Opinion
(December Term, 1843.)
1. In equity, relief is granted between cosureties upon the principle of equality applicable to a common risk; and upon the insolvency of one, the loss is divided between the others as being necessary to an equality.
2. But in a court of law each surety is responsible to his cosurety for an aliquot proportion of the money for which they were bound, ascertained by the number of sureties, merely without regard to the insolvency of any one or more of the cosureties.
3. This rule of the common law as declared in England is not altered by our act of 1807, Rev. Stat., ch. 113, sec. 2, by which it is provided that where the principal is insolvent, one surety who has paid the debt may have his action on the case against another "for a just and ratable proportion of the sum."
4. Where there are more than two sureties, and one pays the whole debt, the principal being insolvent, he cannot bring an action against his cosureties jointly, but each must be sued separately for his own liability.
APPEAL from Pearson, J., at Fall Term, 1843, of DUPLIN.
No counsel for plaintiff.
Reid and Winslow for defendants.
This suit commenced by a warrant before a justice of the peace of Duplin County, and was carried by successive appeals to the Superior Court of the county. On the trial it was in evidence that in 1838 one Carrol executed a note to one Barden for $52.83, and that the plaintiff and the two defendants executed the said note as the sureties of the said Carrol; that in April, 1840, the plaintiff paid a judgment which (84) had been taken against the said Carrol and himself and the two defendants upon the said note, including interest and costs, being at the time of payment $59.69. It was also proven that Carrol, the principal, was in 1840, and still is, insolvent, and that the plaintiff had demanded a contribution from the defendants before the warrant issued. The defendants' counsel insisted that the plaintiff could not maintain a joint action, and moved to nonsuit because the cause of action was several. This question was reserved by the court, and the jury returned a verdict for the plaintiff, subject to be set aside and a nonsuit entered if the court should be with the defendants upon the question reserved. The court was of opinion that the cause of action was several, and that a joint action could not be maintained, and set aside the verdict and entered a judgment of nonsuit, from which the plaintiff appealed.
In equity, it has always been held that there should be relief between cosureties, upon the principle of equality applicable to a common risk; and upon the insolvency of one, the loss has been divided between the others as being necessary to an equality. The court of equity, from its modes of proceeding and having all the parties before it at once, is able to adjust their rights upon this principle in every case, however complicated by the number of the sureties or by successive insolvencies. In a single suit, everything may be fully investigated, the property of the principal first applied, full or partial indemnities to some of the sureties inquired into and required, and the insolvency of some of the sureties ascertained, and indeed the loss of each ascertained and the proper contribution from each finally and conclusively determined. In many instances, a court of law is incompetent to administer the justice to which sureties may be entitled as against each other. For that reason, it was formerly held in this State that the ground of relief in the courts of equity was a pure equity, and not the notion of mutual promises between the cosureties; and therefore (85) that at common law no action would lie for one against another, even where there were but two sureties. Carrington v. Carson, 1 N.C. 410. It is true that about the same time in 1800 it was held otherwise in England, and an action at law was sustained for one surety who paid the debt against another for contribution. Cowel v. Edwards, 2 Bos. Pul., 268. But it was there found necessary to restrict the action to the simple cases where there were two sureties; or if there were more than two, to a recovery against a each of an aliquot proportion of the money, ascertained by the number of the sureties merely. It was found impossible to carry the doctrine further at law, because courts of law proceed only on contracts, and could not imply that there was more than the one contract between the sureties, at first entered into, and suppose, contrary to the fact, new ones to spring up with every change of the circumstances of the sureties that might happen, even after the payment of the money by one of them. As far as an aliquot proportion, according to numbers, the money might be presumed to have been paid to the uses of the sureties severally; but on the insolvency of one of them afterwards, the share of the insolvent could not be made then to change its character and become money paid to the use or at the request of those who were solvent. The law could not in such complicated cases do complete justice by one final determination, and therefore it did not undertake it; and such is still the rule in England. Browne v. Lee, 6 Barn. Cres., 689.
In this State, however, the doctrine has been the subject of legislation in the act of 1807, Rev. Stat., ch. 113, sec. 2, and it is to be considered how far that has altered the law as it previously existed here. It provides that when the principal is insolvent, one surety who has paid the debt may have his action on the case against another "for a just and ratable proportion of the sum." The purpose of the act was probably nothing more than to say that the rule laid down in Carrington v. Carson, that there was no jurisdiction at law in any case, should be (86) law no longer, leaving the question to the courts what in each case was the "just and ratable proportion" to which, as far as a court of law was competent to ascertain, the party was entitled. It is not unlikely that a knowledge of the case of Cowel v. Edwards, about that time acquired, might have induced the enactment, and that it was intended to transfer its principle and nothing more in the act. At all events, it furnishes no data for determining the proportion but the number of sureties, and thus it adopts the rule of that case. The words are, "where there are two or more sureties, and one may have been compelled to satisfy the contract, he may have his action against the other surety or sureties for a just and ratable proportion of the sum." The proportion here spoken of is that which arises among the parties to the contracts specified in the first part of the sentence, which are, first, a contract in which there are two sureties, and, secondly, a contract in which there are more than two.
In each of those cases, the sureties are to be respectively liable for a ratable proportion, namely, where there are two sureties for a moiety, and where there are more than two, in a like proportion — that is, according to their number. This construction is rendered the clearer when attention is drawn to the particular case in which the action is given. It is not in every case in which a surety makes the payment, but only in that of the insolvency of the principal, or what is tantamount, his residence out of the State. Those and those alone are the cases within the purview of the act; and upon the supposition of that state of facts, an aliquot part, according to numbers, is not only a ratable, but the only just proportion of each surety. Without the insolvency of a surety also his share cannot in any court be imposed on the others; but the act takes no notice that one or more of the sureties may be insolvent or reside abroad, nor gives an action for rights arising out of that state of things. It is apparent that case was not contemplated by the Legislature, and therefore no rate of contribution between the sureties, as affected by the insolvency of one or more of their own body, or indeed by anything else but the insolvency of the principal was thought of or is provided (87) for in the act. The object was merely to change the form in the single instance of payment by a surety who was unable to obtain reimbursement from the principal, and everything else was left as before.
It follows that each surety is liable at law for only his original aliquot part, and of course an action cannot be brought against two or more jointly, but each must be sued separately for his own liability. Indeed there is another consideration which renders it perfectly clear that a joint action cannot be maintained, which is that the plaintiff might thereon raise the whole recovery from one of the defendants in the first instance, although the other might be solvent, which is wholly inadmissible. Moreover, it would change the ratio of liability, even in case of the insolvency of one, for suppose three sureties. A., B., and C., for a debt of $300, and that A. pays it and then sues the other two for $200. If B. then becomes insolvent and C. pay the judgment, he would then pay more than his proportion and have a just claim on A. — to return to him $50 to equalize their loss. But it is an absurdity that one should recover in one action what the defendant may have a right to recover back in another action, which shows that no action can be allowed in which the recovery will not be confined to the sum for which the defendant is liable at all events. Beyond such a liability justice can be done between persons in this relation only in the court of equity.
PER CURIAM. Affirmed.
Cited: Hall v. Robinson, 30 N.C. 59; McPherson v. McPherson, 33 N.C. 403; Leak v. Covington, 99 N.C. 570; Adams v. Hayes, 120 N.C. 386; Fowle v. McLean, 168 N.C. 543.
(88)