Emery v. Richardson

On the second day of October, a. d. 1866, the defendant, as principal, and James E. Fernald, as surety, in consideration that the plaintiffs had conveyed to the defendant the balance of their interest in a certain invention, entitled “ A safety switch for preventing railroad cars and engines from running bff their tracks,” together with their interest in the letters patent issued therefor, and of the receipt of one dollar, jointly and severally promised and agreed with the plaintiffs to pay them the sum of seven thousand dollars, on or before the eighth day of January then next, or to reconvey and revest in the plaintiffs all the property and rights they had received from them by virtue of said conveyance.

On April 13, 1867, the surety paid the plaintiffs $1,000, and on the 13th day of the following August he gave them eleven notes of five hundred dollars each, and one of seven hundred and thirty-three dollars and four cents. The first note was payable Sept. 15, 1867, and the others monthly thereafter, respectively. It was *103stipulated between the plaintiffs and the surety that “ the notes, when paid, with what the surety had previously paid were to be regarded as full payment and satisfaction of the contract of Oct. 2, 1866.”

Neither alternative of the contract of Oct. 2, 1866, has ever been complied with; and the only defense relied upon is the aforesaid arrangement entered into between the plaintiffs and the surety.

It is argued by the counsel for the defendant that that transaction constituted a new contract superseding the contract of Oct. 2,1866, and discharging the defendant from all liability thereon. It appears that the defendant was not a party to that contract, and that he never assented to it. It was a contract exclusively between the surety of the contractor and the contractee. In the contemplation of the parties to it, the notes were not to be regarded as payment and satisfaction of the prior contract unless they were paid, a contingency that has never occurred. If, therefore, the taking of the notes operated in law as a discharge of the defendant from his liability on his contract, it has an effect contrary to the intention of the parties to it.

The case is clearly distinguishable from that class of cases where, for a valid consideration, the contractee agrees with the contractor without the knowledge or consent of the surety to extend the time of .payment. In such cases, a new contract is made materially differing from the old one. The surety not being a party to the new contract cannot be held under it, nor is lie liable under the old one, since that has been superseded by the new one ; the right of action of the contractee against the surety is not simply suspended by the new arrangement, but it is lost. Besides, by the extension of the time of payment the surety might lose his claim against his principal for indemnity if he should pay the debt.

In the case at bar the surety undoubtedly made a new contract with the plaintiffs in respect to his liability on the prior contract. But this new contract, by its terms, only relieved him from that one conditionally; and if, as the counsel for the defendant contends, *104the new contract suspended the plaintiff’s remedy against the surety on the original contract, during the time fixed for the payment of the notes, the1 defendant has no cause of complaint; he was not damaged by this suspension; nor would he have been damaged if the surety had fulfilled his new contract, with the plaintiffs. It was immaterial to the defendant whether he paid his debt to the plaintiffs or reimbursed his surety for paying it. And even if the new arrangement suspended the plaintiffs’ right of action against the defendant for the time being, what cause of complaint would he have ? How was he damaged ? He might have paid his debt at any time, and if he had done so pending the provisional arrangement between the plaintiffs and his surety, the latter would have been relieved from his liability to pay the notes to the plaintiffs. But the contract with the surety did not suspend the plaintiffs’ right of action against the defendant; that' was another form of security given by the surety to which the defendant was a stranger, •and by which he lost no rights, was not damaged, nor discharged from liability on the original contract.

According to the provisions of the report, the entry must be,

Judgment for plaintiffs, for the sum of seven thousand dollars and interest from Jan. 31,1867, less the payments specified in the report, and the interest thereon from the time they are respectively. made.