Opinion
(June Term, 1848.)
1. An indemnity obtained from a principal by one of two cosureties, after the risk is incurred, inures equally to the benefit of both.
2. But where the surety merely had a deed of trust for certain property, as an indemnity, executed by the principal, and neglected to have it registered, so that the property was sold by other creditors, the cosurety is not entitled, on account of this laches, to make him responsible for the value of the property.
APPEAL from the Superior Court of Law of PERQUIMANS, at Spring Term, 1848, Settle, J., presiding.
Heath for plaintiff.
Iredell for defendant.
(287) This is an action on the case, brought, under the statute, by one surety of an insolvent principal against a cosurety for contribution.
The case was as follows: The firm of H. N. Williams Co., composed of H. N. Williams and C. C. Green, did business as merchants in Elizabeth City, and made several promissory notes to different persons, which were also executed by the plaintiff and the defendant and one Proctor as sureties. The principals became insolvent, and some of the notes were afterwards paid by the plaintiff, and after giving the defendant notice thereof and demanding an aliquot part of the sum paid by him, he brought this suit.
The counsel for the defendant in opening his case stated that he claimed that the value of certain slaves, which Williams and Green had conveyed to the plaintiff, should be deducted in the first instance from the amount paid by the plaintiff, and that he was liable only for a share of the balance that would remain after such deduction. And in support of that defense the counsel for the defendant offered to give in evidence a deed of trust, made by Williams and Green to the plaintiff, dated 16 March, 1841, and proved and registered 2 December, 1842, purporting to convey to Pool seven slaves in trust to indemnify him from loss by reason of his having become one of the sureties in the notes of H. N. Williams Co. before that time made and mentioned in the deed, being the same that were paid by the plaintiff and given in evidence in this action. And the counsel offered further to prove that at the time the deed was executed Williams remarked to Green: "Mr. Pool will not have the deed proved and registered, unless it becomes necessary to do so for his security," and the plaintiff then assented thereto; and further, that a memorandum in pencil on the deed in the following words, "To be proved and registered when I say so," was in the handwriting of the plaintiff; and further, that the said slaves remained, after the execution of the deed, in the possession of Williams and Green and became liable (288) to be sold and were sold for the satisfaction of the debts of Williams and Green, by reason that the said deed was not sooner proved and registered; and further, the counsel offered to prove the value of the said slaves. But the court refused the evidence, because it was irrelevant and incompetent to establish a defense at law, and only made a case of equitable cognizance. There was a verdict for the plaintiff, and after judgment the defendant appealed.
Fagan v. Jacocks, 15 N.C. 263, and Hall v. Robinson, ante, 56, establish that there is no difference between the law and equity applicable to the rights and liabilities of cosureties, as they are involved in this suit. The jurisdiction is made concurrent for the sake of the remedy merely, and not to change the rules which fix the rights of the parties. From the nature of things, where two courts are required to take cognizance of the same subject, both courts, in determining the right, must proceed on the same principles of law and justice; otherwise, although the jurisdiction be the same, the decisions will be in conflict. However perplexing, therefore, some of the questions that may arise between sureties may be to a court of law, they must, in general, be entertained and decided as well as we can. As far, then, as the reason goes on which the evidence was ruled out, the Court does not concur in the decision.
Nevertheless the Court is of opinion that the judgment ought not to be reversed, because the evidence, if received, could not establish the defense, but admitting it all to be true, the plaintiff would be entitled to recover without any deduction, either at law or in equity.
The argument for the defendant is based on the equitable (289) principles that sureties are upon an equality, and hence that an indemnity, not stipulated for when the risk began, obtained by one surety, inures to the benefit of another. The soundness of those principles cannot be contested, and by the statute they are incorporated into the law. But the difficulty is to apply them to this case, so that the defendant can derive any benefit from them. It is to be noted that the plaintiff has not misapplied a common fund to his own benefit, nor even given up the debtor's property, which had been effectually conveyed. The plaintiff then says, in answer to the defendant's claim, that he is willing to divide the deed of trust with him; nay, that he is welcome to the whole deed, to make the most of it. But that does not satisfy the defendant. He does not want the deed, which was all the plaintiff got, but he wants something more, which is, that the plaintiff should account with him for what the plaintiff might have made by the deed if he had been as diligent as he might have been, or even as most men are, in guarding against loss. That is altogether a different principles from those before spoken of, and is new to us. We do not see how one surety can resist making contribution by showing that the other had it in his power to secure both, and did not. No such doctrine is found to have been laid down, and it does not appear to rest upon any reasons of justice or benevolence. The obligation of one surety to divide with another what he gets from the principal arises out of their connection in a common risk. It is said, and every one feels, that all standing in that relation ought to make common cause, and that one cannot with a good conscience selfishly provide for himself and leave others to lose. It is his duty to remember his fellow sufferer with himself. Hence, when he can get a counter-security he ought to take it to both; and if he take it to himself only, the other has a right to claim it, and equity treats it, as if it were made to both, or got by a common (290) agent for the benefit of both. But one surety cannot ask another to do more for him than he does for himself. It is a plain violation of the benevolence that ought to subsist between sureties for one of them to insist that he should be relieved from loss and the whole thrown on another, because the latter did not, when he might, get a security, or an effectual security. In claiming the benefit of the deed the defendant treats the plaintiff as his agent in getting a good security. How, then, can be disavow the agency when the security turns out not to be effectual? He claims that the deed, though not so expressed, inured to his benefit, on the principle of equality; and yet, at the same time, he would break in on that equality by deducting the value of the negroes from the debt, so as to give him a benefit, while the plaintiff gets none. There seems to be nothing to uphold such a doctrine. The true principle is that sureties are to fare alike. If one gets a security, it is a security for all. But they must take it in the state in which they find it. If good for one, it is good for all. What right has the defendant to complain of the laches of the plaintiff? They were no greater than his own. The one made no attempt to get a security, and the other made a partial attempt, but did not carry it through. It is said, however, that the conduct of the plaintiff may have been to the prejudice of the defendant, as it may have prevented the principal, upon the defendant's application, from giving him a security, inasmuch as they had already executed that to the plaintiff which secured both. That is answered, first, by the fact that there is no evidence of such an application by the defendant; and, next, that if there had been such a transaction, that by itself would not help the defendant's case; for upon hearing of the deed to the plaintiff — it being in law for their joint benefit — it would have been as much his duty as that of the plaintiff to advise and see to its completion by registration. If he had applied to the plaintiff to register the deed or let him have it done, and (291) the plaintiff had refused, the defendant might have more cause to complain — not, indeed, of a violation of a duty of benevolence on the part of a cosurety merely, but because of the positive wrong of preventing the defendant from perfecting a conveyance in which he had equitably as much interest as the plaintiff and as much right to control. There seems to be a plain distinction between wantonly frustrating the wish and effort of the defendant to make their common security effectual, and a mere passive omission to do so on the part of the plaintiff.
Then it is said the plaintiff was guilty of a fraud in agreeing not to make the deed public by registration. But that is a fraud on the principal's creditors, who claimed against the deed, and not on the defendant, whose claim is under the deed.
Finally, the Court holds that, as a cosurety, the plaintiff was only bound to act for the defendant as he did for himself, and that, as the plaintiff derived no benefit from the deed, the defendant cannot; and, therefore, that the plaintiff was entitled to recover an aliquot part of what he paid without any deduction on account of the slaves conveyed, or, rather, intended to be conveyed by the deed.
PER CURIAM. Judgment affirmed.
(292)