Surety, in law, a person who binds himself to fulfil, either wholly or in part, the engagement of the principal obligor. For those cases in which the surety expressly assumes the obligation technically known as a guaranty, see Guaranty. When two parties join in making a purchase, or in giving a promissory note, each is in law equally liable to the party with whom the contract was made; but as between themselves, it is always competent for one to show that the transaction was wholly for the benefit and at the request of his co-obligor, and that he became bound as surety merely for his associate. If in such case the surety in face be compelled (as, according to the tenor of his obligation, he obviously may be) to pay the whole, equity declares that he is entitled to complete reimbursement from the principal, and that, in order to secure this reimbursement, the surety is entitled to the benefit of all the security which either the rules of law or the express acts of the parties have given to the obligee or creditor; and if, by any negligence or other acts, the obligee defeat these rights of the surety, he forfeits his right of action against him.
If the creditor or obligee is fairly informed of the relation of principal and surety existing between the parties, he is bound to take care that no act of his shall destroy or lessen the surety's right of indemnity from the principal debtor. If therefore he declare that he will look solely to the principal for payment, so that the surety is induced to omit taking security from the latter; or if he tell the surety that the debt has been paid so that he relinquish to the principal his security; the surety will be in both cases discharged from his obligation to the obligee. But the mere inaction of the creditor to pursue his remedies against the principal will not discharge the surety, nor will positive indulgence to the principal have this effect; but if the delay be granted in pursuance of any binding agreement with the principal, so that the surety cannot pay the debt and then proceed at once for indemnity against the principal, the creditor's act releases the surety. And as the surety is entitled to the benefit of all securities given by the principal, he is discharged if the creditor's inaction or negligence have rendered these securities valueless.
In short, though the creditor is not bound, so far as the surety is concerned, to pursue the ordinary legal remedies against the principal, yet he is bound, in respect to all remedies given him by way of pledge or security or by other act of the parties, to hold or pursue them diligently in behalf of the surety; and if he relinquish any such remedy without the knowledge or against the will of the surety, he shall lose his claim against the latter to the extent of the right surrendered. Question has often been made whether the creditor would not lose his right against the surety if the principal should become insolvent after a request by the surety (which was disregarded) that proceedings be immediately taken for collection; but it has generally been held that he did not, and that the remedy of the surety was to pay the debt and then proceed to collect of the principal.