Does their insolvency excuse that delay?

I see no principle upon which that can be claimed.

When a creditor agrees with a surety for his debtor that he will commence a suit against such debtor within a reasonable time after the debts fall due, and in default thereof that the surety shall be released, it is a condition precedent to his right. of action against the guarantor that such suit shall not only be so commenced, but that it shall be carried to consummation.

The plaintiff had no right to determine, on his own responsibility, whether the debt was collectible. That was a question which the defendant had made it incumbent on him to ascertain by recourse to the ordinary rules provided by the law for the collection of debts.

If the debtor's insolvency is an excuse for the delay at all, there is no reason why it should not be such as long as the insolvency continues, and thus the liability of the surety would be for an indefinite period controlled by the opinion of witnesses as to the ability of the principal to pay the debt, and not by the standard or means fixed by the parties themselves for ascertaining that fact.

These views lead us to the conclusion that the proof of the debtor's insolvency was properly rejected.

It follows, therefore, that the nonsuit was proper, and that the judgment should be affirmed, with costs.

MASON, J., dissenting. There has been a very great deal of discussion, in the courts of this country, as to the legal construction of such a guaranty as this. The real difference of opinion has been as to what was implied in such a guaranty. All agree that, unless the terms of the guaranty imply that the liability of the guarantor depends upon the failure to obtain payment of the principal, by proceedings at law, such proceedings are not a condition precedent. In most of the states it has been regarded as an undertaking to pay, if recompense could not be obtained of the principal debtor; and that where clear proof of the principal debtor's insolvency could be made, no suit against him was required. The following cases will be found to hold this: McDoal v. Yeomans, 8 Watts, 361; McClurg v. Fryer, 15 Pa. St. 293; Bull v. Bliss, 30 Vt. 127; Dana v. Conant, 30 Id. 246; Perkins v. Catlin, 11 Conn. 213 [29 Am. Dec. 282]; Ranson v. Sherwood, 26 Id. 437; Sanford v. Allen, 1 Cush. 473; Gillighan v. Boardman, 29 Me.

79; Thompson v. Armstrong, 1 Breese, 23; Wren v. Pierce, 4 Smedes & M. 91; Huntress v. Patten, 20 Me. 28. The rule with us seems to be different.

The rule to be deduced from the adjudged cases in this state is, that such a guaranty is an undertaking that the demand is collectible by due course of law, and that the guarantor only undertakes to pay, when it is ascertained that it cannot be collected by suit, prosecuted to judgment and execution against the principal; and that the endeavor to collect of the principal, by due course of law, is a condition precedent to the right of action against the guarantor: Moakeley v. Riggs, 19 Johns. 69 [10 Am. Dec. 196]; White v. Case, 13 Wend. 543; Eddy v. Stanton, 21 Id. 255; Taylor v. Bullen, 6 Cow. 624; Burt v. Fowler, 5 Barb. 501; Loveland v. Shepherd, 2 Hill, 139; Manning v. Haight, 14 Barb. 76; Newell v. Fowler, 23 Id. 628; Van Derveer v. Wright, 6 Id. 547; Gallagher v. White, 31 Id. 92; Cady v. Sheldon, 38 Id. 102. It must be admitted, also, that the decided weight of authority, in the supreme court of this state, is, that a still further condition is implied in such a guaranty, and which is, that due diligence must be used in bringing the suit against the principal, and in prosecuting the same to judgment and execution; and that any laches in this respect will discharge the surety: See cases above cited.

