unless they should want money, that was a matter of courtesy rather than of legal obligation. The strongest circumstance showing a renewed credit, is the receiving of interest in advance ; but in the case of Oxford Bank v. Lewis, where that point was directly adjudged, it was held that that circumstance did not tie the hands of the plaintiffs, if at any time they thought it necessary for their security to bring an action.1

Another question is, to what amount is the defendant chargeable. A surety is only answerable for so much of the debt as is not paid by the principal. The defendant relies on the judgment recovered by the plaintiffs upon several notes, including the two now in suit, and a partial satisfaction of the plaintiff’s execution, as showing a payment upon the two notes. *134The plaintiffs claim the benefit of the principle of law enabling a creditor having several demands against a debtor, to appropriate a payment to the demand which is least secure, unless the debtor, at the time of the payment, elects to have it appropriated to a different demand. The principle is glear, where it can be applied; but it has place only in cases of voluntary payment. It cannot be applied to a payment by process of law or in invitum. It was not in the power of Wall to make his election, and say that the property levied on should be appropriated in satisfaction of a particular note out of several embraced in the judgment. We think the same rule applies to the plaintiffs. All the debts sued by them having been consolidated into one by the judgment, and that one having been partly discharged, all the notes embraced in it must be taken to be satisfied proportionably, and the notes now in suit are therefore paid pro tanto.2

A question remains in regard to the assignment. If the provision had been, that the defendant should first apply the property assigned, to the payment of the notes signed by the assignor, and then pay over the surplus to Bates, the defendant would be held to apply the proceeds to pay the notes. But he would not be so held, if the goods were assigned to him in order that with the proceeds he might indemnify himself against his liabilities, and pay over the surplus to Bates. And such is clearly the character and effect of this assignment. Bates has a claim against the defendant for all the property not required for the indemnity of the defendant, and the assignment does not enlarge his liability.

Defendant defaulted.