the principle stated above. (Taylor v. Jeter, 23 Mo. 244.)

And the creditor by wasting or rendering unavailable the mortgaged security of the principal will thereby discharge the surety. (Phares v. Barbour, 49 Ill. 370.) If the creditor by relinquishing security for the debt materially alters the contract of the surety, such surety is fully discharged. (Polak v. Everett, supra; Watts v. Shuttleworth, 7 H. & N. 353.) If the surety's contract is not changed, he is only released to the extent of the security released. (McMullen v. Hinkle,

39 Miss. 142; Brandt, Sur. & Guar., Sec. 429.)

The creditor must have a lien on the property released or such an interest in it as will charge him as trustee if the release is to operate to discharge the surety. And where the release of the property by the creditor in no wise injures the surety or alters his contract, it will not discharge the surety. (Brandt, Sur. & Guar., Secs. 430, 431; Coates v. Coates, 33 Beav. 249.) Where a bank holding a note of principal and surety receives a deposit from the principal, the authorities are divided as to its duty to retain such money and apply it to the payment of the note.*

The release by the creditor of a valid levy, or execu

*Wilson v. Dawson, 52 Ind. 513, is a case where the money of the principal was deposited on a special agreement, and though sufficient to pay a note with surety then due at the bank, its being paid out according to the agreement by the bank did not discharge the surety. The opposite opinion is maintained in several cases. (McDowell v. Bank, 1 Harr. (Del.) 369.)

tion against the property of the principal, by which the surety loses the right to hold the property for the payment of the debt, will discharge the surety to the value of the property levied upon. (Dixon v. Ewing's Admr., 3 Ohio 280.) Likewise the release by the creditor of an attachment on property of the principal to the damage of the surety will discharge the surety pro tanto, as such attachment is regarded as a lien held by the creditor and must be protected for the benefit of the surety. (City of Maquoketa v. Willey, 35 Ia. 323.) The mere dismissal of a suit by the creditor against the principal in which no attachment or other lien has been secured will not discharge the surety.

Marbury, 7 Gill & Johns [Md.] 275.)

(Somerville v.

When there are several sureties liable for the same debt, and the creditor releases one of them without materially altering the contract, the others are generally held released only to the extent that such released surety would have been liable to contribute to them. (Jemison v. Governor, 47 Ala. 390; Dodd v. Winn, 27 Mo. 501.)

Sec. 904. SAME SUBJECT-NEGLIGENT LOSS OF COLLATERAL SECURITY.-The creditor being held to be a trustee of the property of the principal in his hands for the benefit of the surety, his negligence or carelessness as regards such property resulting in a loss will discharge the surety to the extent of such loss. The creditor in such cases must use due diligence in preserving such property according to the circumstances of the case. As regards collateral security in the way of claims or obligations against third

parties, the creditor is bound to use such diligence and take such steps as will render them available for the purpose for which they were assigned, and negligence or inaction resulting in a loss will release the surety. (Crim v. Fleming, 101 Ind. 154; Kemmerer v. Wilson, 31 Pa. St. 110.) Thus where the assignee of a note as collateral security was notified of the impending insolvency of the maker, and warned to sue or surrender the note, and he did not do so, the debt being lost he was held responsible for the amount of the note. (Bonta v. Curry, 3 Bush 678.) And where the creditor had received a mortgage on personal property from the principal to secure a note previously signed by a surety, and negligently let the principal dispose of such mortgaged property he thereby discharged the surety. (City Bank v. Young, 43 N. H. 457.) So the creditor who has a lien or security for a debt will discharge the surety by not taking the steps necessary to preserve or perfect such lien on the principal's property, as by neglecting to make the proper parties defendant in case of the death of the principal (Saulet v. Trepagnier, 2 La. Ann. 427), or to record a mortgage. (Burr v. Boyer, 2 Neb. 265.) But the creditor is not required to present a claim to the personal representatives of a deceased principal, and though the remedy is lost against the estate by such delay, the surety will not be discharged. It being said that the creditor is under no greater obligation to present his claim against the estate than he would have been to sue the principal if still alive. (Brandt, Sur. & Guar., Sec. 448.)

CHAPTER III.

OF THE RIGHTS OF SURETIES AND GUARANTORS

CONTRIBUTION AND SUBROGATION.

Sec. 905. IN GENERAL.-The rights of sureties and guarantors, generally speaking, are the following: 1. The right to indemnity from the principal on payment of the debt or obligation. 2. The rights which they have against the creditor at law and in equity to prevent the creditor from doing acts to their prejudice, and which have been covered in the preceding chapter. 3. Rights against third persons to hold property of the principal to indemnify them against prospective or possible damage. 4. Rights as against each other for contribution between co-sureties. 5. The equitable right to be subrogated to the position and the rights of the creditor upon payment of the principal's debt. This chapter will be devoted to a brief discussion of these rights and the principles governing them.

Sec. 906. THE RIGHT TO INDEMNITY FROM THE PRINCIPAL.-The principal being the real debtor, and the guarantor or surety only being responsible for his default, the law implies a promise on the part of the principal to indemnify the surety, and a right of action immediately accrues to the surety or guarantor against the principal upon payment of the debt. (Wilson v. Crawford, 47 Ia. 469; Kimmel v. Lowe, 28 Minn. 265.)

The right of action by the guarantor or surety against the principal does not accrue until he pays the debt of the principal. (Cotton v. Alexander, 32 Kan. 339; In re Estate of Hill, 67 Cal. 238.) This being so, the surety could not bring an attachment or hold property in his hands not appropriated for the payment of the debt, until he had actually paid the debt. (Dennison v. Soper, 33 Ia. 183; Ingalls v. Dennett, 6 Greenl., Me. 79.) The surety may pay the debt before due and sue the principal for indemnity after it has become due. (White v. Miller, 47 Ind. 385.) The action for indemnity should be brought in the name of the surety and not in the name of his obligee. (Hardware Co. v. Deere, etc., Co., 53 Ark. 140.) No demand or notice need be made or given to the principal by the surety who has paid the debt before suit is brought for indemnity. The contract of indemnity is said to arise at the moment when the surety contracts his obligation, and is broken the moment the surety is damnified. (Ward v. Henry, 5 Conn. 595; Brandt, Sur. & Guar., Sec. 210.)

The surety need not pay the debt of the principal in cash, but any form of payment accepted by the creditor will answer to support his right to sue the principal for indemnity. Thus the surety may pay with his note, by the delivery of property, or a mortgage thereon to the creditor will constitute a payment. (Sapp v. Aiken, 68 Ia. 699; Peters v. Barnhill, 1 Hill, Law 287; McVicar v. Royce, 17 Up. Can. [Q. B.] 529.) A few cases hold that the note would have to be paid before