§ 103. Extension of time to the principal in a criminal case. Whether an agreement between the officers of the state and the principal in a criminal case for a continuance, without the assent of the sureties on his bond, will discharge them, is a question upon which the authorities disagree. That there is a difference between the surety's responsibility on an ordinary bond and a criminal bail bond, is well recognized. The undertaking of an ordinary surety is discharged whenever he pays his principal's obligation. Payment discharges both principal and surety. But the principal on a criminal bond is not discharged by payment of the amount called for in the bond. The surety is under a duty to see that the accused principal appears in court when required. The custody of the accused is transferred to the surety by the acceptance of the bail bond, and he stands in place of the sheriff.66 Probably most cases hold that the surety is not relieved by continuances granted the accused without the consent of the former. The reason for such a conclusion is the continuing duty of the surety to produce his principal whenever the court directs.67 A mistrial of the principal will not release the sureties. Nothing except a valid release, or acquittal, will relieve them. Chief Justice Clark, in an opinion for the North Carolina Supreme Court, said: "A person once in court by service of summons or subpoena, or by giving bond for his appearance in a criminal action, must continue to appear, according to the precept of the court, until discharged; and, in the latter case, his sureties remain liable until the defendant is placed in custody, or gives a new bond, or is discharged on acquittal or by order of the court."' 68 Other decisions, based somewhat on the language of the particular recognizance in question, have held that the bond terminated with the term of court to which it bound the principal to appear.69 66 City of St. Louis v. Young et al. (1911) 235 Mo. 44, 138 S. W. 5, 11. 67 State v. Cooper et al. (1920) 147 Minn. 272, 180 N. W. 99. 68 State v. Eure (1916) 172 N. C. 874, 89 S. E. 788, 789. 69 State, to use of Gage County v. Murdock (1900) 59 Neb. 521, 81 N. W. 447. For a general discussion of the subject, see note in (1921) 30 Yale Law Journal, p. 529; sec. 263, infra. The United States Supreme Court, in a case where a stipula. tion was made between the accused and the government to postpone trial to a future date, after civil cases against him had been disposed of, with the understanding that the principal might go to Mexico in the meantime, held the sureties were discharged. The postponement would be for an uncertain time, perhaps several years, and the government by consenting that the accused might go to Mexico made it impossible for the surety to exercise the right to arrest and surrender him.70 § 104. Duty of the obligee to the mortgagor or retiring partner. As previously discussed a grantee who assumes a mortgage for part of the purchase price, or a continuing partner who assumes the partnership debts, is the principal, and the mortgagor or retiring partner is the surety for such debts.71 But if the grantee of the mortgagor does not assume payment of the mortgage debt, no relation of principal and surety can arise for the deficiency above the value of the property.72 Whether an extension of time given by the mortgagee to the purchaser for consideration releases the mortgagor, or a prolongation of the time within which the continuing partner may pay a firm debt releases the one who has retired, is a question on which authorities will be found reaching opposite conclusions. There is, of course, a difference between these cases and the ordinary case of principal and surety in that at the time the debt was incurred the mortgagee or creditor dealt with the mortgagor or partnership only, and at that time he could treat the mortgagor or partners as principal. To apply the ordinary rules governing principal and surety, compels the creditor to treat the mortgagor and retiring partner differently than he was entitled to treat them when the debt was incurred. It is true, however that even if he is ignorant of the existence of a surety, when the obligee acquires knowledge that a surety has signed, he must treat with him as such.73 70 Reese v. United States (1869) 9 Wall. 13, 19 L. Ed. 541. 71 See Sec. 9, supra; Jones on Mortgages (1904, 6th Ed.) Vol. I, Sec. 741. 72 Braun v. Crew et ux. (1920) Cal. 192 Pac. 531. 78The rule that a mortgagee is bound, in dealing with his security and with the bond, to observe the The following excerpt from a Federal opinion, while concerning the mortgagor and mortgagee, would apply equally where a partner by assuming the firm debts is a principal, and the retiring partner becomes a surety: "Two different views exist and have been applied to cases in which a mortgagor conveys the mortgaged premises subject to the mortgage and the grantee assumes and agrees to pay the mortgage indebtedness to the mortgagee. The one equitable rights of third persons, of which he has notice, has been frequently recognized." Calvo v. Davis (1878) 73 N. Y. 211, 215, 29 Am. Rep. 130. But if the surety consents, he is not released by a transaction between creditor and principal. Johnson v. Prater (1889) 84 Ga. 141, 10 S. E. 589. The New York courts have taken the same view in case of a retiring partner. Colgrove V. Tallman (1876) 67 N. Y. 95, 23 Am. Rep. 90. Accord: Smith V. Shelden (1876) 35 Mich. 42, 24 Am. Rep. 529. In holding that actual notice to the creditor of the assumption of the firm debts by the continuing partner requires that the retiring partner be treated as a surety, Justice Cobb, speaking for the Supreme Court of Georgia, said: "It is well settled that where a partnership is dissolved by the retirement of one of the members, and the continuing partner assumes the payment of the debts of the firm, the retiring parther, as between himself and his copartner, is no longer a principal debtor, but merely a surety for the latter upon the debts of the firm. ... Some disagreement among the courts has arisen in fixing the rights of creditors after dissolution by the retirement of one member and the assumption of the debts by the other. Of course, if a creditor is a party to the agreement made between the partners, he will be bound by it, and must deal