I cannot find that this question has ever been passed upon in this court or in the late court of errors. But as a general rule its soundness cannot be doubted, I think, and it seems unquestioned from the adjudged cases. The rule which requires the creditor, in such case, to use due diligence to collect the debt of the principal, is just and reasonable, and should be enforced as well for its reasonableness as for the unbroken current of authority with which it is supported. The rule is not, however, in my judgment, inflexible. It is like most general rules, it has its exceptions. It cannot be maintained upon principle, as the unbending rule, under all conceivable circumstances. If the principal debtor is and has been, from the time the right to bring suit against him has accrued, utterly and hopelessly insolvent, with no property out of which anything could be collected, then the reason of the rule which requires the principal debtor to be prosecuted to judgment and execution with all diligence ceases, and the familiar maxim of the law, Cessante ratione legis, cessat ipse lex, steps in and relieves the creditor from the rule of diligence in prose

cuting his suit. The reason of the rule ceasing, the rule itself must cease. This must be so, unless we are prepared to hold that the creditor should lose his debt for the want of due dili gence in doing a vain, idle, and useless thing.

The law is said to be the perfection of human reason, and should not be subject to such a reproach. Is it insisted that the judgment and the issuing and return of an execution nulla bona is, under all circumstances, the best evidence of the debtor's inability to pay? If it is, it cannot be maintained. His recent discharge under the bankrupt act of Congress, or under the insolvent laws of the state, on the petition of two thirds of his creditors, is better evidence of his insolvency than the sheriff's certificate upon the execution that he has no goods or chattels, lands or tenement. The one is preceded by a full and complete judicial investigation into the property and affairs of the bankrupt, and the certificate of discharge is only issued when the property of the debtor has been made. over to the assignee for the benefit of the creditors. The other is the certificate of a ministerial officer, often made upon the very slightest investigation, and never more than prima facie evidence.

What the plaintiff offered to prove in the case at bar would have been quite as satisfactory evidence of the inability to collect anything of the principal debtor as the return of the sheriff upon an execution; and it seems to me more so. The plaintiff offered to prove that these principal debtors were at the time this debt fell due, and that each of them ever since had been, entirely and hopelessly insolvent, and that nothing could have been collected of them by proceeding at law then or since. This evidence was objected to, and rejected by the court. Under this ruling, we must hold that the creditor is compelled to proceed to judgment and execution against the principal debtors, where they are concededly, entirely, and hopelessly insolvent, and have nothing out of which the execution could be collected, and that he must do this with all diligence or lose his debt. There is no other principle upon which such a proposition can be maintained than that it is so provided in the bond, and that the party must stand to his contract. The argument must be that the condition of the guaranty made due diligence in such a case a condition precedent to the right of action against this guarantor. The decided weight of authority in the supreme court of this state is certainly to this effect. The rule, however, has been seriously

questioned by some of the judges in that court, and was distinctly repudiated in the recent case of Cady v. Sheldon, 3 Barb. 103. All that such a guaranty implies is, that the evidence of debt is good, and collectible by due course of law. The courts have said the law imposes this duty to prosecute the principal debtor with reasonable diligence; and this is for the purpose of insuring the collection of the debt out of the principal, and that no opportunity shall be lost to do so. This is very well, and is all right, as a general rule, as we have already said; but when the principal debtors are utterly and hopelessly insolvent, and have nothing out of which an execution could be collected, then the law excuses the want of diligence, as it would have been idle and useless in accomplishing any purpose whatever. Due diligence in prosecuting the principal debtor, who is proved to be utterly insolvent and without any property, should never be implied in such a guaranty as a condition precedent to the right of action against this guarantor. There is certainly no express undertaking of the kind in the contract of guaranty under consid eration; and as none will be implied, it is not required. The terms "good and collectible," used in such a guaranty, mean nothing more than "capable of being collected": Marsh v. Day, 18 Pick. 321; Sanford v. Allen, 1 Cush. 474, 475. The rule which would require the creditor to prosecute with diligence in such a case a hopelessly insolvent debtor, without any property out of which to collect the same, ought not to obtain, for the further reason that it would be at war with the general analogies of the law.

The judgment of the supreme court should be reversed, and a new trial granted.

HUNT, C. J., and GROVER, MURRAY, and DANIELS, JJ., concurred with LOTT, J., for affirmance.

WOODRUFF and JAMES, JJ., concurred with MASON, J., for reversal.

