day. We enclose further renewal on account of overdue amount, which please sign and return." The $472 was signed and returned, and is shewn by statement of 20th July as held to account of the old balance. It appears again in a statement of 3rd August. That document states the balance as $1,101.05; credits a draft for $200, due 25th August, and mentions as held to account of the sum due the $472 note, and another, due 7th November, for $434.15, making $1,106 15, which covers the whole amount due and something more, probably interest.

On 29th October, 1877, the balance shewn, including interest to 1st November, is $929.61, on account of which it is noted are held the $434.15 note and another then sent for $429.61. I think this is the last note which appears to have been taken from McGuire specially on account of the old account. The subsequent statements, while they usually carry forward the old balance with accumulated interest, as something separate from the new account, yet shew that paper was taken and renewed from time to time on account of the gross amount of the two accounts, although the payments made were credited on the new account alone.

The fact of the systematic extension of time to McGuire is, in my judgment, very conclusively made out; and I think it is equally clear that, under the settled doctrines of equity, it was a dealing with the principal which, in ordinary circumstances, would discharge the surety.

I am unable to satisfy myself that the rule is not applicable to the circumstances before us; but, as that result is very strongly questioned, I shall try to explain the grounds of my opinion.

It is important, at the start, to recall to mind the principle on which the general doctrine is founded. I do not think it is anywhere more clearly or satisfactorily stated than in the following passage which I read from the judgment of Lord Hatherley in Oriental Financial Corporation v. Overend, Gurney & Co., L. R. 7 Chy. 142, 149. "Now the real question is, whether this case falls within the author

ities by which it has long been settled that, if time is given to the principal, the surety is discharged. It was suggested, and the learned Vice-Chancellor seems to have given some weight to the suggestion, that the basis on which this principle rests has never been fully understood, and that it would have been better had the Court ab initio decided, not that the surety should be absolutely released, but that he should be put to prove his injury, and be allowed damages for any injury he might have sustained, and that therefore the authorities which have proceeded upon this principle are in no way to be extended. I do not feel myself at liberty to comment upon the propriety or impropriety of a principle which more than half a century ago was stated by Lord Eldon, in Samuel v. Howarth, 3 Mer. 272, to have been long established, and which has been continually acted upon since that time, and is as well settled and established as any principle of the Courts of Equity. I think that sometimes the cases are a little open to this observation, that they do not all of them, especially the later cases, clearly and distinctly shew in what way the principle is established and brought to bear. But, undoubtedly, if we look to the earlier cases, amongst which I might cite especially Oakeley v Pasheller, 10 Bligh, 548, the principle is laid down very clearly, that if you agree with the principal to give him time, it is contrary to that agreement that you should sue the surety; because, if you sue the surety, you immediately turn him upon the principal, and therefore your act breaks the agreement into which you have entered with the principal. It is not simply neglecting to sue the principal which would have any effect upon the surety; but there must be a positive agreement with the principal that the creditor will postpone the suing of him to a subsequent period. To shew that this is the principle we have only to refer to another class of cases, which, down to one very late case, clearly and distinctly established that it is competent to the creditors to reserve all their rights against the surety, in which case the surety is not discharged; and for this reason-that the

contract made with the principal is then preserved, because the creditors have engaged with the principal not to sue him for a given time, but subject to the proviso that the creditors shall be at liberty to sue the surety, and so turn the surety upon the principal without any breach of the engagement with the principal. I say that this doctrine. has always been recognized down to a late period, because Lord Truro threw some doubts upon it in the case of Owen v. Homan, 3 Mac. & G. 378. But Lord Cranworth, in giving judgment in that case upon appeal to the House of Lords, 4 H. L. C. 997, said there could be no doubt about the case before the House, and that he did not think he should have entered into any discussion of the case had it not been for the doubt thrown by Lord Truro upon the principle that you might retain the surety, if that formed part of the original contract as to not suing the principal; and Lord Cranworth said that he thought it right to protest against the doubt, because he thought the doctrine was perfectly clear and established."

