Baily's Estate

156 Pa. 634 | Pa. | 1893

Opinion by

Mr. Justice McCollum,

Richard B. Baily and Francis Worth were co-sureties jointly and severally liable for the default0of their principal, and in their relation to each other each was a principal for one half the amount recoverable for such default, and a surety for one half of it. If either was compelled to pay the whole amount, his rights and remedies against his co-surety for the half were the same as against their principal for the whole : Croft v. Moore, 9 Watts, 451; Mosier’s Appeal, 56 Pa. 76 ; Hess’s Estate, 69 Pa. 272, and Wright v. Grover and Baker S. M. Co., to use of Smith, 82 Pa. 80. If a surety gives a legacy to his principal the latter cannot recover it from the estate of the former until he has satisfied or furnished indemnity against the demand for which the testator was his surety : Ross v. McKinney, 2 Rawle, 227. If the debt of the principal has been paid by the surety or his estate, such payment may be relied on to satisfy or reduce the amount of the legacy, and this is so, although the payment was made by the estate after proceedings for the recovery of the legacy were instituted: Beaver v. Beaver, 23 Pa. 167. It is clear, therefore, that in a proceeding by Worth for the collection of the legacy to which he was entitled under and by virtue of the will of Richard B. Baily, the estate could deduct therefrom the amount it was compelled to pay by reason of his default as the testator’s co-surety. It was thought, however, by the learned court below, that as Baker purchased the legacy before the payment was made by the estate, such payment was not available as a partial defence to his claim for the whole of it, and in accordance with this view, it, less the collateral inheritance tax, was awarded to him.

In support of this decree, it is urged that when Worth transferred the legacy the estate had no demand against him which was applicable to it, nor equity for the protection of which the executors could withhold from him the whole or a part of it until indemnity was furnished or his liability as co-surety was discharged. We think this contention, to the extent that it denies the existence of such an equity in the estate at the time of the transfer, is unsound. It fails to give proper effect to the relation between co-sureties, and to duly consider the rights and liabilities which spring from it. Prima facie this relation is established between two persons when they unite with a third in an obligation for the payment of his debt, and by this act they become, as we have already seen, his sureties for the whole debt, and sureties of each other for half of it. If their principal fails to pay his debt and the co-sureties pay it in equal proportions, he becomes their debtor and their liabilities to each other as such are discharged, but if one of them is compelled to pay the whole debt he is entitled to contribution from his co-surety, and may enforce it by an action of assumpsit, or by subrogation to the rights of the creditor. While the action for it cannot be maintained until default and payment as above stated, it is nevertheless true that the right to have and the liability^ to make contributions inhere in the transaction by which the sureties were jointly and severally bound for the debt of their principal. In Agnew v. Bell, 4 Watts, 31, Kennedy, J., in delivering the opinion of the court, said: “ It is certainly too well established now to be questioned, that where any one or more of those who are co-sureties have had to pay, as such, the debt of their principal or any part thereof, and he is unable to reimburse it, the loss arising therefrom must be borne equally by all of them. Hence has arisen the right to contribution. This right has been considered as depending rather upon a principle of equity than upon contract; but it may well be considered as resting alike on both for its foundation ; for, although generally there is no express agreement entered into between joint sureties, yet from the uniform and almost universal understanding which seems to pervade the whole community that from the circumstance alone of their agreeing to be and becoming accordingly co-sureties of the principal, they mutually become bound to each other to divide and equalize any loss that may arise therefrom to either or any of them, it may with great propriety be said that there is at least an implied contract: Deering v. Winchelsea, 2 Bos. & Pull. 270 ; Craythorne v. Swinburne, 14 Yes. 160. This liability between sureties to contribution in case of loss through the inability of their principal to pay, being known to them at the time of their becoming sureties, may well be considered a great if not the main inducement in many instances to their becoming such.” It is therefore incorrect to say that the estate before payment of the principal’s debt had no equity against the testator’s co-surety and legatee which would enable it to withhold payment of the legacy until it was indemnified or the liability of such co-surety to pay one half of that debt in case-of the principal’s inability to pay it was discharged. It clearly-had such an equity, which in a suit by Worth for the legacy would have been, to the extent mentioned, available as a defence. This equity was not destroyed nor the defence founded upon it affected by the assignment of the legacy to Baker. He acquired by his purchase such right to the legacy as his assignor had, and this right, as we have seen, was qualified by the estate’s equity against the latter as co-surety of the testator. The learned counsel for the appellee concedes in his printed argument that “ if the decedent was surety for Worth and that relation existed at the time of the transfer, the legacy would be abatable by the amount subsequently paid by the estate or the legacy might be held to await the determination of the liability of the estate.” It seems to us that this concession is fatal to the appellees’ claim because, in the relation of co-sureties established between Baily and Worth, there was an implied promise by each to the other to pay one half of their principal’s debt in case of bis inability to pay it, and as they were jointly and severally bound for sucb debt their relation to each other for half of it was that of principal and surety.

In the acceptance by the executors of notice of the assignment there is nothing prejudicial to tlie interests of the estate, and we fail to discover anything in the evidence which prevents the residuary legatees from successfully asserting, on distribution, tlieir rights to the deduction claimed. We therefore sustain the second, fifth and sixth specifications of error and overrule the first, third and fourth.

.Decree reversed and record remitted to the court below, with instructions to enter a decree in accordance with this opinion.