Campbell loaned Perry Dixon $70,000, which was secured by a possessory security interest in stock owned by Perry. The stock had a market value of $40,000.
In addition, Campbell insisted that Perry obtain a surety. For a premium, Sutton Surety Co. agreed to act as a surety for the full amount of the loan.
Prior to the due date of the loan, Perry convinced Campbell to return the stock because its value had increased and he wished to sell it to realize the gain. Campbell released the stock and Perry subsequently defaulted. Is Sutton released from his liability?