Opinion
No. 32374.
April 5, 1937.
SUBROGATION.
Complaint alleging that sureties signed principal's bond conditioned on faithful accounting for all sums of insurance company coming into principal's hands, that plaintiffs were required to and did indorse and guarantee such bond, that principal defaulted, that plaintiffs were required to pay money in default to insurance company, and that they were entitled to be subrogated to rights of insurance company under the bond, held insufficient to state cause of action under doctrine of equitable subrogation, where bond which was made part of bill of complaint did not show that plaintiffs were parties thereto as sureties or otherwise.
APPEAL from the chancery court of Grenada county. HON. L.A. SMITH, SR., Chancellor.
W.M. Mitchell, of Grenada, and McCallum McCallum, of Memphis, Tenn., for appellants.
The demurrers filed by defendants were general demurrers and undertook to set up in bar of the suit a matter which was in fact only a matter of defense, if it were true, and could have been raised and set up only by answer and proof, and not by demurrer, especially a general demurrer as was done in this case.
Griffith's Chancery Practice, sec. 301; Schwartz v. Leiber, 32 So. 954.
The defendants could not plead the want of a written agreement between Jenkins and Boyle, and the Franklin Insurance Company, since the right to plead the statute is a personal privilege not available to outsiders. The fact that Jenkins and Boyle also guaranteed the insurance company against any loss they might sustain on account of employing Rogers as their agent was no concern of Rogers and his sureties on his bond, and the fact that they were compelled to make good their guarantee did not release Rogers or his sureties from their obligation under their bond to the insurance company.
Grissham v. Lutrie, 76 Miss. 444.
This suit is to enforce the claim of the complainants against the defendants on their bond; and they are seeking to have the complainants, Jenkins and Boyle, subrogated to the rights of the insurance company and compel said defendants to make good to them what they undertook by their bond to make good to the said company, they having satisfied the claims of the company which the defendants bound themselves to pay by the execution of said bond, under the doctrine of an equitable assignment or subrogation; and we submit that they had the right to do this, and that the lower court erred in sustaining the demurrer on any ground.
Section 2958, Code of 1930; Griffith's Chancery Practice, sec. 24; Ligon v. Barton, 88 Miss. 135; Robinson v. Sullivan, 102 Miss. 581.
Cowles Horton, of Grenada, for appellees.
Counsel says that affirmative defenses may not be presented by a demurrer, citing Griffith, sec. 301. That matter does not appear here at all. Appellees' demurrer maintains that the bill on its face does not allege the facts necessary to bring the principle of subrogation into play. On the stated facts, no court on earth could have found that appellants were ever "sureties or guarantors" for Rogers' debt to the company in writing. This is true, under the rules of pleading for two reasons: (1) because appellants do not allege the existence of any such writing, and, (2) because the only writing referred to or exhibited with the bill and upon which subrogation is sought discloses on its face that these appellees did not sign same as its sureties.
The question naturally arises, why was such paper (if in existence at all) not set up in the bill and exhibited as the law requires? Especially so, when all of the inferences and conclusions are that the parties have stated their whole case and in a way more favorable to themselves and when every rule of pleading prevents any recourse to favorable inference to save an insufficient pleading.
Griffith's Chancery Practice, sections 82, 171, 175, 218 and 330.
We submit that the learned court below must be reviewed entirely on the record as presented on the trial and cannot be convicted of error on any statement which appears solely in the briefs.
Alexander v. Hancock, 174 Miss. 482; State ex rel. v. White, 171 Miss. 663; Moore v. White, 161 Miss. 390; Warner v. Warner, 33 Miss. 547.
The principle of subrogation is a peculiar and particular one. Whenever appealed to the party claiming under it must disclose a case which "on its facts fits perfectly in" with its nature and purpose.
Berry v. Bullock, 81 Miss. 465.
Mere payment by one person of another's debt, however commendable such payment may be, "never entitles a party to subrogation."
Good v. Golden, 73 Miss. 95.
Where a party seeks subrogation as surety for another, the facts on which such party relies are bound to establish the liability of the party as such surety and payment of a debt which the party seeking subrogation was legally bound to pay. Otherwise his pleadings do not state a case.
25 R.C.L. 1317, 1325; 21 R.C.L. 1099; 32 Cyc. 257; 37 Cyc. 375; Morris v. Lake, 9 S. M. 521; Slaton v. Alcorn, 51 Miss. 72; Staples v. Fox, 45 Miss. 680; Adams v. Taylor, 149 Miss. 750; Bowen v. Hoskins, 45 Miss. 183; Conway v. Strong, 24 Miss. 665; Brown v. Brown, 90 Miss. 410.
Even when suretyship is established, the debt paid by him for his principal must be one which the surety is "legally bound to pay." Otherwise subrogation is denied.
Seelbinder v. American Surety Co., 155 Miss. 21; 20 Cyc. 1413; 12 R.C.L. 1053; Mathews v. Chrisman, 12 S. M. 597; Bishop v. McGraw, 133 Miss. 517.
