If the creditor makes a false representation of fact concerning his contract relation with the debtor, which materially affects the transaction had with the surety, and it is the inducement of the surety's contract, or deceives the surety as to the extent of the contract liability he is assuming, it is a fraud on the surety, and the surety as a general rule is not bound on the obligation he has so undertaken.31

28 Kline vs. Redmond, 70 Ind., 271. 29 Milberry vs. Stover, 75 Me., 69.

30 Bell vs. Mahin, 69 Iowa, 408. 31 Armstrong vs. Cook, 30 lnd., 22,

A surety may claim a discharge, by showing that he made his contract with the creditor on condition that another surety be procured, and that the condition of his signing was not complied with.32 While the fraud of the creditor will usually discharge the surety, the fraud of the principal debtor on the surety will not discharge the surety on his contract with the creditor, unless the creditor participates in the fraud, or was, in some way, concerned in the perpetuation of the fraud or had a knowledge of the same. Where the obligee is without notice, however, the surety cannot interpose the principal's fraud as a defense to his contract.33

The surety may as well avail himself of the fraud perpetrated on his principal as on himself, where he becomes the surety or guarantor of the debt, that was induced by a fraud perpetrated on the principal debtor, as defenses that are inherent in a thing cannot be wiped out by the obligee obtaining a surety for the obligation; the defense of fraud is therefore available to the surety in such a case.34

The rule as to whether concealment of a certain fact by the creditor from the surety will amount to fraud, has been stated in substance as follows: in order that a failure to communicate a fact to the surety in respect to the subject matter of the proposed contract should have the effect of fraud upon him, and vitiate the contract, it must be a fact which necessarily must have the effect of increasing the responsibility of the surety, or operating to the prejudice of his interest.35 Concealment or failure to disclose has been held to be fraudulent, only when the duty rests on the person having the knowledge of the facts to disclose them.36

32 Bellville Savings Bank vs. Borne-man, 124 I11., 200; Crawford vs. Foster, 6 Ga., 202.

33 Ladd vs. Board of Trustees, 80

I11., 233. 34 Putman vs. Schuyler, 4 Hun.,

166. 35 Comstock vs. Gage, 91 I11., 328.

The case of Warren vs. Brand decided by the West Virginia Court37 gives a general review of the authorities as to when concealment of a fact by the creditor from the surety is to be regarded as a fraud on the surety. They say in conclusion, in part: "Our conclusion is that unless inquired of by the surety, a creditor is under no obligation to disclose the facts in no manner connected with the business which is the subject of the suretyship, though such facts would probably have a decided influence on the surety in entering into, or declining to enter into, his contract of suretyship. As, for example, in the taking of a bond of a cashier, the fact that the cashier gambled largely might, and probably would, influence a surety in going on the bond, yet such fact not being in any manner connected with the contract that he would faithfully perform his duties as cashier, the directors are under no obligations to volunteer a disclosure of this fact to the surety. If a material fact connected with the contract of suretyship, which might influence the surety in entering into the contract, is fraudulently concealed with a view to benefit the creditor, such concealment, though no inquiry is made by the surety, would vitiate the contract of suretyship and discharge the surety."

Where the surety's bond is given for the faithful performance of the duties of a person in the employ of the obligee, and the principal has been found by the obligee to be dishonest in his work, and he continues the dishonest servant in his employ without giving notice to the surety, he cannot hold the surety liable for subsequent losses he may meet with, by reason of the subsequent defaults of the servant.38

36 Domestic Sewing Machine Co. vs. Jackson, 15 B. J. Lea., 418.

37 15W.Va.,21.