the principal debtor, unless he had knowledge, at the time of so doing, that the other makers were sureties; and that such knowledge is not to be presumed in favor of the sureties, but must be proved; that a covenant not to sue one or more joint makers of a note does not discharge or release the others, it being regarded as a mere personal covenant. 2 Dan. Neg. inst., 289. There are many decisions of this court in full agreement with the above. cases. McCloskey v. Indianapolis, etc.; Union, 67 Ind. 86; s. c., 33 Am. Rep. 76; Davenport v. King, 63 Ind. 64; Huff v. Cole, 45 id. 300.

In the case of Davenport v. King, supra, the court, quoting from Neel v. Harding, 2 Met. (Ky.), 247, says: "If they were all principals, an agreement with one of them to give further day of payment would not operate to release or exonerate the others. Such an agreement cannot be allowed to have any more effect than it would have had if the promisors were all actually, as they all appear to be, principals in the note, unless the holder, at the time he entered into the agreement, had notice that the parties who claimed to be sureties did occupy that attitude on the paper."

In some of the paragraphs of the answer, the agreement to extend the time of payment is alleged to have been made before the maturity of the note. This can make no difference. The agreement was the agreement only of the parties to it. The note still remains in full force, unaffected by the agreement for the extension of the time of payment. We have examined the authorities referred to by the appellant's counsel, and think them not opposed to the conclusion which we have reached.

In the case of Hall v. Hall, 34 Ind. 314, the Halls borrowed $100, and each was to have $50. This fact distinguishes that from the case now before us. In the case of Crafts v. Mott, 4 N. Y. 603, the land, for the purchase of which the instrument was given, was equally divided between the purchasers, and this was held to operate as a division of the debt. Each of the makers was regarded as principal debtor for one-half of the land purchased, and surety as to the other half.

In the case of Cheetham v. Ward, 1 B. & P. 630, one of the joint obligors had been appointed executor of the obligee, and thereby discharged. This was held to discharge the other obligor. In the case of Rees v. Berrington, 2 Ves. Jr. 540, it was held that where the creditor, without the consent of the known

surety, gave further time to the principal, the surety was discharged. None of these cases is irreconcilable with the cases to which we have referred in support of our conclusion. The court did not err in overruling the demurrer to the first paragraphs of the reply.

(Omitting other questions.)

It is ordered, upon the foregoing opinion, that the judgment below be in all things affirmed, at the costs of the appellant. Order affirmed.

LEITHAUSER v. BAUMEISTER.

1891.

47 Minn. 151; 49 N. W. Rep. 660; 28 Am. St. Rep. 336.

'Appeal from municipal court of St. Paul, Cory, Judge. Action by Matt Leithauser against William Baumeister and others. Judgment for plaintiff. Defendants appeal. Reversed. DICKINSON, J. Prior to November 30, 1887, the three defendants were copartners, engaged in business under the name of John Comes & Co., and as such copartners they were indebted to a partnership firm (Matt Leithauser & Co.), to whose rights the plaintiff has succeeded in the sum of $280. The partnership was dissolved at time above stated. This action is to recover on that indebtedness. The defendants, Nagler and Baumeister, plead in defense that, by a contract between the defendants at the time of the dissolution, Comes became obligated to pay this debt; that after the dissolution Comes formed another partnership with one Schneider, under the same partnership name as that of the former firm, John Comes & Co., all of which, as is alleged, was known to the plaintiff; and that he accepted from Comes a promissory note of the new firm, signed in its partnership name, payable 90 days thereafter, in satisfaction of the indebtedness of the defendants. The court found in general terms that, except as to the allegation of the dissolution of the defendants' partnership, the allegations of the answer were not proved. This finding was erroneous in some particulars, and it cannot be said that the erroneous conclusion may not have affected the decision of the case. The evidence conclusively showed, and without dispute, not only that the partnership of the defendants had been dissolved when (as the fact is admitted.