Then we find it decided that, in order to give the surety the benefit of the rule, it is not necessary that the creditor should have, at the time of the contract, been aware that he was surety or have dealt with the parties on that footing. It is enough if, before he makes the agreement to give time to the principal, he is informed of the relation of the parties to each other. This is true, even if that relation is the reverse of that which appeared to exist when the contract was made; as if the creditor is informed that the party who appeared to be principal had all the time been surety, and the party who appeared to be surety had really been the principal debtor. This was what happened in Oriental Financial Corporation v. Overend, Gurney & Co. L. R. 7 Chy. 142; 7 H. L. 348.

Neither will the surety lose the protection of the rule in consequence of his being a joint contractor, and by the form of his contract jointly liable with the principal, as was the case in Pooley v. Harradine, 7 E. & B. 431; and Greenough v. McLelland, 2 E. & E. 424.

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These doctrines appear to me to apply to the present case, notwithstanding the feature which is dwelt upon as distinguishing it from cases like those to which I have adverted, viz., the circumstance that the parties were originally co-debtors, and only became principal and surety after the debt to the plaintiffs was contracted.

It is said that the rights of the plaintiffs under the contract cannot be changed by arrangements between the debtors to which the creditors were not parties. But setting aside for the moment what I take to be the fact, that these plaintiffs were privy and assenting parties to the change, I do not perceive any force in the objection which would not have attached to it in the cases I have just cited.

The contract is, no doubt, interfered with, and the creditor's right under it abridged, if, on being told that the person with whom he contracted as principal is really a surety, and that the one whom he supposed was surety is the principal, or that one of two with whom he dealt as joint debtors, equally liable to him as principals, is only a surety for the other, he is obliged to recognize that relationship in his subsequent dealings. What I do not understand is what difference it can make to the creditor who has to submit to the variation of his contract, whether the relationship of principal and surety existed between the debtors all the time, or was only created shortly before notice of it is given to him.

Bailey v. Griffith, 40 U. C. R. 418, was a case in which the relationship of principal and surety was the result of a change made after the debt there in question was contracted, by which the original principal became the surety, and the original surety the principal debtor. It was decided by the present Chief Justice of the Common Pleas at nisi prius, and afterwards by the Court of Queen's Bench, in accordance with the views I have been putting forward; some stress also being placed on the fact, which I take also to exist here, that the creditors had assented to the change of relationship.

The case relied on as decisive against the application of the general rule to the present case is Swire v. Redman, L. R. 1 Q. B. D. 536, a decision of Cockburn, C. J., and Blackburn, J. The judgment, which was read and concurred in by the Chief Justice, was prepared by Blackburn, J.; and it is needless to say that every opinion of that very eminent Judge is entitled to the greatest respect, and that, if comparison is permissible, this is especially true of his judgments on questions of mercantile law.

We have, however, to be guided by the reasoning upon which the opinion is founded, and not by the mere authority of the decision. I cannot say that I am convinced by anything said in Swire v. Redman that the opinion to which I have been led by the other authorities is incorrect.

The whole of the reasoning on which the judgment proceeds is found upon pages 541 and 542 of the report. I shall have to quote it for the purpose of pointing out some particulars in which it seems to me unsatisfactory.

The first observation I have to notice reads thus: "We think it clear law that a creditor, who has two principal debtors, may bind himself to one of them (in any way short of an absolute release) to give him time, or even not to sue him, without in the least prejudicing his right of recourse against the other. By suing that other debtor, a recovery from him entitles him to recover contribution from his co-debtor, and consequently the creditor may, by his suit against the one debtor, bring about such a state of things as renders him, the creditor, liable to an action by the co-debtor who has been forced to make contribution, when by the bargain between the creditor and himself he ought not to have been; but this forms no defence for the other debtor. The law says that the party injured shall have compensation in damages adequate to the injury he has received, but that this shall form no defence to the party who has received no injury at all. And if no damage at all has been received there is no compensation due to anyone. And this, we cannot but think, is consistent with sound sense and clear justice."