PART II. CASES ON THE LAW OF SURETYSHIP AND GUARANTY. CHAPTER I. THE CONTRACT DEFINED AND EXPLAINED. Suretyship and Guaranty Defined and Distinguished.* 151 Pa. St. 70. 1892. Appeal from court of common pleas, Sullivan county; John A. Sittser, Judge. Contest between J. A. Homet, claimant, and other lien creditors of Adam Sherman, upon distribution of a fund arising from a sheriff's sale of the real estate of said Sherman. From a judgment allowing Homet's claim in part only, he appeals. Reversed. MCCOLLUM, J. On the first of January, 1887, J. A. Homet, the appellant, bought of Adam Sherman two judgments against A. R. Robbins, on which there was then an unpaid balance of $592.38, and they were duly assigned to him. At the same time he loaned to Sherman $266.62. To secure the payment of the judgments and the money loaned he received the bond of Sherman in the sum of $859, on, which, by virtue of the warrant of attorney contained therein, judgment was entered Jan. 3, 1887. On a distribution of the proceeds of a sale by the sheriff on the 13th of September, 1890, of the real estate of Sherman, the appellant claimed to apply on his judgment the fund remaining after paying costs and prior liens. The subsequent lien creditors of Sherman admitted that the appellant was entitled to receive the sum loaned, with interest thereon, but contended that Sherman was released from liability as to the balance because of the appellant's failure to revive the Robbins judgments. To this *See Sec. 868, Vol. 6, Cyclopedia of Law. the appellant answered that his omission to revive these judgments did not release Sherman, and that, if it did, the creditors could not take advantage of it on distribution. The conclusion reached by the learned auditor was that he could not, at the instance of the lien creditors, set aside or disregard the judgment on the showing before him, but that Sherman might, in an appropriate proceeding, rely on the appellant's negligence as a defense to it. The learned president of the common pleas thought that this defense could be successfully made before the auditor by the lien creditors, and the fund was accordingly awarded to them. In reviewing the decision of the court below, the first important inquiry is whether the obligation of Sherman in respect to the Robbins judgments was that of a surety or of a guarantor. If he was a surety, he was not released from liability by the negligence of the appellant, and the contention concerning the powers of the auditor has nothing to rest upon. It is well settled that mere forbearance, however prejudicial to a surety, will not discharge him, and that the failure of a creditor to revive a judgment does not release the surety, unless there was an express agreement that it should be kept revived for his benefit. Winton v. Little, 94 Pa. St. 64; U. S. v. Simpson, 3 Pen. & W. 437. We think the undertaking of Sherman was that of a surety. His bond included the money loaned and the balance due on the Robbins judgments, and by its express terms was to remain in force until the whole sum was paid. The written conditions in the bond define the liability of the obligor, and we cannot add to them by implication a condition which would render them nugatory. The written condition applicable to this contention is that, if the judgments "shall be paid in full by the said A. R. Robbins, his heirs and assigns, to the said J. A. Homet, then this obligation to be void, otherwise to be and remain in full force and virtue." The appellant purchased the judgments on the agreement of his vendor to pay them if Robbins did not. It was a contract of suretyship, and not of technical guaranty, on which he parted with his money. On the failure of Robbins to pay the judg ments at maturity, he was at liberty to proceed directly against the surety. He was not bound to resort to legal proceedings against Robbins or to show that they would have been unavailing in order to sustain process upon the bond. He was under no legal duty to the surety to revive the judgments, unless requested to do so, and, as no such request was made, negligence in this particular cannot be imputed to him. The law on this subject is stated by Agnew, J., in Reigart v. White, 52 Pa. St. 440, as follows: "A contract of suretyship is a direct liability to the creditor for the act to be performed by the debtor, and a guaranty is a liability only for his ability to perform this act. In the former the surety assumes to perform the contract of the principal debtor if he should not, and in the latter the guarantor undertakes that his principal can perform-that he is able to do so. From the nature of the former, the undertaking is immediate and direct that the act shall be done which if not done makes the surety responsible at once; but from the nature of the latter, nonability, in other words insolvency, must be shown." In Kramph's Ex'x v. Hatz's Ex'rs, Id. 525, Woodward, C. J., discussing the same subject said: "The contract of a guarantor is to be carefully distinguished from that of a surety, for whilst both are accessory contracts, and that of a surety in some sense conditional, as that of a guarantor is strictly so, yet mere delay to sue the principal debtor does not discharge a surety. The surety must demand proceedings, with