debtors, although by discharge of the debt the judgment is CHAPTER IX. satisfied (b). cialty of surety is Although under this provision a surety who discharges a When spespecialty debt becomes a specialty creditor of the principal debtor, a specialty debt is not created by reason of the enforce- created. ment by the surety of his right to indemnity against a specialty debt, for which he is liable, but which he has not discharged (c). This Act applies to a contract made before the Act if the breach takes place and the payment is made after the Act (d). The Court has no power under sect. 5 to enforce the remedy As to of one co-surety against the other (e). Independently of the statute, a surety who pays off the mortgage debt, or any part thereof, being the whole remaining due (f), is entitled to the benefit of every security which the mortgagee has against the principal debtor (g), whether the surety was or was not aware of the existence of the securities (h), and even though the securities are taken by the creditor after the contract of suretyship was entered into (i). The rule is thus laid down by Lord Brougham, C. (k), adopting the language of Sir J. Romilly arguendo in an earlier case (7): "A surety will be entitled to every remedy which the creditor has against the principal debtor to enforce every security and all means of payment; to stand in the place of the creditor, not only through the medium of contract, but even by means of securities entered into without the knowledge of the surety; having a right to have those securities transferred to him, though there was no stipulation for that, and to avail himself of all those remedies against the debtor." Thus, for example, if a bond is given by principal and surety, and at the same time a mortgage is executed by the principal debtor to the creditor without the knowledge of the surety for Act is retrospective. co-sureties. Right of surety to bene fit of securities held by the creditor. (b) Batchellor v. Lawrence, 9 C. B. N. S. 543. See Re Swan, Ir. R. 4 Eq. 209; Silk v. Eyre, Ir. R. 9 Eq. 393. (c) Fergusson v. Gibson, L. R. 14 Eq. 379. (d) Lockhart v. Reilly, 1 De G. & J. 476; Re Cochran's Estate, L. R. 5 Eq. 209. (e) Phillips v. Dickson, 8 C. B. N. S. 391; 29 L. J. C. P. 223. (f) Ewart v. Latta, 4 Macq. H. L. 983. (g) Mayhew v. Crickett, 2Swarst. 191; VOL. I.-R. Allen v. De Lisle, 3 Jur. N. S. 928; (h) Mayhew v. Crickett, 2 Swanst. (i) Forbes v. Jackson, 19 Ch. D. 615. See Pledge v. Buss, Johns. 663; Lake v. Brutton, sup. (k) Hodgson v. Shaw, 3 My. & K. 183, at p. 191. (1) Craythorne v. Swinburne, 14 Ves. at p. 162. H CHAPTER IX. Securing the debt, the surety paying off the bond debt will be entitled to stand in the place of the creditor in respect of the mortgage (m). So, if there be but one specialty, viz., the mortgage, the surety being bound as such by simple contract only (n). Exception Right only arises where Effect where principal gives further security. Where a prior debt exists. Surety for The above doctrine does not, however, apply where the surety guarantees one part of the debt, and the security is given for another part (o), but it applies when the security is given subsequently though by an independent transaction (p). A surety will not be entitled as against the creditor to the benefit of the security unless he has paid the whole debt, or so much thereof as for the time being remains unpaid. So, where a security was given for a floating balance of 2,000l., and when the debt reached 4,6007. a surety for 2,000l. paid a sum of 3,0007. in discharge of his guarantee, but the security was not given up, the creditor was entitled to hold the security for the balance (9). The right of the surety to the principal security is not affected by a further mortgage by the mortgagor to a person who had notice of the first mortgage, though the subsequent mortgagee has got in the legal estate (r). Where the mortgagor has given a collateral security for the original debt and borrows a further sum, which is guaranteed by the surety, the latter is entitled to the surplus value of the securities after payment of the original debt towards payment of that for which he is surety (8). A surety