Opinion
09-11-1855
W. & C. TARR v. RAVENSCROFT & als. W. & C. TARR v. HENDRICKS' adm'r & als.
Fry, for the appellants. There was no counsel for the appellees.
1. Bill by a residuary legatee against an administrator with the will annexed and his sureties T and H; the administrator being insolvent. C the son of T has received assignments of a number of the legacies, and claims them as his own; but H insists they belong to T, and were purchased at a large discount, the benefit of which he is entitled to share. H insists further that C should not be paid these legacies until T or T and C should file a cross-bill against him, and thus give him an opportunity to contest C's right. If C is not entitled to the legacies he is entitled to compensation for purchasing them up. HELD: C is a proper party defendant to the original bill to have his right to the legacies settled. And H and C having filed a cross-bill against T setting up C's right to the legacies, that T could not object to it at the hearing after having insisted on it. And if C held not entitled to the legacies, he should be allowed compensation for purchasing them.
2. One of two sureties of an insolvent administrator purchases up legacies for which the sureties are bound, at a discount. He shall only charge his cosurety for his proportion of what he paid for the legacies and of the expenses of purchasing them.
Barbara McGuire died about the end of the year 1835, having made her will, which was duly admitted to record in the County court of Brooke; and James and Robert Marshel qualified as administrators with the will annexed, with William Tarr and John Hendricks as their sureties. They also qualified as administrators of Francis McGuire with the same sureties. By her will, after some small legacies, she directed the proceeds of the residue of her estate, both real and personal, to be divided into seven parts, one of which she gave to each of her living sisters, and to the families of her brothers and sister who were dead.
In 1842, there was a settlement of the administration account under the order of the court of probat; and according to that settlement the residuum of the estate amounted, on the 31st of May 1842, to eleven thousand one hundred and ninety-nine dollars of principal, and three thousand and seventy-one dollars and sixty-eight cents of interest. About this time the administrators and their two brothers, who were doing business in partnership, failed in business; and in June 1842, they executed a deed by which they conveyed all their property in trust to secure their debts as well social as individual.
The administrators having become insolvent, three judgments were recovered against the sureties for some of the specific legacies left by Mrs. McGuire; which judgments were paid by Tarr; and in December 1843, Hendricks executed a deed by which he conveyed to Tarr a tract of land to secure him for Hendricks' moiety of the money he had paid or might be compelled to pay as surety of the administrators, after deducting from said moiety one-half of the dividend which he might receive on account of said debts from the trust fund created by the Marshels for the payment of their debts.
In 1847, Rebecca Ravenscroft, the sister of the testatrix Barbara McGuire, and entitled under her will to one-seventh of the residuum of the estate, filed a bill in the Circuit court of Brooke county, on behalf of herself and the other residuary legatees of Mrs. McGuire, against James Marshel, the surviving administrator, Hendricks and Tarr the sureties, and the specific legatees, setting out the will, and the settlement of the account under the order of the court of probat, and the insolvency of the administrators, and asking for an account, and that the sureties might be compelled to pay what might be found to be due to her.
The record states that William Tarr filed his answer, but it does not appear in the record. In May 1847, the cause came on to be heard upon the bill taken for confessed as to all the parties except William Tarr, and upon his answer, when a decree was made, directing a commissioner to take an account of the administration of James Marshel on the estate of Barbara McGuire, and also of the specific and residuary legacies, and who were the residuary legatees and others interested in the estate: And these legatees and others interested, were allowed to appear before the master, and prove their rights or interest in said estate.
In September 1847, the commissioner returned his report. He did not state the administration account, the parties being satisfied with that returned to the court of probat; but taking the residuum of the estate as amounting on the 31st of May 1842 to the sum of thirteen thousand two hundred and seventy-eight dollars and twenty-four cents, he apportioned that sum among the residuary legatees. He gave a list of these legatees, numbering forty-six, and some of these were dead leaving children; and he stated an account with each of them, except the seven children of one sister, showing the payments which had been made to them, and from what fund made. The children of that sister it appeared had been paid in full by the administrator and his sureties. Of the persons claiming this residuum Campbell Tarr, the son of William Tarr, was reported as the assignee of thirty-nine; and he was the assignee of the only specific legatee who had not been paid: The plaintiff and four others of the residuary legatees still held their claims to their legacies.
