41 Colo. 467 | Colo. | 1907
delivered the opinion of the court:
The question presented by this appeal is the liability of appellant as surety on an appeal bond upon which suit was commenced against him by the appellees, McPhee & McGinnity. In the complaint filed by these appellees in their action on the bond, it is alleged that they obtained a judgment in the dis
By the first defense it is averred that the judgment mentioned in the complaint was rendered in an action instituted by plaintiffs in the county court of Arapahoe county against J. B. Hindry; that this action was supplemented by an attachment under which the city of Denver was garnished, by which sufficient funds of Hindry were attached to more than cover their claim; that following this garnishment, by stipulation of parties to the action, an order was entered by the county court reciting that the parties had stipulated to discharge the attachment upon Hindry filing a bond in the sum of three thousand dollars, with sureties, conditioned for the payment of any judgment which might be obtained against him in the action; that such bond had been filed, and there
It is further alleged that plaintiffs have entered into an arrangement with Ross-Lewin to enforce collection of the judgment from this defendant upon his bond, and to discharge Ross-Lewin from all liability thereon when such judgment is so collected. It is also averred that Hindry is insolvent.
From the foregoing synopsis it is claimed by counsel for defendant that it appears from this defense that the judgment for which Day became surety
(1) A surety, on paying the indebtedness of his principal, has the right to he subrogated to the securities held by the creditor for the payment of the debt discharged by the surety.
(2) That this right extends to securities of the principal debtor held by other sureties.
(3) That a release by the creditor of a security to which the surety has a right of subrogation, releases the surety.
(4) That, as between Day and Boss-Lewin, the latter was the primary surety from whom the former, on paying the judgment, would he entitled to full indemnity. This proposition is based upon the further ones to the effect that the bond signed by Boss-Lewin was a substitute for the original garnished assets.of Hindry; that Boss-Lewin held as security assets of the principal debtor, Hindry; and the appeal perfected by the bond of Day was taken in the interest, and with the consent, of Boss-Lewin.
(5) That the agreement of plaintiffs to release Boss-Lewin from his obligation has released the defendant Day.
The reason for these rules of law is that a judgment debtor may appeal from a judgment rendered against him independent of the judgment creditor, and when he is enabled to exercise this right through another engaging to pay the judgment appealed from in case it is affirmed, whereby the collection or enforcement of the judgment is stayed, the surety on the bond given for this purpose will not be heard to say that there is property of the principal debtor which can be subjected to the payment of the judgment, or that there are other sureties holden for the debt, or that because of equities between himself and others liable for the debt which the judgment creditor was not responsible for creating, that the discharge of his engagement should be postponed until such property is exhausted, or .unless other sureties are proceeded against, or such equities between himself and others are first settled. So that upon the breach of the condition of his obligation he will not
G-enerally speaking, then, the only defense which a surety upon an appeal bond can interpose after affirmance of judgment is one which discharges him from his obligation, either in whole or in part. There may be exceptional cases, as where the judgment creditor has access to a fund for the payment of his debt which a surety cannot make available; but no facts are presented for our consideration by the first' defense upon which any argument is based, which excepts this case from the general rules of law announced.
Applying these principles, it is clear that the facts upon which defendant relied, as pleaded in his first defense, were not sufficient in law for any reason suggested by counsel. The judgment which he engaged to pay by the appeal bond which he executed was affirmed. That Boss-Lewin may also have been liable to discharge such judgment by virtue of the bond which he executed did not concern the defendant, for the plaintiffs had the right to elect which bond they would first proceed upon. "Whether Day or Boss-Lewin was the primary surety was also immaterial for the same reason; neither was it material whether the bond signed by Boss-Lewin was or was not a substitute for the original garnished assets of Hindry, or that Boss-Lewin held as security to indemnify him assets of the debtor Hindry; because, as stated, the plaintiffs had the unquestioned right to elect which of the several sureties liable for the judgment they would proceed against. If it be true, as contended by counsel for defendant, that the allegation to the effect that the appeal of Hindry was taken in the interest, and with the consent, of Boss-Lewin made him liable to Day if he should pay
There are no facts stated in the first defense upon which any argument is predicated by counsel for defendant which excepts this case from that rule.
