Wilds v. Attix

It was frankly admitted by the complainant’s solicitor that, under the law of suretyship, the creditor is not bound to active diligence against the principal and that he does not lose his remedy against the surety even by

. _ Chancellor Kent, in King vs. Baldwin, 2 John. Ch. 562, does affirm broadly the equity of the surety, at any time after the debt is due, to compel the creditor to collect the debt citing as authorities Lord Thurlow in Nisbet vs. Smith, 2 Bro. C. C. (582) and Lord Loughborough, in Rees vs. Berrington, 2 Ves. J. 543. The remark of Lord Thurlow, however, has since been held as alluding only to the surety’s equity under special circumstances. See the note (5) in Perkins Ed’n. of Brown. The remark of Lord Loughborough, which is wholly extra judicial, is the only one in the English cases affirming in general terms, the surety’s equity to compel a collection of the debt out of the principal. Lord Loughborough’s broad statement of it is not, however, reconcilable with the more cautious qualification of it when stated by other judges, who have uniformly rested the equity upon special grounds, as by-Lord Eldon, in Wright vs. Simpson, 6 Ves. 734. In Hays vs. Ward, 4 Johns. Ch. 131 , which was subsequent to King vs. Baldwin. Chancellor Kent upon a full examination of the question, concludes that there is not in the English law, as there was under the civil law, any general rule requiring that upon the surety’s request the debtor be first sued and in that case he compelled a creditor to resort first to a collateral security on the special ground that it would not be available to the security by assignment on his paying the debt.

It seems then that Pain vs. Packard is not supported by the ground assumed for it; and it must be considered as obnoxious to the objection that it incorporates a new term in the contract of the surety. The rule of that case was affirmed in the Court of Errors and Appeals of New York in King vs. Baldwin 17 Johns. 386 . But this was by

But the equity to relief in this case is sought to be raised out of the neglect of Attix, the creditor, to fulfill a promise made to the surety on his request, that a judgment should be entered on the bond, by means of which judgment, had it been entered as promised, the surety alleges that he could have protected himself.

Now it is quite clear that this promise by Attix had no force of a contract, such, to shew what I mean, as would have sustained a bill in equity for specific performance or an action at law for damages upon a breach of it. For it was a promise, wholly without consideration. It is therefore clear that this is not a case for relief as for the breach by Attix of any general duty resulting from his relations to the complainant as surety for the debt nor for a breach of a contract. We must then look for some other ground of relief. The complainant’s counsel sought to find it by putting the case as one of constructive fraud, arguing that although the promise of Attix was without consideration, yet, that having led complainant to rely upon that means of protection, without giving himself any further concern and having disappointed him in it the attempt afterwards to hold the surety liable, is a constructive fraud. But in order to make the breach of such promise operate as a constructive fraud it must appear that the surety was induced by it to forego some advantage or remedy which otherwise he would have taken. It is not sufficient for this purpose to suppose that but for the promise he might have resorted to some other mode of, indemnifying himself. It must appear that in consequence of the promise he did in fact alter his line of conduct to his injury.

The class of constructive frauds within which alone a case of this nature could be brought, is that in which one party has been misled to his prejudice by some

The rule is in the text books sometimes stated as if the intention of the party misleading were material. But upon principle this cannot be. For the doctrine of equitable estoppel proceeds not upon the ground of premising fraud or deceit, but rather, of adjusting between two parties a loss which one or the other must bear, upon the equitable consideration that it should fall upon him through whose act, admission or silence, in a case wherein it was a duty to speak, it has resulted. In such cases, equity acting upon the conscience of the party in default, restrains him from asserting the claim in question, however well founded it may be otherwise. This doctrine of equitable estoppel for the prevention of fraud has been much favored for its wholesome tendency to promote good faith and fair dealing, and it is now applied in courts of law as well as in equity. Nevertheless, in as much as this kind of relief interferes with what is a prima facie legal right or title of the party restrained, it is administered only in favor of one who has been actually misled through the act, admission, silence, or as in this case, by the promise of another, i. e., one who has been induced to alter his line of conduct, with respect to the subject-matter in controversy, so as to have subjected himself to some liability, he would not otherwise have incurred, or to have foregone some right or remedy which he otherwise would have taken. But where the party has not been so misled, and the transaction remains wholly unaffected, leading to the same results as,if the acts or silence complained of had

Now the complainant’s case is defective in not shewing that, as a consequence of the promise of Attix, he altered his condition, by waiving some protection or remedy through which otherwise he would have secured himself; as if he had been ready to pay the debt and take an assignment or to proceed in equity to compel its immediate collection out of the principal and had been induced by the promise of Attix to forego these or some other means of indemnity.

It is true the bill alleges that but for the omission of Attix to enter the judgment the complainant would have attended the sale of Williams’ farm and bid it up to a figure sufficient to cover his judgment, supposing it to have been made a lien next after the Bailey mortgage. But without stopping to enquire what such an opportunity for indemnifying himself would have been worth, it is enough to. say that the loss of it to this complainant was not a consequence of the promise of Attix or of any reliance of the complainant upon it. It is simply the same result to which the' transaction would have come had no promise been made, that is no judgment would have been entered by Attix against Williams, the subsequent liens would have intervened and the property of Williams would have been sold without paying this debt. To entitle the complainant to relief it is not enough to show that he had suffered loss in consequence of the creditor’s omitting to enter the judgment; but he must connect his loss with the promise of Attix, showing that, but for that promise and his relian'ce upon it, he would have adopted,—not that