After the commissioner's report had been returned, the administrators with the will annexed of John Hendricks answered the bill. They do not question the liability of Hendricks as surety of the administrators; but say that the judgments to secure which their testator executed the mortgage to William Tarr, had not then been paid off by Tarr; and that they had been since paid in great part, from the proceeds of the property conveyed in trust by the Marshels. They say further, that the legacies assigned to Campbell Tarr were in fact the property of William Tarr, paid for by money furnished by him to his son Campbell Tarr, who acted as his agent in the purchases, and who was a young man without means of his own to purchase them; and that having been purchased at a considerable discount, they could only be charged by William Tarr against their testator Hendricks, at the amount paid for them: And they charge that William Tarr, to induce Hendricks to execute the mortgage aforesaid, proposed and agreed that he would purchase in as many of said legacies for which the sureties were liable, as he could obtain, and that Hendricks should participate equally in any profit which might result therefrom.
They insisted further, that if Campbell Tarr was to be considered as the true holder of said claims by assignment, he ought not to be allowed to recover any thing in respect thereof, nor should William Tarr be allowed to recover any thing on account of payments made to Campbell Tarr as such assignee, without first filing his or their bill against Hendricks' representatives, real and personal, alleging and proving said purchase and assignments, and giving said representatives an opportunity to contest said claims.
Upon the filing of the foregoing answer, on the motion of Campbell Tarr, he was admitted a party defendant in the suit, and filed his answer. He denied in express terms that he acted as the agent of William Tarr in the purchase of the legacies, or that William Tarr had any interest in said purchases. He said that at the time the purchases were made, Hendricks and William Tarr were the sureties of the administrators, and they were liable as such sureties, as was then supposed, for near twenty thousand dollars; the various claimants to which were widely dispersed through several states of this Union. That at that time his father and himself were doing business as partners and merchants, and that in consequence of these heavy liabilities their credit was subject to suspicion, and William Tarr was liable to be called upon at any time to pay a large amount when he was least prepared to pay it. That in consideration of these things, and believing that the claims could be purchased upon terms that would indemnify the purchaser for the labor, exposure and expense of hunting them up and buying the said claims, he proposed to William Tarr that if he would loan respondent so much of the money necessary to purchase these claims as respondent had not of his own, that respondent would hunt up the claimants and purchase the claims. That William Tarr agreed to loan him such money as he could conveniently spare from his business; and thereupon the respondent undertook for himself to hunt up and purchase the claims, and succeeded partly with his own money and partly with money borrowed from William Tarr, in purchasing, at immense labor, exposure, trouble and expense, divers of said claims. That in so far as he purchased said claims for himself, he took the assignments to himself. And he refers to the report of the commissioner made in the cause, as showing which of the legacies had been assigned to him.
In September 1850, the report of the commissioner was recommitted by consent, and he returned a report in which several accounts were stated as between the sureties William Tarr and John Hendricks. The fourth statement showed their indebtedness to Campbell Tarr as assignee of the legacies, if they belonged to him, to be six thousand seven hundred and sixty-eight dollars and forty-nine cents. And the fifth statement showed the indebtedness of Hendricks to William Tarr, if the legacies were purchased for him, to be one thousand eight hundred and seventy-six dollars and sixty-seven cents.
Upon the question, who was the owner of the legacies purchased by Campbell Tarr, this court was of opinion that the evidence showed a purchase for William Tarr. Campbell Tarr was examined by the commissioner as to the prices given for the legacies purchased by him. He gave a detailed statement, from which it appeared that the legacies purchased by him amounted to twelve thousand four hundred and eleven dollars and forty-three cents, for which he gave nine thousand five hundred and ninety-eight dollars and eighty-three cents. And he gave a statement of the time, labor and expense employed in the purchases, and estimated the amount which would be due to him, if acting for another, at eight hundred and eighty-five dollars. The amounts reported by the commissioner were so reduced by payments out of the trust property of the Marshels.
In 1852, William and Campbell Tarr filed a cross bill in the cause against the administrators with the will annexed and devisees of Hendricks. The object of this bill was to have the mortgage given by Hendricks to William Tarr, for the purpose of repayment to William Tarr of the money he had paid for Hendricks, foreclosed, and payment to Campbell Tarr of the amount he claimed as assignee of the legacies aforesaid. They state that the personal estate of Hendricks did not amount to five hundred dollars, and that he had no real estate at his death but that embraced in the mortgage deed. The administrators answered, relying upon the grounds of defense taken in their answer to the original bill.
It appears that the personal estate of Hendricks was less than five hundred dollars, and that was given specifically to two of his children: As to his real estate, he directed that one of his sons should keep possession of it until the final settlement of the administration of Mrs. McGuire's estate. That if upon that settlement these sureties had nothing to pay, his real estate should be sold and divided among his children; but if the sureties had to pay any thing, his proportion of the amount should be paid out of the proceeds of the sale of his estate, and the balance of these proceeds divided in the same proportion among his children.