for a Crown debtor may obtain an order to stand in Crown debtor. the place of the Crown and to have the benefit of an extent (t), which will give him priority over subsequent mortgagees and execution creditors of the principal (u). Indemnity on other property. If the surety take from his principal by way of indemnity a (r) Drew v. Lockett, 32 Beav. 499. And see Bowker v. Bull, 1 Sim. N. S. 29; Lancaster v. Evors, 10 Beav. 154. See further as to tacking against sureties, post, p. 1235. (s) Praed v. Gardiner, 2 Cox, 86; Copis v. Middleton, T. & R. 224; Hodgson v. Shaw, 3 My. & K. 183, 195. But see Allen v. De Lisle, 5 W. R. 158. (t) Reg. v. Salter, Reg. v. Robinson, 1 H. & N. 274, 275, n. (u) See post, p. 1366. security upon other property, he loses his right to the principal CHAPTER IX. security (x), unless he did so in ignorance of the principal security, which was available for his indemnity (y). When the principal debtor has deposited the title deeds of an Securities given by estate with, and conveyed the estate to, the surety, by way of principal to indemnity, against his liability under a joint bond, although the surety. surety or his executors be induced, by a false representation of the debtor, to deliver up the title deeds, that will not give the debtor a right to call for a reconveyance until the indemnity is fully carried out (≈). A creditor is not entitled to the benefit of securities given by the principal debtor to a surety by way of indemnity (a). surety as If money be paid by a surety in discharge of a security, which Right of afterwards proves to be sufficient, the surety is entitled to be against puisne reimbursed before subsequent incumbrancers of the mortgaged brancers. property (b). incum surety to The surety for a debt has also an equitable right to the preser- Right of vation of the security by reason of his liability to pay the debt; preservation but as the wasting of the security by the default of the creditor of security. causes the release pro tanto of the surety, it is unnecessary for the latter to take active steps to maintain his rights (c). Upon an assignment by the mortgagee the obligation of preserving the securities for the surety attaches upon the assignee (d). surety to set by him to principal. Where the surety pays off the debt of the mortgagor and Right of becomes entitled to all the securities, he may set off the amount off debt due paid against a debt due by himself to the owner of the equity of redemption (e); and if such owner is a joint stock company, he may set it off against calls as if he had been mortgagee when they fell due (e); and this he may do in bankruptcy, notwithstanding the principle which prevents a debt assigned after the bankruptcy from being set off against a debt to the bankrupt's estate. A surety will have the benefit of voluntary payments made, in respect of a charge on the estates by the agent of the debtor, (x) Cooper v. Jenkins, 32 Beav. 337. (y) Lake v. Brutton, 8 De G. M. & G. 440; Brandon v. Brandon, 3 De G. & J. 524. (z) Tyson v. Cox, T. & R. 395. (a) Exp. Waring, 19 Ves. 345; Re Walker, Sheffield Banking Co. v. Clayton, (1892) 1 Ch. 621. (b) Sawyer v. Goodwin, 1 Ch. D. 351, C. A. (c) Fisher, Mortgages (4th ed.), 295; Coote, Mortgages (5th ed.), 1225. (d) Wheatley v. Bastow, 7 De G. M. & G. 261. (e) Exp. Barrett, 34 L. J. Bky. 41. Surety enbenefit of titled to voluntary payments. CHAPTER IX. Payment of debt by one co-surety. in expectation of rents coming into his hands, though such fund fails; and neither the creditor nor the agent will be allowed to enforce against the surety the securities given by him to the creditor to the extent of the sums so paid (ƒ); and similarly, in the well-known case of Godsall v. Boldero, the insurance office was allowed the benefit of the payment, made by the public, of the debt insured against (g). But if the insurers pay the sum insured in their own wrong (that is, either when the creditor has no insurable interest in the life insured, or the contingency, which was insurable, has failed in coming to pass), the debtor cannot have the benefit of such payment in reduction of his debt (h). iii.—Right to Contribution from Co-sureties.