MAULE INDUSTRIES, INC., A FLORIDA CORPORATION, APPELLANT,
v.
JEROME J. COHEN, D/B/A JEROME CONSTRUCTION CO., APPELLEE

Fla. 3d DCA | 1960-01-11
No. 59-385
HORTON, C. J., and CARROLL, CHAS., J., concur.
117 So. 2d 37 Florida District Court of Appeal, Third District (1960)

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Synopsis

Maule Industries sued Jerome Cohen for an unpaid balance on a building materials contract. The trial court granted Cohen's directed verdict motion based on finding that Maule's release of Cohen's surety (Capital Indemnity) without Cohen's consent released Cohen from liability. The appellate court reversed, holding that releasing a surety does not discharge the principal debtor as a matter of law.


Holding

No. The general rule is that discharge of a surety does not discharge the principal debtor. The trial court erred in directing a verdict based on a release defense that was not pleaded and was not available under the law, as the principal debtor (Cohen) was not prejudiced by the creditor's release of the surety since he remained primarily liable for the full debt.


Key Quotes

“The general rule is that the discharge of a surety does not discharge a principal.”

Establishes the foundational legal principle governing suretyship that the trial court violated

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Facts & Procedural History

Maule Industries and Jerome Cohen entered into a verbal contract in January 1955 for Maule to supply construction materials for Cohen's subcontracting…

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Opinion of the Court
PEARSON, Judge.

PEARSON, Judge.

The appellant,' Maulé Industries, Inc., filed its complaint in the circuit court *38against the appellee, Jerome J. Cohen, d/b/a Jerome Construction Co., to collect the alleged unpaid balance due under a building material purchase contract. Cohen answered the complaint denying liability and raising the two affirmative defenses of payment and the statute of limitations. The cause came to trial and at the close of plaintiff’s case the defendant’s motion for directed verdict was granted. Final judgment was entered and this appeal followed.

The trial judge in the final judgment entered set forth a statement of the facts that he found to be true from the case of the plaintiff.1

The final judgment set forth the following principle of law as the basis for the directed verdict:

“The Court therefore finds, as a matter of law and as a matter of fact, that the plaintiff elected to ignore Pierce Construction Company and the defendant in this cause and carried on separate negotiations with the prime contractor and with the surety on the defendant’s bond, and that upon arriving at a satisfactory figure, the plaintiff thereupon released and discharged the defendant’s surety company from any further liability by virtue of its becoming a surety on the defendant’s bond. And the Court further finds that the release of the surety company, under the circumstances as reflected by the evidence, constitutes a valid release as to the defendant Jerome J. Cohen, doing business as Jerome Construction Co.”

The appellant points out first that the court directed a verdict upon the affirmative defense of “release” which had not been pled by the defendant. Secondly, the ap*39pellant urges, that the defense of release was not available to the defendant upon the facts as found by the trial judge. Briefly stated the precise issue raised by the facts in this case is: Does the release of a surety by a creditor without the principal debt- or’s consent release the principal debtor? The trial judge determined that such a release of the surety did release the principal debtor. We hold this to be error and reverse.

The general- rule is that the discharge of a surety does not discharge a principal. This rule was enunciated by the Supreme Court of the United States in City of New Orleans v. Gaine’s, 138 U.S. 595, 11 S.Ct. 428, 34 L.Ed. 1102. It has been recognized and affirmed by our own Supreme Court in the case of Feiner’s Organization v. Caffina, Fla.1955, 77 So.2d 852. Further authority may be found in cases cited at 50 Am.Jur., Suretyship, § 102; 72 C.J.S. Principal and Surety § 245; Steam’s Suretyship § 6.41 (5th Ed.1951).

Recognizing the general rule as above set forth we have examined the record particularly in light of the findings of the trial judge in the final judgment in order to determine if these facts are so peculiar that justice requires the application of a different rule. A proper analysis of the suretyship triangle reveals beyond question that the principal debtor was not prejudiced by his creditor’s release of his surety. By accepting a partial payment from the surety the creditor has penalized himself and has not damaged the principal debtor. This is true because the principal debtor is at all times liable for the entire and the full debt. He is in no way relieved from any responsibility whatsoever by the fact that he has a surety who is secondarily liable. Throughout the relationship growing out of the purchase contract the principal debtor remains primarily liable for the full amount of his debt to the supplier less payments made by himself or surety. This obligation is created by the contractual, relationship established between the creditor and the debtor. Although consideration may be given by the creditor to the presence or absence of a surety in weighing as a business decision the advisibility of contracting in the first place; it is immaterial to the question of primary liability of the principal to his creditor.

Having determined that the final judgment is erroneous upon the substantive law above discussed, it is unnecessary to discuss the procedural aspects of the case. The final judgment is therefore reversed and the cause remanded to the trial court for trial.

Reversed and remanded.

HORTON, C. J., and CARROLL, CHAS., J., concur.


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