§ 1140. A surety or guarantor of a debt may, if his character as such be apparent on the face of the instrument1 upon which suit is brought, require the creditor to proceed against the principal first, provided he offer to indemnify him in such proceedings and to pay any deficiency in the sum which he may recover.2 And if a guaranty for the performance of a contract be made by a separate instrument, a joint action cannot be maintained against the principal and the guarantor.3 The surety or guarantor who has paid the debt of his principal is entitled to a reimbursement therefor,4 and may bring is implied. Indeed, it becomes the duty of the guarantee, in case of the bankruptcy of the principal, to prove his debt, and take the dividend.1
1 And even where the character of a surety does not appear on the face of the paper, if his real character be known to the payee or creditor, his rights and remedies may be the same as if he were an apparent surety. See Lime Rock Bank v. Mallett, 42 Me. 349 (1856). Thus, a surety to a note, known to the payee to be such, though in form a principal, is discharged if the payee gives time to the principal. Taylor v. Burgess, 5 H. & N. 1 (1859); Pooley v. Harradine, 7 El. & B. 431; Greenough v. McClelland, 6 Jur. (n. s.) 772. So where several sign a note without any designation as to the character in which they sign, whether as principals or sureties, they will all be presumed to be principals; yet that presumption may be rebutted by extrinsic evidence that some of the signers were sureties only, and that this fact was known to the creditors. Derry Bank v. Baldwin, 41 N. H. 434 (1860).
2 In the matter of Babcock, 3 Story, 398.
3 De Bidder v. Schermerhorn, 10 Barb. 638, 641.
4 In an action upon a promissory note given by the principal to his surety to indemnify him for that liability, the measure of damages is the amount paid by the surety at any time before trial; and unless he has made such payment he can recover nominal damages alone. Osgood v. Osgood, 39 N. H. 209 (1859). The treasurer of a corporation made notes in the name of the corporation payable to his own order, procured them discounted upon his indorsement, and appropriated the money to his own use. While the notes were outstanding, both the corporation and the an action of indebitatus assumpsit against his principal, unless he have taken a bond of indemnity; in which case he must sue upon his bond.1 Yet, if the payment made by the guarantor or surety be in respect to a claim known by him to be illegal or void for fraud or immorality, he cannot recover the sum paid thereupon from the principal.2 If a counter security be given by the principal to the surety, which becomes due before the original debt, the surety may enforce it forthwith, without waiting until the default in the original debt. Thus, if a bond be given by the principal to the surety or guarantor, he may sue upon it immediately upon breach of the condition.3
§ 1141. So, also, the guarantor, who has paid the whole 4 debt of his principal stands in his place, and may avail himself of all the securities for the debt held and acquired by him,5 as well as of all the rights and remedies which he would treasurer failed, and the notes were presented against both estates. In an action by the corporation against the estate of the treasurer, it was held that the corporation was the surety of the treasurer on the notes, and could claim of his estate only the amount it had been compelled to pay. Capen's Appeal, 28 Conn. 220 (1859).
1 Theobald on Principal and Surety, 228, §247; Toussaint v. Martin-nant, 2 T. R. 100; Crafts v. Tritton, 8 Taunt. 365; s. c. 2 J. B. Moore, 411.
2 Bryant v. Christie, 1 Stark. 329. So the voluntary payment of money for another furnishes no ground of action against him; and a payment by a surety, made with a knowledge of the facts, though under the mistaken belief that he was bound to make it, is voluntary. Bancroft v. Abbott, 3 Allen, 524 (1862). So a certificate of discharge of a bankrupt will be a discharge of his liability to his sureties upon an official bond, when it appears that the debt against the principal and sureties might have been proved under the Bankrupt Act. Fowler v. Kendall, 44 Me. 448 (1858).
3 Penny v. Foy, 2 M. & R. 181; s. c. 8 B. & C. 11.
4 A surety cannot, either at law or in equity, call for an assignment of the claim of his creditor against his principal, or be clothed with the rights of an assignee of such claim, unless he has paid the entire claim of the creditor; a pro tanto assignment, by way of substitution or subrogation, is not known or allowed. Gannett v. Blodgett, 39 N. H. 150 (1859).
5 A surety who pays the debt may stipulate for an assignment of the collateral securities held by the creditor, and the debt will be held unpaid so far as is necessary to support those securities. And an attachment is deemed such a collateral security, and an assignment of the action will have thereupon.1 If the surety be disabled from enforcing any securities for the debt which the principal holds and can enforce, the guarantee will be restrained by a court of equity from prosecuting his claim against the guarantor until the principal has enforced such securities.2 Thus, where A. was surety for the performance of a charter-party of a neutral ship, freighted to go to France, and the charter-party was broken in consequence of an embargo laid by the French government, for which the French government declared itself bound to indemnify the owners, who were principals; it was held that the surety was not bound to pay until the owners had an opportunity to prosecute their claim against the French government, they being alone capable of enforcing it.3 § 1142. So, also, if the creditor, with the consent of the surety, accept from the debtor a percentage or reduction of the debt guarantied, the surety is entitled to a proportional reduction of his own liability.4 Thus, if the debt be $1,000, and the amount guarantied be $500, and the proportion accepted be fifty per cent of the original debt, the surety is only liable to pay fifty per cent of the amount of his guaranty. If the composition be made without the consent of the guarantor, he is discharged thereby. If, however, the claim to the entire debt against the principal be extinguished by operation of law, as when he goes into bankruptcy, the consent of the surety to his accepting a dividend upon his claim entitle the surety to prosecute the same and to lay the execution recovered for his own benefit. Brewer v. Franklin Mills, 42 N. H. 292 (1861).