The second defense is the same as the first, omitting the averment that Boss-Lewin was indemnified by the debtor Hindry, and that the appeal by Hindry was taken with the consent of Boss-Lewin. By this defense the alleged primary liability of BossLewin and his liability to defendant Day appears to be based upon the allegation that the bond executed by Boss-Lewin was a substitute for the property of Hindry attached. That this is no defense, in connection with the other facts presented, although the contention of counsel for defendant may be correct as to the relative liability of Boss-Lewin and Day as between each other, has been shown in considering the first defense.
The third defense is the same as the first except that, instead of alleging an agreement on behalf of plaintiffs to release Boss-Lewin upon collection of their judgment from defendant, it is averred, in substance, so far as necessary to notice, that defendant, because of certain facts stated, believes it probable that subsequent to the affirmance of the Hindry judgment by the court of appeals, an agreement has been entered into between plaintiffs and Boss-Lewin, whereby the former have either absolutely released the latter from obligation upon his bond, or on the contingency of their obtaining and collecting a judgment against defendant upon his bond. Then follow statements or averments to the effect that by reason of the premises, and by virtue of the relation between .plaintiffs, Boss-Lewin and the defendant, that he is
It is further stated or averred that as a condition precedent to plaintiffs’ obtaining judgment against defendant and collecting it, that they be required to disclose whether or not they have entered into any arrangement or agreement whereby they have agreed absolutely or contingently to release Boss-Lewin from his obligation so that by such disclosure the defendant may know whether his right to subrogation against Boss-Lewin has been impaired, lost or discharged by the action of plaintiffs, to the end that if by such disclosure it should appear that Boss-Lewin has been discharged from his obligation, either absolutely or contingently, that defendant be discharged from all liability on his bond.
Then follows an averment to the effect that after suit was commenced against defendant, he requested of plaintiffs information as to whether or not they had agreed to release Boss-Lewin, either absolutely on contingently, and whether, if he, the defendant, should pay plaintiffs the amount sued for, they would assign to him their judgment against Hindry, and their right of action against Boss-Lewin on his bond, coupled with assurances that such right of action would not be impaired by any arrangement, contract, or agreement whereby Boss-Lewin could justly claim that he had been or should be released by plaintiffs from obligation upon his bond, but that
The right of defendant to the disclosure requested is not challenged, neither is the sufficiency of this defense questioned, except upon the ground that in no event would Ross-Lewin he responsible to defendant in case the latter should discharge his obligation upon the appeal bond. That the alleged contingent release is immaterial has already been determined. It might be said that defendant is not entitled to a formal assignment from plaintiffs of security to which they could resort to satisfy their judgment, because if defendant could resort to such security to indemnify him, his right to do so, upon payment of the judgment, would be protected by operation of law. But as this question is not argued by counsel for plaintiffs, nor the right of defendant to a disclosure of whether or not plaintiffs have released Ross-Lewin from his obligation questioned, we shall express no opinion upon either of these propositions, but pass to the question of whether that obligation can be resorted to by defendant in case he pays the judgment, and such collateral ones connected therewith as are necessary to determine the rights of defendant with respect to the Ross-Lewin bond.
We have said the defendant’s liability upon the appeal bond is absolute, but it is not so in the sense that plaintiffs, by any affirmative act on their part, can destroy his right to indemnity and still hold him on such bond. The release by a creditor of security for a debt to which a surety therefor has the right to resort upon paying such debt releases the surety
If, then, plaintiffs have absolutely released RossLewin from his bond, and defendant would have the right, because of such bond, to compel him to repay any sum which he might pay to discharge his obligation, the defendant would be released from his bond. The important question, then, to determine, is whether or not the defendant, on payment of the judgment, could hold Ross-Lewin liable for the amount thus disbursed.
