Opinion
(December Term, 1858.)
Where a surety has paid money, he is entitled to an assignment of all the securities that the creditor held, and to substitution, and in that case, the creditor need not be a party; but where he has not paid the debt, he may have relief, but the creditor must then be a party.
Where it appeared that a party took, without endorsement, from a guardian, notes, payable to him as such, by paying the money in full, which was done at the request of the makers, to avoid being sued thereon, it was Held that the circumstances repelled the idea of fraud, and that there was no ground to seek for exoneration, by following the notes.
CAUSE removed from the Court of Equity of Perquimons co. [Co.]
Smith and Pool, for plaintiffs.
Jordan, W. A. Moore and Brooks, for defendants.
Four notes, of $300 each, with an amount of interest thereon, drawn by William T. Sumner and J. M. Sumner, and payable to Willis H. Bagley, guardian, to Anderson Woodly, were, at two several dates, delivered to the defendant, James Newbold, by the said Bagley; and the plaintiffs, who were the sureties on Bagley's guardian bond, seek to be substituted to the rights of the ward, alleging that these transfers were with notice of the character of these instruments, and that the same were fraudulent, and with the full knowledge that Bagley was raising the money on them for his own private purposes, in anticipation of insolvency. The bill alleges, that Bagley became insolvent after using his ward's money, and that the plaintiffs, as his sureties, were liable for large sums of money on account of this guardianship.
The answer of Newbold denies the fraud alleged, and says that, as to two of the notes, William T. Sumner called on him in the year 1853, and desired him to pay to Bagley the amount of them, take them up, and to permit him and his brother to make a note to him for the amount; he said he had been notified by Bagley to pay the same, and was afraid he would be sued on them, if they were not paid; that he agreed to do so, but not being prepared to complete the arrangement, it was delayed for some time; that in the mean time, seeing the surety to the notes, Mr. J. M. Sumner, he told him what his brother had proposed, and he acquiesced in the plan, and professed his willingness to go into the new note; that shortly thereafter, meeting with Bagley, he told him what had been proposed by the Sumners, and he, Bagley, shortly after sent the notes to him, by his son, with authority to receive the money, and hand him over the notes; that he did pay the full amount, called for in the papers, with the interest that had accrued; that he being the guardian of a child of a Mr. Harrell, took from the Sumners new notes for the amount paid for them, payable to him, as guardian, and delivered the former notes to the makers; and he had no other view than to invest his ward's money; that as to the other two notes, he says, at February term, 1850, of Perquimons County Court, he was appointed guardian to the heirs of James Harrell, and the administrator passed to him a claim, which was in the hands of Bagley for collection; that the latter told him he had collected the money, and wished to know if a bond, with sufficient sureties, payable to him, as guardian, would not suit him; to which he agreed; that Bagley told him he was not just ready to make the note, but handed to him a bundle of notes to make him safe until he could comply with the proposed terms, stating that two of the notes included were on the Messrs. Sumners, for about $300 each; that having full confidence in the responsibility of Bagley, he at first declined receiving the deposit, but on being urged to do so, he reluctantly took it; that he kept the bundle, thus committed to him, without having opened it till the 18th of April, ensuing, when Mr. Bagley gave him, as guardian, his note, for the whole amount due his wards, with W. T. Sumner and J. M. Sumner as sureties, whereupon, he handed him the package back again, in the exact condition it was in when he received it, with no other knowledge as to the character of its contents than was conveyed by Bagley's remark above stated. The answer of Bagley, gives the same account of these transactions, and he adds, that he transferred the latter notes afterwards to another person. The testimony does not contradict Newbolds's answer.
The bill, filed, does not allege that the plaintiffs ever paid the money for which they became liable for Bagley, nor is the ward made a party to the suit.
The cause was set down for hearing on the bill, answers and proofs, and sent to this Court.
The plaintiffs are the sureties of the defendant, Bagley, on his bond, as guardian; they allege that Bagley fraudulently transferred four notes, which he held, as guardian, to the defendant, Newbold, and that Bagley is insolvent, and the object of the bill is to be substituted to the rights of the wards, to follow the fund for exoneration.
The bill is fatally defective in this, there is no averment that the plaintiffs have paid the amount due to the wards, and they are not made parties. Where a surety pays the debt, he is entitled to an assignment of the securities, held by the creditor, and to substitution; Brinson v. Thomas, 2 Jones' Eq. 414; where he has not paid the debt, he may have relief, but the creditor must then be made a party; Bunting v. Ricks, 2 Dev. and Bat. Eq. 130.
As this objection was not taken on the hearing, and the argument was put on the evidence, which seems to be full on both sides, it is proper to decide the case on the merits. The allegations of the bill are not sustained by the proof in contradiction to the answer of the defendant, Newbold, in respect to the four notes, mentioned in the pleadings. As to two of them, the allegations that they came to the hands of Newbold, is very indefinite, and he denies it positively; it is matter about which he could not be mistaken, and the evidence is not sufficient to establish it in the face of his answer.
As to the other two, he alleges that he advanced the money, in full, for them, at the request, and as the agent of the obligors, William and James Sumner; the Sumners admit that they requested him to take them up, and afterwards substituted their notes, payable to Newbold, and took them up from him; but they say the agreement was, that he should take them up by giving Bagley a credit on a note, which he (Newbold) held against him, and upon which, William Sumner was a surety. It is clearly proved that Newbold did pay to Bagley the full amount of the notes, in money, and that he discharged them at the request of the obligors. Whether he ought to have done so, with the money, or by a credit on Bagley's note, is a matter which does not concern the plaintiffs, for the allegation of fraud, in respect to them, is met by the fact, that the notes were taken up at the request of the obligors.
PER CURIAM, Bill dismissed.