
    Wade Hampton v. Lyon Levy Treasurer of the State of South Carolina.
    1825.
    
      Charleston.
    
    Complainant stated that prior to the 20thof Jan. 1802 a loan was obtained by General Isaac Huger at the Land Office, for which he mortgaged the lands hereafter mentioned. That on his neglecting to pay, said lands were ° ° 1 J sold, by order of the treasurer of the state, by the of Richland district, according to the act of assembly; that John Bostick purchased them, and the act requiring 1 to that personal security should be taken from thepurchasers as well as a bond and mortgage, complainant by said Bostick’s inducement became his security in the bond, . . , 7 and was so designated therein; and complainant had it also inserted in the condition that the mortgage had been given. The complainant averred that he became bound only on the faith of said collateral security being given The bill also stated that the bonds were dated the 20th 0f January 1802, and mortgages were taken as required, and . i r ■. ,, • , i , i i were in defendant s possession, and complainant hoped they might be produced, and it would thereby appear that the lands were described as situated in the fork of the Wataree and Congaree rivers, but without any other description to identify them, or to furnish notice to sequent purchasers, mortgagees and creditors. That the mortgages were never recorded by the state, and that Bostick had sold all or greater part of the lands , . ,7 . , sons who had recorded their titles, and thus defeated the lien of the state and the confidence of complainant. That the lands would constitute the first fund to which the state would look for indemnity, and that in any event, complainant might by aid of this Court have the said mortgages set up to indemnify him if he should poyBos-fácjc>s bonds. That the bonds were never sued by the state 1812, when Bostick’s situation was becoming daily worse. That on the 10th oí May 1815, they issued an execution against Bostick, and then dropt all further proceedings. That Bostick lived till 1815 but the state or its officer did not pursue him to insolvency, but were satisfied with one execution, when, as complainant believed, the Register’s Office furnished evidence that he was owner of several tracts of land at that time, of value probably more than enough to satisfy the demand of the state against him. That defendant had never foreclosed said mortgages, or made that security available to the state; though it was evidently the intention of the act that it should be first applied to the payment of the debt. That complainant being a mere surety, and in no way benefited by the purchase, had a right to insist that the principal should be pursued to insolvency before he was assailed. But in October 1819 a suit was brought against him in the name of Lyon Levy, treasurer of the state, successor of Daniel Doyley, to recover the amount said to be due on said bonds, and it was tried at Columbia in March 1821, and a verdict found for the complainant, who relied for de-fence on lapse of time, laches in the state, and “presumption of payment. That the state appealed and a new trial had been ordered, principally on the ground that relief could only be given complainant in equity. That, on the new trial thus ordered, complainant’s counsel offered to prove all the facts stated in the bill, and to shew that he was only considered as security in said bond; but the evidence was overruled by the Court, which refused to permit such testimony to go to the jury. That therefore the said Lyon Levy obtained a verdict for the amount of the bond, and was now urging against complainant the execution which had been issued on the judgment thus obtained. The bill prayed that a perpetual injunction might he granted against the suit at law, and defendant restrained from proceeding while this suit was advancing in this Court. That defendant might resort to the mortgaged premises, and to the representatives of Bostick and those who held his property, before complainant is compelled to pay, and prayed other re-relief, &fC.
    
    
      Office, and kndfand* »ave R- afjys security. The Office their mor£°,d sase' and conveyed the same lands to ouTnoticef" an? uP°n ?-’s being sued twelve years on^h^bond"1 alld proving suit was ’ bl?ugbl: a" „ gains this surety H. Held, that the Loan officers neg-mortgage, u^ns were lost empt H. from though sued years after the bond was giv-cHrity^uia6* notobjeetthat the laDdswere but vaguely the mortgage.
    