-If one of several co-sureties pays off the debt, he may recover against any one of the others his proportion of the money so paid (i). So, if one surety pays more than his proportion, he will be entitled to a contribution for a proportion of the excess (). But a surety, who has not been called upon to pay, and has not paid more than his share, cannot claim contribution from his cosureties, although they have paid nothing, as there is no legally ascertained debt (7). If, however, the creditor has actually obtained judgment against one of several co-sureties for the full amount of the debt guaranteed, such surety, though he has actually paid nothing, may enforce his right to contribution against his co-sureties (m). Formerly, at law, only the aliquot part of the money could be recovered from each surety, though one or more of the sureties were insolvent (n); but, according to the present practice of the Courts, following the principles formerly adopted in equity, the insolvent co-sureties are struck out and the rest are made to contribute equally (o). If one co-surety, (f) Williamson v. Goold, 1 Bing. 171. (h) Henson v. Blackwell, 4 Ha. 434. (k) Ex parte Gifford, 6 Ves. 808. (m) Wolmershausen v. Gullick, (1893) (n) Cowell v. Edwards, 2 B. & P. 268. See Deering v. The Earl of Winchelsea, 2 B. & P. 270; Turner v. Davies, 2 Esp. 478; Browne v. Lee, 6 B. & C. 689; Wilson v. Cutting, 4 Moo. & Sc. 268; Stirling v. Forrester, 3 Bligh, 575. (o) See Peter v. Rich, 1 Rep. in Ch. 34; also cited 1 Rep. in Ch. 151; Hole v. Harrison, 1 Ch. Ca. 246; Cas. t. Finch, 15; Swain v. Wall, 1 Rep. in Ch. 149; Layer v. Nelson, 1 Vern. 456; Madox v. Jackson, 3 Atk. 406; Angerstein v. Clark, 2 Dick. 738; Lawson v. Wright, 1 Cox, 275; Cockburn v. Thompson, 16 Ves. 321. however, becomes bankrupt, a surety who has paid more than his aliquot proportion, having regard to the original number of sureties, may prove for contribution against the bankrupt surety's estate (p), or if proof has already been made by the creditor, such surety may stand in the creditor's place (2). If one of several co-sureties, who are jointly and severally liable, dies during the continuance of the guaranty, contribution may be enforced against his representatives (»). CHAPTER IX. The doctrine of contribution amongst sureties is not founded Foundation of right to upon contract, but on general principles of justice requiring contribution. equality of burden and benefit. Therefore, it makes no difference whether the sureties are bound jointly and severally, or jointly only, or severally only; nor will it make any difference if they are bound by different instruments but for the same debt, even though one person becomes surety by a separate instrument without the knowledge of another surety (s). There is, however, this distinction, that where sureties enter into separate bonds, the penalties of those distinct bonds will ascertain the proportion in which they are to contribute; but, if they join in one bond, then they must contribute equally (t). securities Any security obtained by one of several co-sureties from the Right of coprincipal debtor must generally be brought into hotchpot, and surety to have will enure for the common benefit of all the co-sureties, even brought into hotchpot. though the giving of such security may have been the condition on which the person taking it consented to become the surety, and though the other co-sureties may have been ignorant that the security had been given (u). A surety cannot have contribution from his co-sureties unless he brings in whatever he has received from the principal debtor; e.g., policy moneys under an insurance on the debtor's life (x). Although the right of contribution among sureties is not founded on contract, but on general principles, yet the right (p) Adkins v. Farrington, 5 H. & N. 586; 29 L. J. Ex. 345. (a) Exp. Stokes, De G. 618. (r) Primrose v. Bromley, 1 Atk. 88; Bastard v. Hawes, 2 E. & B. 287. (8) Deering v. The Earl of Winchelsea, 1 Cox, 322; Craythorne v. Swinburne, 14 Ves. 160, 165, 169; Whiting v. Burke, L. R. 6 Ch. A. 342. (t) Deering v. The Earl of Winchel- (u) Steel v. Dixon, 17 Ch. D. 825. (x) Re Arcedeckne, Atkins v. Arce- |