Both causes came on to be heard on the 2d day of September 1853, when the court dismissed the original bill as to Campbell Tarr, and recommitted all the reports made in the cause, to a commissioner, with directions to state various accounts. First. An account with each legatee, showing how much was due from the administrators, and how much was paid by them. Second. An account of all moneys paid to the legatees by William Tarr, including therein such money as was paid by or through Campbell Tarr, and claimed by him in his own right; and when paid. Fifth. An account of all moneys due from Hendricks to William Tarr on account of their joint suretyship for the administrators. And sixth. An account of the reasonable expenses of William Tarr and Campbell Tarr incurred by them in making the purchases of all the claims by them or either of them. And the court holding that Campbell Tarr had no interest in the cross suit, the bill in that case was dismissed as to both plaintiffs, with costs to the defendants. Whereupon William and Campbell Tarr applied to this court for an appeal, which was allowed.
Fry, for the appellants.
There was no counsel for the appellees.
LEE, J.
Whether Campbell Tarr is to be regarded as having purchased the interests of the legatees of Barbara McGuire, now claimed by him, on his own account and for his own benefit, or as agent of his father William Tarr, and for the use and benefit of the latter, it was not improper he should be made a party in the case of Rebecca Ravenscroft, the object of which was to obtain a settlement of the estate of Barbara McGuire, and a decree for payment of the various legacies left by her will. Campbell Tarr had taken the assignments of the different legacies purchased in by him to himself in his own name, and was claiming them for his own use; and it appears that in making these purchases he had spent some time and labor, and had incurred various charges and expenses. It was right, therefore, that his claim to the legacies should be adjudicated, and that he should be bound by the decision; and if it should be held that the purchases were in fact for the benefit of his father, and that he held the assignments as trustee merely, still he could not be required to surrender them for the benefit of other persons except upon being reimbursed for his time, labor and expenses. It was therefore proper that he should be a party in this cause, so that the whole matter might be finally adjudicated, and the bill should not have been dismissed as to him when the case was heard and the reference directed.
It is clear that it was proper for William Tarr to convene the representatives of the personal and real estate of John Hendricks, by cross bill before the court, for the purpose of charging upon the real estate the amount for which it was properly responsible by reason of the cosuretyship of Hendricks with William Tarr in the administration bonds given by James and Robert Marshel as administrators of Francis McGuire and Barbara McGuire. Hendricks, by the mortgage of the 18th of December 1843, had charged his land with reimbursement to William Tarr of one-half of all he might have paid as such surety; and by his will he had in effect charged all his estate with the payment of his proportion of any deficiency that might be made to appear upon the settlement of the administration accounts. This provision of course enured to the benefit of William Tarr, and his right therefore to come with his cross bill is beyond all doubt. Nor was there any impropriety in Campbell Tarr's being joined with him as a complainant. Campbell Tarr had purchased the legacies and taken the assignments to himself in his own name. He claimed to have purchased them for his own use and benefit. This claim was recognized and acknowledged by William Tarr. Thus Campbell Tarr was apparently concerned in the proper disposition of the proceeds of the real estate of John Hendricks; and if others were interested to show that the purchases were in fact for the use and benefit of William Tarr, still Campbell Tarr might claim indemnity for his services and expenses in obtaining the assignments as the condition of his surrendering them for the benefit of those entitled. And having thus an interest in the subject, it was proper he should be a party. Story's Eq. Plead. § 72, § 153, and n. 3, § 154; 1 Dan. Ch. Pr. 284, 291. The same reason therefore which forbad the dismissal of the original bill as to Campbell Tarr, applied also to the case of the cross bill of William and Campbell Tarr; but there was still another reason which rendered the dismissal of the latter, for the cause assigned, improper at the hearing. The administrators of Hendricks had in their answer to the original bill insisted that Campbell Tarr should not be allowed to recover any thing by reason of the supposed assignments of the legacies to him, nor William Tarr to recover any thing by reason of any payments to Campbell Tarr as such assignee, without first filing their bill against the representatives of John Hendricks, and alleging and proving the assignments and giving the administrators an opportunity to contest them; and when the cross bill was afterwards filed, setting up the assignments, neither they nor any other of the representatives of John Hendricks made any objection for such supposed misjoinder by demurrer, plea or otherwise. The administrators of Hendricks answered, and the cause came on for final hearing on the merits. The objection not having been made in due time and in the proper form, should at this stage have been disregarded. 1 Dan. Ch. Pr. 399, 401; Story's Eq. Plead. § 544. Raffity v. King, 1 Keen's R. 601; Trustees of Watertown v. Cowen, 4 Paige's R. 510; Dickenson v. Davis, 2 Leigh 401.
Upon the merits, I think there is as little room for doubt or difficulty.