      The defendant, Lyon Levy, in his answer stated, that he did not of his own knowledge know the transactions mentioned in the bill; his information being derived from papers in the state treasury; that it did appear from them that Isaac Huger mortgaged to the Commissioner of the Paper Medium, on the 10th of May 1786, two hundred and fifty acres of land described as swamps, in Camden district, bounded w'est by Congaree river, north east by land of E. Lightwood, and north by land of G. Kelly. That the said lands were mortgaged for the payment of a bond of J. Huger and T. Lewis, and by a pencil memorandum of Major Thews it appeared the said lands were sold on the 29th of March 1797, by virtue of said mortgage, and bought for the use of the state. That by another memorandum it appeared, in 1800 or 1801 sheriff Rees, of Sumpter, was directed to sell said lands, which order was afterwards transferred to the sheriff of Richland, who returned to Daniel Doyley state treasurer an account of the sale, and two bonds of John Bostick and Wade Hampton, each conditioned for the payment of ‡649,97; viz. one for the payment of said sum on the 7th of September 1802, and one for the like payment on the 7th of September 1803, with a mortgage of the lands aforesaid to secure the payment. That from entries in a book containing an account of debtors to the Paper Medium and Loan Office, it appeared that J. Walton, then treasurer, delivered the bonds to the comptroller general to be sent to solicitor Starke on the 27th of January 1815, and that the mortgage was also delivered to Mr Cogdell, in consequence of an application from solicitor Starke. Defendant further stated that he did not believe the mortgage of Bostick was recorded, . and that all original mortgages to the Paper Medium were taken in two books kept for that purpose; the body of the mortgages being printed and the blanks written out by the Commissioners, and whenever any mortgage was paid off an entry was made in the books. That Isaac Huger’’s mortgage was in one of the said Books uncan-celled, and defendant did not believe that the mortgages to the Paper Medium were recorded in any of the offices for registry of mesne conveyances. That whenever a sale was made of premises mortgaged to the Paper Medium, and it happened that they were bought for the state, the treasurer used to expose the same for sale in the districts where they lay pursuant to acts of the legislature, and bonds for the purchase money taken, and a mortgage of the premises. But defendant did not believe that the mortgages so taken were recorded at all. That by the mortgages in the office, and by the public books of the debtors to the office, the state of the transaction might at any time be known. Defendant further said, that he was a stranger to the legal proceedings mentioned in the bill. That it belonged to the complainant to order suits to be brought against debtors to the state, and to direct the proceedings therein. Defendant knew nothing of the circumstances of Bostick. He could not admit or deny any allegations of complainant respecting his former ability to pay or subsequent insolvency. That he was a stranger to the reasons of complainant’s engagement in the bonds mentioned in the bill, no part whereof defendant admitted or denied, and prayed the same might be proved. Defendant was unwilling to give any opinion on the extent of complainant’s liability to pay the bond, or his right to be relieved, all which he submitted to the judgment of the Court.
    The proofs in the case were, that John Bostick and Wade Hampton executed two bonds, dated on the 20th January 1802, each conditioned to pay $649,97 with interest from the 7th of September 1801, being for the purchase money for lands sold at sheriff’s sale and lying in Richland district; which lands were originally mortgaged to secure the loan of Paper Medium. General Wade, Hampton signed the bonds as security. The sheriff, Williamson, executed a deed of conveyance for the lands to John Bostick. A mortgage was at the same time executed by John Bostick of the lands in question to the state, to secure the payment of the bonds; but it never was recorded. It was proved that John Bostick was solvent till the year 1814, and paid many judgments and debts. He was not sued on his bond to the state till the year 1814, and judgment was entered up and executions issued, to which “ nulla bonahad been returned. Bostick died insolvent. No suit was brought against Wade Hampton till about seventeen years from the date of the bonds. Bostick sold or conveyed some of the lands in question to several purchasers, Kelly and He-■mington, &c. The lands in the deed of conveyance and in the mortgage were very vaguely described, and it would be difficult to discover and locate them. By the statute of December 1801, the lands held by the state under the Paper Medium loan were directed to be sold, and bonds and mortgages to be taken. It was further shewn that in the suit against Wade Hampton on the bonds in which he was surety for Bostick, as appeared on their face, the jury found a verdict for the defendant. But the Constitutional Court ordered a new trial, and a verdict was found for the plaintiff, the Court being of opinion that the grounds did not furnish a sufficient de-fence at law, and that if defendant was entitled to relief it must be in equity. See the case, 1 M’Cord’s Reports, 145.
    A creditor has n°rr'fhe sitúation in which bomThas0 a sdf ed him"
    A new ment with the principal to enlarge the charge the^ mere7laches dentSUÍS"
    On the argument the following grounds were taken by , . complainant s counsel.
    That Hampton being merely security for Bostick was entitled to relief, because of the long indulgence given by the public officers to Bostick, the principal debtor; to wit, from January 1802 to the year 1814, during which time Bostick was solvent, after which he became insolvent and no suit was brought against the surety till 1819. That the mortgage from John Bostick to the state was never recorded, which was the duty of the public officers to have done, and by which Bostick was enabled to sell the lands to “ bona fide purchasers,” by which the lands, the primary security, were lost, to the prejudice of the surety. That the lands described in the mortgage were so vaguely described that it was impossible to find them, which neglect was such a disadvantage to the surety in the bond, that if any remain unsold he could not have recourse to them for his indemnity.