to have been) the plaintiff in February, 1888, took from Comes a note, signed in the partnership name of that firm, for the amount of the debt, payable 90 days after date, with interest at the rate of 8 per cent. per annum, but that a settlement had been made between the copartners, and an agreement entered into which, as between themselves, obligated Comes to pay this partnership debt to the plaintiff. Moreover, the evidence on the part of the defendants (appellants) went to show that the plaintiff had been informed of this fact, and this is not really controverted in the evidence on the part of the plaintiff. On the contrary, he admits in his testimony that he "knew of the settlement they had," but did not know of the dissolution of the partnership. He admits that "Comes gave the note in the partnership name, because he said he did not want to stand by his agreement with the other parties because they did not stand by theirs.. He did not want to pay this claim all by himself, because they didn't live up to their agreement." We think that the case showed, contrary to the finding of the court, both that Comes had assumed the obligation, as respects the other defendants, of paying this debt, and that the plaintiff was informed of it when he took from Comes the note, in form expressing the obligation of the partnership, payable at a future day, at a rate of interest in excess of what the law would allow in the absence of express agreement. These facts are material. While such an agreement between the joint debtors, to which the plaintiff was not a party, could not prejudice him or affect his right of action against them all, yet it would affect the rights of the parties growing out of any new contract which he, having knowledge of such agreement between the defendants, might thereafter make with one of them. When Comes took upon himself the legal obligation of the defendants to pay this debt, they occupied towards him the position of sureties; and the creditor, knowing the fact, should not be allowed to make a new contract extending the time for payment, without their consent. Millerd v. Thorn, 56 N. Y. 402; Smith v. Shelden, 35 Mich. 42; Oakeley v. Pasheller, 10 Bligh, (N. S.) 548, 589. If the plaintiff knew that Comes had thus assumed the payment of this debt, he must be deemed to have known that the mere general partnership relation which he may have supposed to be still existing did not authorize Comes to give the note of the partnership for a debt which it had become his own personal obligation to pay. While the note,

taken under those circumstances, would not be obligatory on the other defendants, it would be enforceable against Comes, and would be effectual, as between the plaintiff and Comes, as a new contract, to extend the time for the payment of the debt (Wheaton v. Wheeler, 27 Minn. 464, 8 N. W. Rep. 599); and that would release the other defendants (see authorities above cited), even though there be no proof as to what, if any, injury the sureties may have suffered (Rees v. Berrington, 2 Ves. Jr. 540; Miller v. McCan, 7 Paige, 451; Calvo v. Davies, 73 N. Y. 211, 216). It may be that if the plaintiff had not known of the agreement between the defendants, and if he could be deemed to have supposed that the note was rightfully given as the note of the partnership, the result would have been different. Agnew v. Merritt, 10 Minn. 308 (Gil. 242). The finding of the court being, as we consider, erroneous in the particulars above stated, a new trial must be granted. We observe a variance between the proof and the answer, in that the note given appears to have been intended to express the obligation of the defendants' former partnership, and not, as alleged, the obligation of a new partnership, of which Comes and Schneider were members. There was no evidence of the existence of any such partnership. It is not claimed that this variance is material, and probably it was not. It is only adverted to here so that any doubt concerning it may, be avoided if thought necessary.

Order reversed.

f. Property of one person pledged for the payment of the debt of another stands in the relation of surety with all the rights of a surety.

Action on a note. The opinion states the facts. The defendant had judgment below.

ZOLLARS, C. J. On the 2d day of September, 1875, Robert C. Losey, for his own use and benefit, borrowed of appellant's decedent, Jacob Hubner, a sum of money to be repaid in three

years.

As evidence of the debt created by the loan, Robert C. Losey and his wife, Emma J., appellee herein, executed and delivered to said decedent a promissory note. At the same time, and to secure payment of the note, Emma J., her husband, Robert C., joining, executed and delivered to said decedent a mortgage upon her separate real estate. She executed the note and gave the mortgage as surety for her husband, and in no other capacity, the money neither having been borrowed nor used by her, nor used for her benefit in any way to make her property primarily liable.

On the 6th day of August, 1878, Robert C. Losey was discharged in bankruptcy from all of his debts, including said note.

On the 29th day of September, 1878, he and the decedent, payee of the note, without the consent or knowledge of Emma J., entered into an agreement which they indorsed upon the back of the note, as follows:

"In consideration of the extension of time for three years from September 2, 1878, and the reduction of the rate of interest from ten per cent to six per cent per annum, I hereby assume to pay promptly the interest at six per cent semi-annually, and the principal of the within note on or before September 2, 1881. "R. C. LOSEY."

Subsequent to said agreement Robert C. paid several installments of interest on the note. At the time the note and mortgage were executed, and at the time the above written agreement was made, the payee and mortgagee knew that Robert C. and Emma J. Losey were husband and wife; that the real estate mortgaged was her separate property, and that she executed the note and mortgage as surety for her husband, and in no other capacity.

The above are substantially the facts specially found by the court below. Upon those facts the court rendered judgment in favor of the plaintiff, against Robert C. Losey, for the amount of the note, and for Emma J. for costs, having concluded as a matter of law, that by reason of the foregoing facts, the mortgage was discharged and satisfied, and her real estate released. The question for decision here concerns the rights of the wife, Emma J. Under the present statutes, a wife may not mortgage her separate property to secure her husband's debts.