Campbell Tarr was the son of William Tarr, and in his employment or engaged with him in business as a junior partner. He was, so far as appears, without means, except such as he derived from his father. The money with which the purchases of the legacies were made was supplied by his father, and the enterprise of hunting up the legatees and obtaining their assignments was undertaken at his suggestion. The idea that the money used by Campbell Tarr in making the purchases was loaned him by his father, is not supported by any competent testimony, but is repelled by the circumstances disclosed. In making the purchases Campbell Tarr appears to have had constant reference to his father, and speaks of it as his father's business. He also speaks of the hardship of the case upon both of the securities, and states his object in making the purchases to be to save them as far as possible; and he uses this as an argument with the legatees why they should consent to an abatement of the amount due them; and the argument appears to have been successful. Looking to all the circumstances in proof, the concert of purpose between William Tarr and Campbell Tarr is plainly apparent. That the latter was the mere agent of the former in making the purchases is, I think, beyond any reasonable doubt or question, and as such, for all the purposes of these causes, he must be regarded. The assignments being in his name, he is to be regarded as holding them in trust for his father, and for those, if any, who may be entitled to participate with him in the benefits of them, subject only to the right to demand a reasonable compensation for his services, and reimbursement of his expenses incurred in obtaining the assignments.
Regarding the purchases of these legacies as in fact made for William Tarr, the claim of the representatives of Hendricks to participate in the benefit of them cannot be successfully resisted. The doctrine of contribution among sureties is founded rather on principles of equity and natural justice than upon any notion of mutual contract, express or implied. Dering v. Earl of Winchelsea, 1 Cox R. 318; Craythorne v. Swinburne, 14 Ves. R. 160; per Lord Redesdale in Stirling v. Forrester, 3 Bligh's R. 575, 590. It is true it may be enforced at law, although no positive contract between the sureties can be shown, but the principle and the measure of relief afforded in the court of equity are different from those of the law courts. Thus, if one of several sureties be insolvent, and another pays the debt, he can at law recover from the other solvent sureties only their original quotas without regard to the share of the insolvent surety. Cowell v. Edwards, 2 Bos. & Pul. 268; Brown v. Lee, 6 Barn. & Cress. 697; S. C. 9 Dow. & Ryl. 700. But in equity the share of the insolvent surety will be apportioned amongst those who are solvent. Hale v. Harrison, 1 Cas. in Ch. 246; Dering v. Earl of Winchelsea, 1 Cox R. 318; Peter v. Rich, 1 Ch. Rep. 34. So if one surety die, the remedy at law lay only against the survivors; but a court of equity would compel contribution from the estate of the deceased surety. Primrose v. Bromley, 1 Atk. R. 89.
Sureties are not only entitled to contribution as between themselves personally, for moneys paid in discharge of the common debt, but they may also claim the benefit of all securities which any one of their number may have taken for his indemnity: And if a surety who seeks contribution has been reimbursed part of what he has paid, either by the debtor himself, or through a counter security, or from any source, he must give credit for the amount reimbursed, and can only claim contribution for the balance. Knight v. Hughes, 3 Carr & Payne 467; Swain v. Wall, 1 Ch. Rep. 80; 1 Story's Eq. Jur. § 499; Theobald on Prin. and Sur. ch. 11, § 283, p. 267.
From these principles it follows, I think, as a necessary corollary, that if one surety purchases in the common debt for less than its nominal amount, he can only claim contribution of a cosurety for the amount actually paid by him. If it be unjust that one surety should bear the whole burden of a demand to which another, in common with him, has made himself equally liable, and from the payment of which he has derived an equal benefit, so it would be unjust to compel the latter to sustain more than his just and equal share of the necessary loss. The object of the whole doctrine is equity, and equality of burdens is equity.
In Blow v. Maynard, 2 Leigh 29, it was held that where a surety for a guardian compromised with the ward for a less sum than was actually due on a settlement of the guardian's account, he could only demand indemnity from the guardian's estate in equity, for the money actually paid to the ward in satisfaction of her claim. A fortiori, it should seem he could not demand contribution of a cosurety except for the amount thus actually paid. If the principal be only liable for the amount actually paid by a surety in discharge of the debt, then he could only be liable to any other surety for his quota of that amount; and if the latter could be called on for contribution according to the nominal amount of the debt, he would thus be liable to his cosurety for a greater amount than he could recover of the common principal.
I think, therefore, the estate of Hendricks was only liable to reimburse one moiety of the amount actually paid by William Tarr for the legacies purchased in by him or by Campbell Tarr for him, and one-half of what would be a just compensation to Campbell Tarr for his time and services and necessary expenses in looking up the legatees and obtaining their assignments.
I am of opinion to reverse the decree, and remand the causes for further proceedings.
The other judges concurred in the opinion of LEE, J.
DECREE REVERSED.