    De Saussuee, Chancellor.
    The principal question in this case is, whether the creditor has given such indul§ence t° Bostick, the principal, or has done any act that will discharge the complainant from his liability under his bond. The doctrine on this subject has some diffi-cu^*es' It has been decided that a creditor has no right vary the situation in which a surety to a bond has piaced himself. He cannot do any act which shall in- . , . , crease the risk or responsibility ot the surety incurred his executing the bond.
    He cannot, for instance, enter into a new agreement with the principal debtor to enlarge the time of payment originally contracted for, as he would thereby preclude himself and the surety from urging the debtor, when perhaps others were obtaining judgments against him. But, on the other hand, it has been expressly decided that mere “ laches,” or inaction, by the creditor, without his ... . doing any positive act to injure the surety, is not a ground for ‘releasing the surety. (See the cases collected by Maddock, Yol. I. p. 233 — 4.)
    as mortgages fcribeTus'es-10,‡13 validity of the mortgage, ^recorded!11 p°st-pones a mortgage not re-“Jnthsto one is recorded within that time.
    In the case we are considering, it does not appear that the public officers made any agreement to extend the time of payment to Bostick, but they were negligent in not suing earlier. It was great laches; but negligence alone, we have seen, is not a legal or equitable ground for relief to the surety. As to the time which elapsed from the date of the bond to the time of the suit, that does not amount to a duration sufficient to raise the presumption of payment. It has been decided that twenty years, without any demand, would raise a presumption of payment, and under extraordinary circumstances eighteen years have been held sufficient. But only twelve years have elapsed as to Bostick, and seventeen as to the surety.
    The next ground taken by counsel for the.complainant is, that the mortgage from Bostick never was recorded, which it was the duty of the public officers to have done, and by the omission the said Bostick was enabled to sell and convey the lands included in the mortgage to third persons to the prejudice of the surety, who cannot have the benefit of them as he is entitled, which it is contended forms a ground for relief. The fact is acknowledged that the mortgage never was recorded. The counsel .... for the state insists that it was not necessary to record it. The law of 1801, directing such sales’ to be made and such mortgages to betaken, did not direct them to be t mi iii iii ed. I he statute, as to double mortgages and sales, does not prescribe it as essential to the validity of mortgages that they should be recorded : but merely gives a „ , , _ , , , xerence to the first recorded mortgages or sales, though the youngest. And it has been decided that judgments no¿ ta priority of unrecorded mortgages. This question is one of nicety and difficulty ; for though it be true that the laws do not prescribe the recording the mortgage, especially in the case of the state, yet it seems be but too certain that the non-recording this mt>rt-gage, coupled with the long neglect to enforce the re-cove¡.y 0f debt, did serious mischief to the complainant ; as Bostick proceeded to sell the best of the lands, and the purchasers now hold them protected, it is believed, by the statute of limitations, and as purchasers for a valuable consideration without notice. The evidence of Mr Guinard is very strong, that some of the lands were vaguely described in the conveyance to Bostick and in the mortgage. And he and Mr Woodward prove, that Bostick has sold the best tracts which were discoverable under the descriptions given, and the remainder are unknown and undiscoverable. So that the surety, Gen. Hampton, can have no indemnity from them. Thus he has suffered by these neglects. On the motion for a new trial at law, that Court said, “ If it be a fact that the defendant was only a security, and that the mortgage not being recorded enabled the principal Bostick to dispose of the land, and if it be a fact that the defendant has sustained an injury thereby, it may furnish a ground of relief in another Court.” The facts in this case seem to go far towards making out the case thus stated. And the question is, is the surety entitled to relief1? The line has been pretty plainly drawn between positive acts of indulgence to the principal debtor, and mere negligence in pursuing the demand. In the former case the Court always gives relief, but not in the latter; unless the neglect be coupled with other circumstances materially disadvantageous to the surety. In the case we are considering, the neglect has been so gross as to have produced the same disadvantage to the surety as if there had been a positive stipulation to extend the'credit: and there are eases in which the Court has decided, that omitting to do what ought to have been done by the creditor, and which if done would have protected the surety, shall be considered a discharge of the surety. See Law v. East India Company, 4 Ves. 824, where the omission of the officers of the company to retain money of the principal in their hands was regarded asadischarge of the surety. In Hayes v. Ward, 4 Johns. Cha. Rep. 123, .. J , , . , Chancellor Kent decided, that the mortgagee ought not to do any act to poison or destroy the mortgage in which the surety has an interest. Now the omission to record , ... . the mortgage m this case poisoned or destroyed the cacy of the mortgage in which the surety had an interest. For by not recording the mortgage, followed by long neglect to sue, Bostick was enabled to sell the lands to innocent third persons for valuable considerations, without notice of the mortgage, by which the surety is damaged. Upon the whole I have come to the conclusion, with hesitation, that this is a case in which the complainant is entitled to relief. It is therefore ordered and decreed that the injunction be made perpetual.
    