with the retiring partner as a surety. All are agreed to this. The difficulty has arisen in determining whether mere knowledge by the creditor of the dissolution and of the agreement of the partners would require him to deal thereafter with the retiring partner as a surety, with reference to past transactions of the firm.' "" Preston v. Garrard (1904) 120 Ga. 689, 48 S. E. 118, 102 A. S. R. 124. After reviewing the leading cases on both sides of the controversy, this was the conclusion in Shapleigh Hardware Co. v. Wells (1896) 90 Texas 110, 37 S. W. 411, 59 A. S. R. 783, 784: "We think that the weight of authority and sound reasoning support the proposition that one of two or more principal debtors cannot, by agreement with his codebtor or debtors, without consent of the creditor, so change the character of his liability from principal to surety as to entitle him from the creditor to the treatment and protection of a surety for the debt." See Sec. 9, supra, and cases cited; Tootle et al. v. Cook et al. (1893) 4 Colo. App. 111, 35 Pac. 193; Norman et al. v. Jackson Fertilizer Co. (1902) 79 Miss. 747, 31 So. 419. supported by the great weight of authority is that, as between themselves, the grantee becomes the principal debtor primarily liable for the debt, and the mortgagor becomes a surety with all of the consequences flowing from the relationship of principal and surety. According to this view, the mortgagee may treat both of them as his debtors, and may enforce liability against either, or he may merely stand upon his legal rights and do nothing, without altering his relationship to the original debtor; but, after receiving notice of the assumption by the grantee of the indebtedness to him, he must thereafter, in dealing with the grantee, recognize and observe the suretyship relation between him and the original mortgagor. If, therefore, without the consent of the mortgagor, he enters into a valid agreement with the grantee whereby he extends the time for the payment of the indebtedness, or alters the terms of the original obligation which the grantee had assumed, or releases the grantee from his obligation to pay, then the well-settled rule applicable between principal and surety operates to release the mortgagor from further liability. "The mortgagee, it is true, is not a party to the agreement of assumption entered into between the mortgagor and his grantee, and the latter cannot, by any act alone of theirs, make him a party thereto, or impair any of his original rights. He may stand upon his rights, and enforce his debt against the original mortgagor; he may stand ready to receive payment from any one, including the grantee, and may from time to time accept payment from him; and, if he does nothing more, his mere laches or failure to collect will not impair his remedies against his original debtor, the mortgagor. He may also, either at law or in equity, according to the practice of the forum, sue the grantee on his assumption of the debt. So far all the authorities are agreed." "On the other hand, if, after learning of the change of relationship affected by the agreement between the mortgagor and mortgagee, he sees fit to enter into contractual relations with the grantee, then he, in a sense, makes himself a party thereto, and must in so contracting and henceforward deal with the parties in view of that changed relationship. This imposes upon him no hardship, and does not against his will alter his original contract. If he by this contract with the grantee or thereafter releases the grantee, or by valid agreement extends the grantee's time of payment, or otherwise alters the terms of the original obligation, no good reason is perceived why the rule applicable as between principal and surety should not be applied to him. The mortgagor, like any other surety called upon to make payment, is entitled to have surrendered unimpaired all securities and remedies which the creditor holds. His rights as against the principal debtor are impaired by the voluntary and intentional act of the mortgagee.'"74 § 105. The effect of agreements between the obligee and one surety on co-sureties. While an enforceable agreement between the creditor and principal debtor extending time of payment, or having the effect of subjecting the surety to a greater risk than he assumed, will discharge the surety if made without his consent, a discharge of one surety will not relieve the remaining sureties entirely, but only to the extent to which they have been subjected to loss,75 unless the surety released in reality becomes principal to the other sureties.76 However, a discharge of one surety for a consideration, or by an instrument under seal, which extinguishes the debt, will relieve the remaining sureties, as will the release of one surety whom the creditor knows to be in reality the principal, and ultimately liable for the payment of the debt.78 But a discharge of a surety will have no effect upon the principal's liability.79 77 At common law the sureties contracted together assuming a common responsibility, and the discharge of one released all; 80 74 In re Roth (1920) 272 Fed. 516, 517, 519-520. See the cases cited in this opinion. Accord: Braun v. Crew et ux. (1920) Cal. 192 Pac. 531. See Jones on Mortgages (1904, 6th Ed.) Vol. I, Sec. 742 and 742-a. 75... the creditor's release and discharge of one or more sureties will operate as a discharge pro tanto only of the sureties." First National Bank of South Bend V. Mayr et al. (1920) 189 Ind. 299, 127 N. E. 7, 10. Accord: Gordon v. Moore (1884) 44 Ark. 349, 51 Am. Rep. 606; Gosserand v. Lacour et al. (1853) 8 La. Ann. 75; Dodd v. Winn (1858) 27 Mo. 501; Fletcher, Adm'r v. Grover (1840) 11 N. H. 368, 35 Am. Dec. 497; Morgan v. Smith (1877) 70 N. Y. 537; Ide v. Churchill (1863) 14 Oh. St. 372; Klingensmith v. Klingensmith's Executor (1858) 31 Pa. 460; Hallock v. Yankey (1899) 102 Wis. 41, 78 N. W. 156, 72 A. S. R. 861. See Spencer v. Houghton (1885) 68 Cal. 82, 8 Pac. 679. 76 Robertson et al. v. Tonn (1890) 76 Texas 535, 13 S. W. 385, 387. 77 City of Deering v. Moore (1893) 86 Me. 181, 29 Atl. 988, 41 A. S. R. 534. 78 Brown et al. v. Chicago R. I. & P. Ry. Co. (1906) 76 Neb. 792, 107 N. W. 1024. 79 McIlhenny Co. et al. v. Blum et al. (1887) 68 Texas 197, 4 S. W. 367, 368. 80 People v. Buster et al. (1858) 11 Cal. 215, 220. |