Gambar halaman
PDF
ePub

CHAPTER XX.

SURETIES.

§ 1. "WHENEVER a creditor, in pursuance of a valid agreement for such a purpose, gives time for payment to the principal debtor on a bond or other security, without the consent of the surety, the latter will be held discharged in equity, although he might still be held bound at law-whether the surety has sustained any actual damage or not," or though "the arrangement may be for his benefit.-Under such circumstances, the surety has a right to restrain the creditor from proceeding at law against him to recover the debt; and a perpetual injunction constitutes the true and effectual remedy." Thus where a creditor recovered judgment against the principal and surety, levied his execution on property of the principal, and, on payment of part of the execution, directed the sheriff to restore the property, and gave further time to pay the residue, without the assent of the surety; held, the judgment was thereby discharged as to the surety; and, if these facts had been returned on the execution, he might have been relieved at law; but, they not having been returned, equity would enjoin any subsequent execution.' So A. and B. signed a note with C., as his sureties, to D. D. recovered judgment upon the note, and assigned it to E., who, with notice of the facts, agreed by parol with C. to extend the time of payment, and did so. E. afterwards sued A., B., and C., upon the judgment, and A. and B. unsuccessfully set up the extension of time in defence. A. and B. then

1 2 Story Eq. 199, § 183. See 2 Baird v. Rice, 1 Call, 18. Tysor v. Sutterloh, 4 Jones Eq. 247;

Armistead v. Ward, 2 P. & H. 504.

filed a bill for injunction. Held, the defence was good in equity, though not at law, and a perpetual injunction was ordered.1

§ 2. And there are numerous other cases, where equity interposes by injunction for the relief of a surety.(a) Thus where execution issues on a judgment against principal and surety, and a part of the money is made by a levy on the estate of the principal, but the execution is returned "no money made," and an alias issued against the surety for the whole amount of the judgment; the sheriff having absconded, the surety is entitled to relief in equity, and the court may enjoin the execution for the amount made. So where the surety on a note had a good defence thereto, of which the principal debtor was the only witness, a bill by the surety, to restrain a suit at law upon the note, against himself and the principal jointly, and for relief against the note, was sustained.3 So W. recovered judgment against S. as principal, and J. as surety, on a simple contract debt. Before execution issued W. sued out a garnishment upon the judgment against F., and recovered judgment thereon. Before this judgment, full satisfaction of the debt was made by J. Upon proceedings in equity to compel F. to pay the amount due to J., it was decreed: That when J. paid the original judgment to W., the judgment was extinguished at law, as between W. and S. and J., and that if the judgment upon the garnishment against F. had been finally rendered at the time of the payment of the original judgment, it would also have been extinguished at law, so far as W. was concerned. That, J. having paid the original judgment before final judg ment upon the garnishment, had F. known the fact, and interposed it as a defence, the court of law could have rendered

1 Dunham v. Downer, 31 Verm. 249.

2 Fryer v. Anstell, 2 Stew. 119.

3 Miller v. McCan, 7 Paige, 457.

(a) As to the same interposition against a surety, see Isler v. Turner, 7 Humph. 116.

no judgment against him in favor of W. for the debt which he owed to S. That on payment of the original judgment, W. having failed to enter satisfaction thereof in the manner prescribed by statute, and F. being thereby deprived of the legal mode of deriving a knowledge of such satisfaction, and having no actual notice of the payment in any other manner, and judgment having been rendered against him upon the garnishment after such payment; he might in equity enjoin the execution of the judgment, so far as W. was concerned. That though the payment of the original judgment by J. extinguished it, and extinguished the right of W. to proceed upon and enforce the garnishment against F. at law, yet such payment did not extinguish the debt which F. owed S.; and had F. filed his bill to be relieved from the judgment against himself exclusively, upon the ground of the payment of the original judgment by J., having made J. a party, equity would hardly have granted him such relief, without his paying to J. the debt which he owed to S., in the absence of any showing on his part of an equitable right, to withhold such payment. That as the judgment against F., in favor of W., was at law extinguished by the payment of the original judgment against S. and J., and as the execution of the judgment against F. by W., in whose favor it stood upon the record of the law court, was perpetually enjoined; the right of the surety to be subrogated to the rights of W. must be enforced by a decree of a court of equity, upon a proper case made for its interposition by parties claiming such rights. That, as judgment at law was recovered against F., as surety for S., by another creditor, before judgment was recovered against him in the garnishee suit in favor of W.; the claim of F. to indemnity in equity was hardly cut off by the proceedings at law in the garnishment suit, where he was not permitted to interpose an equitable defence.1

