Marks and Moss in Rowlatt on The Law of Principal and Surety, 4th ed. (1982), London, at p. 151, say that s. 5 embodies this rule derived from Reed v. Norris (1837), 2 My. & Cr. 361, 40 E.R. 678 (L.C.): A surety's right to use securities given to the creditor by the principal is limited to the recoupment of the surety's indemnity against the principal. If the surety makes terms with the creditor and settles the debt for a lesser sum, and then obtains an assignment of the creditor's securities, he cannot recover more from the principal than he has actually paid.
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