      Judgments do oritj^of umecorded mortgages.
    
      „, If the mortgagee does any aate^r^de-’" stl'°ythe , mortgage he surety^
    
      5 & 6 Dec.
    From this decree the Attorney General appealed. He contended that the surety, by his undertaking as a joint obligor, was absolutely bound to pay, and that the rights of the creditor could not be divested, unless he did some positive act to impair the rights which the surety had, as between him and his principal. That in this case nothing had been done, on the part of the state, to prevent General Hampton from having the full benefit of his rights between him and Bostick. That if General Hampton had been prejudiced at all, it was by the act of Bostick, who sold the mortgaged lands without giving the purchaser notice (as it was said); but as General jjampton, of his free will, bound himself for Bostick, he was responsible, and not the state, for the acts of Bos-He cited 4 Yes. 820. 4 John. Rep. 130. 2 John. Cha. Rep. 554. 17 John. Rep. 384. 6 Yes. 260. 734. 6 John. Cha. Rep. 302. It was the duty of the surety to take care of himself; he could not expect the obligee to protect him. 4 Ves. 827.
    Nov. 1825. The surety is entitled to every remedy which the creditor has against the principal; and all securiiies given to him must be transferred to the surety.
    
      Dawson, contra,
    cited 1 Pothier on Obligations, 427. 245. 1 Atk. 135. 1 Equity Ca. Abr. 4 John. 130. 4 Ves. 184. The surety was entitled to all the securities which the creditor had, as a bond, a mortgage, &c. The king may be barred in cases where an individual would be, but not in matters of prerogative. 1 Str. 517. 1 Wooddeson, 31. He also cited 4 Yes. 833. 1 Munf. 316. 1 John. 129. 134. A discharge of the estate is a discharge of the surety. 1 Mad.Ch. 191. 6 Ves. 806. 17 John. Rep. 394. 1 Faust. P. L. 220, act of 1792. The act required that the treasurer should proceed to sell the lands in the same manner as was provided in respect of public vendues. People v. Jansen, 7 John. Rep. 332. The surety had a right to confide in the diligence of the officers in performing what was regarded by law, and their neglect to do so discharged him.
    
      Petigru, in reply,
    cited l John. Cha. Rep. 414. Ü. States v. Kirkpatrick, 9 Wheaton’s Rep. 720.
    
      
       See Golson v. Knight, Columbia, January 1827, at law, pot yet reported.
    
   CuítiA, per

Colcock, J.