Judgment affirmed.

ASSIGNMENT OF DEBT CARRIES WITH IT, AS INCIDENT, SECURITIES FOR ITS PAYMENT: Peters v. Jamestown Bridge Co., 63 Am. Dec. 134, and note; Perkins v. Sterne, 76 Id. 72; Herring v. Woodhull, 81 Id. 296; Pardee v. Lindley, 83 Id. 219; Bank of State v. Anderson, 83 Id. 390; Miller v. Rutland etc. R. R., 94 Id. 413; and see Perry v. Roberts, 95 Id. 689, and note. The prin cipal case is cited to this effect in George v. Tate, 102 U. S. 571; S. C., 1 Trans. Rep. 406; Barlow v. Myers, 64 N. Y. 44; Smith v. Starr, 4 Hun 125; S. C., 6 Thomp. & C. 388.

GUARANTY OF COLLECTION IS UNDERTAKING THAT DEBT WILL BE PAID, if due legal proceedings to collect it are taken within a reasonable time after it becomes payable: Moakeley v. Riggs, 10 Am. Dec. 196; Peck v. Frink, 74 Id. 384; Schmitz v. Langhaar, 88 N. Y. 506, 512; S. C. below, 24 Hun, 171, per Gilbert, J., dissenting. It is a condition precedent that the creditor will diligently endeavor to collect the debt by exhausting the legal remedies: Northern Ins. Co. v. Wright, 13 Id. 168; Griffith v. Robertson, 15 Id. 346; Vanderbilt v. Schreyer, 21 Id. 540; Riper v. Poppenham, 43 N. Y. 74; Hernandez v. Stilwell, 7 Daly, 363; and an unreasonable delay will discharge the guarantor: Moakeley v. Riggs, supra; McMurray v. Noyes, 72 N. Y. 526; S. C., 28 Am. Rep. 182; Northern Ins. Co. v. Wright, 76 N. Y. 448; Toles v. Adee, 91 Id. 572; Tiffany v. Willis, 30 Hun, 267; S. C., 17 Week. Dig. 397; McFarlane v. City of Milwaukee, 51 Wis. 696; and proof of insolvency, or inability of the principal to pay, will not avail as a substitute: Northern Ins. Co. v. Wright, supra; but see Janes v. Scott, 98 Am. Dec. 328. The question of reasonable diligence is one for the court, and not for the jury, where the facts are undisputed: Bowery Nat. Bank v. Mayor etc. of New York, 8 Hun, 229. The principal case is cited to the above propositions; but see it distinguished in a case where the payee of a promissory note neglected to proceed against the principal debtor upon the request of a surety, the principal debtor being insolvent: Field v. Cutter, 4 Lans. 196.

VALENTINE v. CONNER.

140 NEW YORK, 248.]

LOAN IS NOT Rendered per SE USURIOUS from the fact that the lenders exacted, as a condition of making the loan, that the borrower should secure to them the payment of a subsisting and genuine debt due them from a third person.

IT WILL BE PRESUMED BY COURT OF APPEALS, IN Support of JUDGMENT OF REFEREE, that he found such facts, in addition to those specified in his report, as are essential to sustain his conclusion, provided there was evidence to warrant the finding of such additional facts.

ACTION to cancel certain notes and a chattel mortgage to secure their payment, executed by the plaintiff to the defendants, and to recover the value of the property sold under the power in the mortgage, on the ground that the notes and mortgage were usurious. The action was tried by a referee, who found that about April 18, 1859, the plaintiff, being indebted to divers persons, including $545.11 to the defendants, applied to the defendants for a loan of $3,184.11, to discharge the indebtedness. The defendants consented to lend the money apon certain conditions as to the execution of notes; and upon the further condition that the plaintiff would, in consideration of such loan, undertake to pay to the defendants the sum of $483.02, claimed to be due from one Henry Jones to them, by virtue of a judgment, interest thereon, referee's and counsel's