Appellants allege that they were "required" to "endorse and guarantee" as sureties for Rogers a particular bond which is exhibited with and made a part of their bill. The exhibit discloses, however, that appellants did not sign this bond and the exhibit must, of course, control.
Griffith's Chancery Practice, sections 57, 82, 175, 190, 192 and 565; Sections 526 and 527, Code of 1930.
It is too late to question now the proposition that the statute (Code 1930, secs. 526, 527) apply to matters of equity in the chancery court as well as in the law courts.
Ins. Co. v. Allen, 141 Miss. 681; Thomas v. Rosenberg, 153 Miss. 314.
Appellants could not have established any relationship of surety for Rogers "independent of writings" to make them sureties. There being no allegation to show the existence of any such writing and no such writing being referred to or made a part of their bill, they could not have proved same on the trial.
Oil Co. v. Fire Ins. Co., 152 Miss. 530; Quarles v. Hucherson, 139 Miss. 357; Griffith's Chancery Practice, secs. 190, 288, 289, 564, 565; Code 1930, secs. 526, 527.
In Berry v. Bullock, 81 Miss. 465, the statement was made that "equity cannot force subrogation on parties" and that "the case must be one which on its facts fits perfectly in with the nature and purpose of subrogation."
Neither the one nor the other would ever justify an application of the principle where the pleadings did not show that the payment made was made by one under legal obligation to make it and that he did so under compulsion, in a case of this kind.
If this is not the law, this court would never have stated, as it did in Good v. Golden, 73 Miss. 95, that "mere payment in and of itself never entitles to subrogation."
25 R.C.L. 1317, 1325; 21 R.C.L. 1099; 32 Cyc. 257; 37 Cyc. 375; Morris v. Lake, 9 S. M. 521; Slaton v. Alcorn, 51 Miss. 72; Staples v. Fox, 45 Miss. 680; Adams v. Taylor, 149 Miss. 750; Bowen v. Hoskins, 45 Miss. 183; Conway v. Strong, 24 Miss. 665; Brown v. Brown, 90 Miss. 410; Seelbinder v. American Surety Co., 155 Miss. 21.
No other writing was alleged to exist nor was there any other exhibit attached or referred to. The court could certainly never have found from a reading of the bill and exhibit that appellants were legally bound for this debt or paid same under compulsion. Nor could the court have supplied these omissions by any presumption.
20 Cyc. 1413; 12 R.C.L. 1053; Mathews v. Chrisman, 12 S. M. 597; Bishop v. Currie McGraw Co., 133 Miss. 517; Code 1930, secs. 526, 527; Griffith's Chancery Practice, sec. 190.
This is an appeal from a decree of the chancery court of Grenada county, sustaining a demurer to a bill of complaint filed by the Franklin Life Insurance Company, and J.T. Jenkins, Sr., and N.C. Boyle, partners in an insurance agency doing business under the firm name of Jenkins Boyle, against Amos L. Rogers, Mrs. L.T. Hayden, D.K. Hayden, and T.L. Guyton.
The bill of complaint alleged that in the year 1934 the defendant Amos L. Rogers was employed by the Franklin Life Insurance Company as an insurance agent or solicitor, and as such was required to execute a bond conditioned for the faithful accounting for all funds of said company coming into his hands, and for the faithful performance of all his duties as such insurance agent; that said bond was executed with the defendants Mrs. L.T. Hayden, D.K. Hayden, and T.L. Guyton as sureties thereon; that the said Jenkins and Boyle were required to and did indorse and guarantee said bond, and thereby became sureties for the said Amos L. Rogers. The bill of complaint further alleged that the said Amos L. Rogers became in default for money belonging to the insurance company which came into his hands, and that the appellants Jenkins and Boyle were required to and did pay the same to the insurance company, under their agreement to underwrite and guarantee said indebtedness, and that they thereby became entitled to be subrogated to the rights of the insurance company under the said bond, and prayed for a decree against the principal and sureties of the bond for the full amount paid by them to the appellant insurance company. The bond executed by the said Amos L. Rogers was filed as an exhibit to and made a part of the bill of complaint, and it does not show that the appellants Jenkins and Boyle were parties thereto as sureties or otherwise.
We think the averments of this bill of complaint are too uncertain, contradictory, and confusing as to the relations of the appellants Jenkins and Boyle to the bond in question to state a cause of action upon which the court could grant relief under the doctrine of equitable subrogation. The averment of the bill that the said Jenkins and Boyle were required to and did indorse the bond is contradicted by the exhibit to the bill, which is made the basis of the recovery sought, and while there is a general averment that they became joint sureties for the defendant Amos L. Rogers, there are no averments which show this conclusion to have any existence in fact. There is authority for the view that a surety, who has become such under an oral promise, may waive the statute of frauds (Code 1930, sec. 3343) and pay the debt and recover therefor from the principal, 50 C.J., sec. 412, p. 253, and authorities there cited, and it may be, as to which we express no opinion, that under a proper bill of complaint the appellants Jenkins and Boyle would be entitled to full recovery from the principal in the bond, and contribution from the sureties thereon. The present interest of the Franklin Life Insurance Company in the controversy is not apparent.
Affirmed and remanded.