There is perhaps no more interesting bit of evolution of legal principle than that which has been taking place, since about I900, in the law of suretyship as to the effect which an obligee's premature payment to the principal debtor has upon his right against his surety. Almost a hundred years ago, in Calvert v. The London Dock Comnpany,' the English Court of Chancery decided that such a payment totally discharged the surety on a contractor's bond. In that case, the principal had agreed to furnish the labor and materials for construction and repairs upon the defendant's property in consideration of the defendant's promise to pay ?52,000. The agreement provided that payment should be made every two months for three-fourths of the cost of the work certified by the architect to have been done, the remaining one-fourth to be paid upon the full completion of the contract. The plaintiff's testator and other sureties executed their bond to the defendant conditioned to be void if the principal performed his contract. Subsequently the principal became embarrassed financially and the obligee, for the purpose of enabling him to continue the work, made advances in excess of three-fourths of the cost of the work certified to have been done. Finally, however, the principal quit the job and subsequently was adjudged bankrupt. The surety filed a bill in equity praying that the defendant be perpetually enjoined from suing at law upon the bond on the ground that the obligee's premature payments had terminated the plaintiff's obligation arising from his execution of the bond. Holding that the defendant should be perpetually enjoined, the court said:
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Apr 1, 1932
Open Access
H W Arant 