notice that he will not continue bound unless they are instituted. Cope v. Smith, 8 Serg. & R. 110. By his contract he undertakes to pay if the debtor do not; the guarantor undertakes to pay if the debtor cannot. The one is an insurer of the debt: the other, an insurer of the solvency of the debtor. It results as a matter of course out of the latter contract that the creditor shall use diligence to make the debtor pay, and, failing this, he lets go the guarantor." The foregoing extracts from the opinions of eminent Pennsylvania jurists draw with remarkable clearness and precision the distinction between a contract of suretyship and a contract of guaranty, and accurately define the respective rights and obligations of a surety and a guarantor. There has been no departure by this court from the principles announced in them, and they sustain the contention of the appellant that his omission to revive the Rob bins judgment did not affect Sherman's liability on his bond. It follows that it was error to award the fund to the subsequent lien creditors. Decree reversed, and record remitted to the court below, with direction to distribute the fund in accordance with this opinion; the costs of this appeal to be paid by the appellees.* SAINT ET AL. v. WHEELER & WILSON MFG. CO. 95 Ala. 362; 36 Am. St. R. 210. 1891. Action by Wheeler & Wilson Mfg. Co. against R. F. Saint, A. J. Crosthwait, C. M. Wright, J. F. Hall and J. R. Spragins, parties to a contract under seal, in the words and figures following: "For value received and in consideration of the within contract, R. F. Saint (and the other defendants, giving their names and residences respectively), hereby guarantee to the Wheeler & Wilson Mfg. Co., its successors or assigns, the full and faithful performance of the foregoing contract, including ll damages which may result to the said company from any failure on the part of the said R. F. Saint to perform any of the provisions of said agreement to the amount of $1,000; hereby waiving all necessity on the part of said company of instituting legal proceedings against said R. F. Saint before having recourse on us; hereby waiving the benefit of all constitutional or statutory homestead or exemption laws now in force; further agreeing to pay plaintiff's attorney's fees and all costs should suit be necessary to enforce the collection of this bond. "Witness our hands and seals, etc." This contract or bond was written on the back of the contract therein referred to, by which said company, as party of the first "The contract of a guarantor is collateral and secondary. It differs in that respect generally from the contract of a surety which is direct; and in general the guarantor contracts to pay if, by the use of due diligence, the debt cannot be made out of the principal debtor, while the surety undertakes directly for the payment and so is responsible at once if the principal debtor makes default." Maxwell, J., in Kearnes v. Montgomery, 4 W. Va. 29. 1870. part, employed said Saint, party of the second part, as its collector, which contract contained these provisions, among others: 1. The party of the first part (Wheeler & Wilson Mfg. Co.) agreed to employ the party of the second part as its collector. 2. The party of the second part is to engage in no other business but to devote his time exclusively to collecting claims given him from time to time by the party of the first part. 3. The party of the second part agrees to remit to the party of the first part on Saturday of each week the full amount of all collections made by him. 4. All notes, leases and cash received by the party of the second part on account of the party of the first part shall be held and rendered strictly as the property of the said party of the first part subject to their order and under their control. 6. The party of the second part is to receive as full compensation for his services under this agreement, a salary of $50 per month and necessary traveling expenses All the defendants filed the plea of the general issue. The other sureties on the bond filed separate pleas, twenty-two in number, including those to which demurrers were sustained. A. J. Crosthwait separately pleaded that, before Saint had entered on the discharge of his duties as collector, he notified plaintiff to take his name off the bond-that he would not become a surety on the bond; that the plaintiff made no objection and he was thereby released from any obligation on the bond. The other sureties on the bond filed a separate plea that they signed the bond with the understanding that Crosthwait was also jointly liable with them on the bond and that a release of Crosthwait on the bond without their consent released them. The evidence introduced on the trial of the case established the following facts: That the above contract was executed by the plaintiff and R. F. Saint and the bond was executed by the defendants, Wright, Crosthwait, Hall and Spragins, as sureties on the bond. That Saint received from the plaintiff a large list of notes and accounts for collection; that he collected a considerable amount of money for it, paying over a portion of it and retaining or embezzling the balance of it. After the bond was executed, Saint carried it or sent it to Nashville to the |