bore the relation of principal and surety to each other, and, subsequently, but before covenanting with the principal debtor, received this information. In some decisions it has been held an infringement of the rights for which the creditor bargained to compel him to recognize the relation between the debtors; and under these decisions he still may treat each debtor as if he were liable as a principal for an aliquot part of the whole debt.75 But by the great weight of authority, even in the situation supposed, the creditor is required to recognize the equitable rights of the surety and therefore loses his own right against the surety if after learning of the relation of the obligors to each other he makes such an agreement or so acts with reference to a joint debtor who is, in fact, the principal obligor, as to impair the rights of a co-debtor who is a surety.76 The principles of suretyship under consideration depend solely on the existence of the relation of principal debtor and surety between persons liable for the same debt. Whether they are liable jointly, jointly or severally, or merely severally, is not material. It is, therefore, pertinent to consider in this connection authorities relating to principal and surety bound severally; and it may be added, therefore, that in the situation supposed the English courts and the Supreme Court of the United States have held that knowledge acquired by the creditor at any time prior to the indulgence given to the principal, excuses the surety.77
75 Drencher v. Fulham, 11 Colo. App. 62, 52 Pac. 685; Gano v. Heath, 36 Mich. 441; Heath v. Derry Bank, 44 N. H. 174; Diffenbacher's Estate, 31 Pa. Super. Ct. 35. See also Hoge v. Lansing, 35 N. Y. 136 (1866); Delaware County Trust Co. v. Haser, 199 Pa. St. 17,48 Atl. 694,85 Am. St. Rep. 763; Farmers, etc., Bank v. Rathbone, 26 Vt. 19, 58 Am. Dec. 200.
76 Oriental Financial Corp. v. Overdid, L. R. 7 Ch. 142; Scott v. Scruggs, 60 Fed. 721, 23 U. S. App. 280, 9 C. C. A. 246; Branch Bank v. James, 9 Ala. 049; Stewart v. Parker, 55 Ga. 656; Lauman p. Nichols, 15 Ia. 161; Neel v. Harding, 2 Met. (Ky.) 247; Fuller v.
Quesnel, 63 Minn. 302, 65 N. W. 634; Smith v. Clopton, 48 Miss. 66; O'Howell v. Kirk, 41 Mo. App. 523; Parsons v. Harrold, 46 W. Va. 122, 32 S. E. 1002. See also Edwin v. Lancaster, 8 B. & S. 571; Wheat v. Kendall, 6 N. H. 504; Westervelt v. Frech, 33 N. J. Eq. 451; Shelton v. Hurd, 7 R. I. 403; Zapalao v. Zapp, 22 Tex. Civ. App. 375, 54 8.W.938.
77 Union Mutual Life Ins. Co. v. Han-ford, 143 U. S. 187, 191,12 S. Ct. 437, 36 L. Ed. 118; Mr. Justice Gray said: "The rule applies whenever the creditor gives time to the principal, knowing of the relation of principal and surety, although he did not know of that rela-
It seems probable, however, that the Uniform Negotiable Instruments Act, which now has been passed in most of the United States, reverses, so far as negotiable instruments are concerned, the rule of suretyship generally established, and permits a creditor to covenant not to sue or to forbear proceeding against one of several persons jointly liable on the instrument, though the covenantee is the principal debtor and known to be such, and the creditor's rights against the surety are not in terms reserved.78
Sec. 341. Whether consideration received from one co-debtor must be credited in proceedings against another. If it be assumed that an agreement made by a creditor with a joint, or a joint and several debtor, does not discharge the remaining debtors, either on the technical principles of the common law governing joint debtors, or on the principles of suretyship, it may still be asked are these remaining debtors entitled to credit for the consideration paid by the debtor who received a covenant or qualified release, or are they liable for the whole debt without deduction? The answer to this question seems to depend on the terms of the agreement made by the creditor. If A. and B. are jointly liable to C. for $100, C. may covenant not to sue A. in consideration of the payment of $25 on the debt, or in consideration of the payment of a separate and additional sum of $25; just as a creditor may agree to forbear suing an individual debtor in consideration of the payment of part of the debt or in consideration of an additional sum.79 But in the absence of clear evidence of a contrary intention, where a creditor covenants not simply for temporary forbearance, but permanently never to sue one of several debtors, it should be presumed that the payment made by that debtor tion at the time of the original contract; Ewin v. Lancaster, 6 B. & S. 571; Oriental Financial Corporation v. Over-end, L. R. 7 Ch. 142, and L. R. 7 H. L, 348; Wheat v. Kendall, 6 N. H. 504; Guild v. Butler, 127 Mass. 3S6; or even if that relation has been created since that time. Oakeley v. Pasheller, 4 Cl. & Fin. 207, 233; a. c. 10 Bligh (N. S.)
548,590; Colgrove v. Tillman, 67 N. Y. 95, 23 Am. Rep. 90; Smith v. Sheldon, 35 Mich. 42, 24 Am. Rep. 529." Quoted with approval in Scott v. Scraggs., 60 Fed. 721, 725, 23 U. S. App. 280, 9 C. C. A. 246.
78 See supra, Sec. 339, and infra, Sec. 1260.
79See supra, Sec. 136; Langddl, Summary of Contracts, Sec. 54, p. 70.
in consideration for the covenant is a payment on account of the debt, and therefore to that extent the debt is discharged as to all the debtors.80