In reviewing this case it is not necessary to go at large into the doctrine which relates to creditors and sureties, because it is clearly and correctly stated by the Chancellor in the first part of his decree. He therein recognizes the clear distinction between positive acts which are injurious to the surety, and mere indulgences, or even negligence. The law is well established, that “ the surety is entitled to every remedy whjch the creditor has against a principal debtor, to enforce every security and all means of payment; to stand in the place of the creditor, not only through the medium of the contract, but even by means of securities-entered into without the knowledge of the súrety; having a right to have these securities transferred to him though there was no stipulation for it; and to avail himself of all these securities against the debtor.” 1 Madd. Ch. 234 — 5. Nor can the creditor, by positive agreement, extend the ere- .... . . ,, dit without its operating as a discharge to the surety — but mere indulgence or neglect to sue does not produce that effect. 1 Madd. Ch. 235. >, But in the concluding part of the decree, it is thought that the Chancellor has extended the doctrine beyond its prescribed limits, in saying that neglect coupled with other circumstances ...... , ,. ot omission (as he is understood J will operate as a charge of the surety ; for the doctrine he relies on case of Law v. The East India CompanyBut on an attentive examination of that case it will bé found that the creditors were not merely inactive, but that they did acts which were radically wrong, some of them arbitrary in the extreme, and all of them calculated to injure and oppress the sureties, and yet the Master of the Rolls, who made the decree, did not release the sureties. r He no decision on that point: when speaking of Mr Law his character of surety, he says, “ I give no opinion whether the sureties are discharged, as will probably be contended hereafter if the company think fit to institute any suit. Nesbit v. Smith, and Rees v. Berrington, are very strong authorities in favour of'the sureties.” He then goes on to observe — “where any act has been done by the obligee that may injure the surety, the Court is very glad to lay hold of it in favour of the surety,” and then adds — “in this case there are more reasons do so; for there is no doubt of the solvency of the prin-pipa!.” In a few sentences after he again says — “I do not mean t0 determine that the sureties are'discharged.” The principal object in the decree was to place Mr Law *n situation he was in, when about to depart from India, and to rescup him from, an act of oppression exercised on him in consequence of his connection with the East India Company. Another case is also relied on, in which Chancellor Kent says, the obligee ought not to poison the mortgage, — the obligee having destroyed the mortgage by tainting it with usury, which certainly can no more be called a mere omission than the not recording of the mortgage in this case can be called an act of the defendant.’ I think the Court of Equity have gone far enough in protecting the surety from the acts of the creditors; for from his negligence the surety can protect himself: and as to the conduct of the principal it is certainly the duty of the surety to look to that. Who places confidence in the principal? Not the creditor, or he would not require security. The surety certainly reposes confidence in him when he agrees to become bound for him. The rule of Lord Habdwicke, in 3 Atk. Rep. 93, well applies here, — “that he who trusts most shall lose most.” If, however, it could be admitted that in any case mere omission or neglect should discharge a surety, certainty it ought, to be required to be shewn that such omission has operated as an injury to the surety; for that is required where the creditor acts; and in this case I think *t is clear that the injury to the surety, if any has been sustained j has resulted from the conduct of the principal, and not from the negligence of the state. It is said, if the mortgage had been recorded, Bostick could not have sold. This is mere conjecture — for we every day see men buying land under incumbrances when they know of their existence; and although recording is notice to all the world for some purposes, yet we also know that it does not in reality give notice in any one case in a thousand to any other person than the officer who records the paper. This is not all. Suppose the mortgage had been recorded, still the purchasers from Bostick would' hold the land after five years’ peaceable, uninterrupted and adverse possession. But on the other hand we can affirm with certainty that if Bostick had not sold, the others could not have bought. Again it is said, that the mortgage is uncertain in its description of the land. Whose fault is that ? Who makes the. mortgage but the mortgagor1? The surety could have seen the mortgage, and if he were dissatisfied with it, he might have required the principal to be more explicit. Upon the whole the case cannot be brought within any of those acknowledged principles on which a surety is relieved in a Court of Equity. The decree of the Chancellor is reversed, and the bill dismissed with costs.

A positive agreement to the charges the surety.

Neglect cou-¡¡¡¿'ekenm-stances of omission will discharge surety‘

If in any case Monandneg-lect could dis-surety,itmust havíopeiated as an injury to

Decree reversed.  