REED, V. C.
Bill by Prances Louise Young against William A. Bell and others to enjoin an action at law by Bell & Gorman against complainant and defendant Bull, as late partners.
C. L. Cole, for complainant.
Wm. Clevenger, for defendant Bull.
REED, V. C. The bill charges that on June 1, 1896, the complainant and Bull entered into a partnership; that from September 12, 1890, to September 1, 1897, Bull bought merchandise from Bell & Gorman amounting to $832.20, which was charged to Bull; that on July 2, 1897, complainant retired from the firm, selling her interest to Bull, who assumed the payment of the firm debts; that notice of such dissolution was on July 6th mailed to Bell & Gorman, and published in an Atlantic paper on the 8th; that on September 27, 1897, Bell & Gorman accepted the individual note of Bull, payable in three months, for their debt; that $224.37 of the debt was for goods bought after dissolution. Bell & Gorman now sue both Bull and complainant for their bill. An answer has been filed, denying the reception of any notice of dissolution or knowledge thereof.
The single question is whether the bill discloses the existence of any defense by the complainant against all or any part of the bill of Bell & Gorman, which defense is available only in a court of equity. The purely equitable defense suggested arises out of the following collocation of facts: On July 2, 1897, complainant left the firm, and Bull assumed the payment of this debt to Bell & Gorman; that notice was at once given to Bell & Gorman; that on September 27th following they accepted the note of Bull, and thus suspended their right to sue Bull for three months. The equitable rule is invoked that where a creditor, having a surety as security for his debt, without the consent of such surety, extends to the principal debtor a right to a further time for payment, he thereby discharges the surety. It is suggested that, upon the dissolution of the firm and the assumption of the partnership debts, Bull became the primary debtor to Bell & Gorman, and complainant the surety, and that the extension of time to Bull thereafter discharged complainant. It is true that, inter sese, that assumption of the firm debts by Bull created, in respect to those debts, the relation of principal and surety between the complainant and Bull. But, to raise an equity in favor of the surety in respect of third persons, it is essential that such persons should have had notice of the existence of the relation of suretyship. Where the original relation of joint debtors is afterwards turned into that of principal and surety, there should be clear and convincing evidence that the creditor was notified of the change, before he is deprived of his original security by reason of his lenience. Now, the notice alleged to have been mailed to the creditor was merely a notice of dissolution of the partnership. There was no notice that Bull had assumed the payment of the firm debts. The suretyship sprang, not from the dissolution of partnership, but from the assumption of the payment of the partnership debts by Bull. I am of the opinion, therefore, that there exists no defense disclosed by the bill which is not available at law, and arises from the force to be given to the answer and affidavits. The rule to show must be discharged.