3. The sureties upon a note cannot maintain a suit in

1 Newton v. Field, 16 Ark. 216.

equity to be relieved against a judgment at law upon the note, on the ground that the note was given for a usurious loan, and that the payee, who had indorsed the note to the nominal plaintiff in the suit at law, testified on the voir dire that he was the owner of the note and the plaintiff in interest, and the court excused him thereupon from testifying; the defendants having given notice of the defence of usury, but not having verified the notice according to law so as to entitle them to examine the plaintiff as a witness. Nor can they sustain the bill upon any ground which might have been set up as a defence in the action at law, unless prevented from setting it up by fraud or accident, or by the act of the opposite party. So, where judgments were recovered against sureties by default, and suit was afterwards brought against. the administrator of the principal, in which the defence of usury was successfully made, he having accidentally discovered the evidence of it among the papers of the principal, and judgment therein was rendered for the sum loaned only, which he paid; held, this was a satisfaction of the judgments against the sureties only pro tanto, and that they could be relieved from the judgments, on the ground of usury, only on paying the sum loaned and legal interest.'

§ 4. Where a surety receives a mortgage of slaves from his principal to indemnify him, and afterwards they are levied on for the debt of the principal, while it is uncertain whether the surety will sustain a loss by his suretyship; the surety may have an injunction to restrain the sale. But upon a bill, by a surety, to be discharged from his liability, the court, having denied the prayer of the bill, refused to grant an injunction, restraining the creditor from enforcing the debt, to give the surety an opportunity to avail himself of collateral security. And where A., as surety of B., received two negroes from him as indemnity; and C. afterwards re

Vilas v. Jones, 1 Comst. 274.

2 Jones v. Kilgore, 2 Rich. Eq. 63. 389. 3 Marshall v. Colvert, 5 Leigh, 146.

Rutledge v. Greenwood, 2 Desau.

covered a judgment against A., and levied the execution on the negroes, and A. then brought an action of trespass against C., and recovered judgment, which C. enjoined by bill against A. alone: held, B. should have been made a party, and the bill was dismissed without prejudice.'

§ 4 a. On the other hand, an action against a surety may be enjoined, where equity requires that the debt should be first satisfied from securities of the principal debtor held by the creditor as a primary fund; more especially in case of doubt as to their validity. Equity holds that this question should be first settled in an action, and at the expense of the creditor.2

§ 5. Equity will not enjoin a judgment against the surety upon a note, on the ground that the note was procured through misrepresentation as to its purpose by the principal, unless the payee were also guilty of such misrepresentation.3

6. If sureties neglect, when judgment is rendered, to cause the entry to be made that they are sureties, as required by statute (of Ohio), chancery will not compel the judgment creditor to exhaust first the property of the principal.*

§ 7. M., a stockholder in a manufacturing corporation, with L., another stockholder, indorsed notes of the company, upon the other stockholders' executing a bond to save them harmless; M. and L. to bear any loss only in proportion to the stock held by them. The company afterwards failed, leaving several of the notes outstanding. M. conveyed away his real estate, and removed from the State, and had never paid anything on the notes. L. and the other stockholders, having paid sundry debts of the company on which they were severally holden as sureties, procured suits to be brought on the notes, and the real estate to be attached, in

King v. Harper, 4 Bibb, 570.

2 Hays v. Ward, 4 John. Ch. 134.

3 Griffith v. Reynolds, 4 Gratt. 46. 4 Elliott e. Elmore, 16 Ohio, 27.

« SebelumnyaLanjutkan »