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Home > Journals > Michigan Law Review > MLR > Volume 29 > Issue 2 (1930)

 

Abstract

In the absence of statutory provision, where the surety is sued alone, the generally accepted view is that he can not show the existence of a claim in favor of his principal against the creditor for the purpose of preventing or decreasing the creditor's recovery against him. The view has frequently been applied where the surety, sued alone, sought to set up the creditor's breach of warranty as a defense. It recognizes that such a breach of warranty gives rise to a cause of action against the creditor that belongs solely to the principal debtor. It also recognizes the possibility that the cause of action in favor of the principal for breach of the warranty that may exist may exceed in amount the creditor's claim against the debtor, as where the principal has paid the major part of the purchase price, and that, in the event that this is so, an affirmative judgment for any such excess can not be rendered in favor. of the surety because he has no right to it, nor in favor of the principal because he is not a party to the suit. The courts, however, that adhere to the view that the creditor's breach of warranty is no defense to the surety make the assumption that the surety, in setting up the creditor's breach of warranty, seeks to use defensively a cause of action that belongs to the principal. From this assumption they draw the conclusion that, if the surety were permitted to show the breach of warranty defensively, the judgment in that suit to which the principal debtor is not a party would necessarily be conclusive upon him as to whether there was in fact a breach of warranty as well as to the amount of damage resulting therefrom. To most courts this reasoning has appeared conclusive. In a few cases, however, the nature of the surety's contract is considered to be such that he can not be liable for .more than the amount for which his principal is liable and the breach of warranty has been held to be a defense to the surety, but only to the extent of the damages it causes the principal.

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