Counsel for defendant contend that this bond was a substitute for the garnished assets of Iiindry, and stands in lieu thereof, while on behalf of plaintiffs it is claimed that this obligation is but a common-law undertaking on the part of Ross-Lewin, whereby he is nothing more than a, common-law surety for the payment of Hindry’s debt. It is not the statutory forthcoming bond which a defendant may give in case of an attachment, for that would not have dissolved the attachment. Its purpose was to secure the debt sued for in the action in which the writ issued, and at the same time work a dissolution of the attachment by substituting the bond for the garnishment. The action of the parties indicate that such was their intent and object. It is so alleged in the defense under consideration. Plaintiffs, in the action against Iiindry, had impounded sufficient assets of the latter to secure their claim. They were parties to the arrangement by. which the Ross-Lewin bond was given. By consent, upon this obligation being executed, an order was entered by the court dissolving the attachment and discharging the garnishee. Thereby the Hindry assets were placed in his control, but plaintiffs were secured in lieu of such
The person signing such an obligation assents to assume the identical liability of the garnishee, had no such undertaking been given; or, as in Sutro v. Bigelow, supra, where, by virtue of a statutory undertaking a garnishee has been released, the court, in speaking of the obligation of the surety on such undertaking, aptly stated:
“Such appears to be the object and purpose of the statute enacted for the benefit of the defendant in the original action, and when he avails himself of it * * * in order to procure the release of his own property from attachment, and to obtain the possession of it for himself, it seems not inaccurate to sáy that the persons signing the undertaking are his sureties with respect to the property or effects so released, and that they are content to assume, and do assume, the precise liability with respect to bim as defendant in the action which would have rested upon the property, or the holder of it, in case they, as such sureties, had not intervened with the undertaking.”
In the 135 Ill. case, above cited, in speaking to the same point, it was said:
“When the attachments were discharged and the funds attached were released, the bonds of the surety company stood in the place of such funds, and were substitutes therefor. ’ ’
The next question to consider is the effect of plaintiffs’ absolutely releasing Boss-Lewin from his obligation. Had his bond not been accepted by plaintiffs, the assets of Hindry would have been subject to their judgment, and had they released them subsequent to defendant executing his bond, he would have been released therefrom, for his right to be subrogated to plaintiffs’ rights in these assets would have been destroyed. The bond of Boss-Lewin stands in lieu thereof. Therefore, the defendant would have the right to resort to it upon payment of the Hindry judgment; consequently, a release of Boss-Lewin by plaintiffs would release defendant from his obligation. •
Counsel for plaintiffs advance the proposition that as between Day and Boss-Lewin, the former is primarily liable, and this, because Day was an intervening surety in a legal proceeding for the collection of a debt, and Boss-Lewin is an original surety for that debt. The premise is wrong as to Boss-Lewin. True, he obligated himself to pay whatever judgment plaintiffs might obtain against Hindry in their action in the county court, but that obligation took the place of property of Hindry which had been attached. This excepts his obligation from the doc
The fourth defense is the same as the third, omitting the allegations concerning the indemnity of Ross-Lewin by Hindry, and the statement that RossLewin consented to the appeal perfected by the bond of defendant.
Prom what has been said previously, we do not deem it necessary to determine specifically whether or not this defense was good.
The first ninei paragraphs of the cross-complaint are essentially the same as the first seven paragraphs of the third defense. In addition it is stated in substance, so far as we shall notice, that to avoid a multiplicity of suits, to obtain complete settlement in one action, and fully protect the rights of defendant, it is necessary that Ross-Lewin be made a party defendant to the original action and a party defendant to the cross-complaint. An order making Ross-Lewin defendant to both the original action and cross-complaint was entered.
To merely settle equities between Ross-Lewin and Day, which the plaintiffs were in no wise responsible for creating, or to settle such equities between Ross-Lewin and Day, which the plaintiffs, by affirmative action, have not destroyed, would not entitle
By the cross-complaint two vital questions are presented: first, the liability of Boss-Lewin to Day in the event the latter pays the Hindry judgment; and, second, whether or not, in cáse such liability exists, the' defendant is released because plaintiffs have destroyed his rights to resort to the Boss-Lewin bond.
Standing alone, the first question would not entitle the defendant to have Boss-Lewin made a party, because the mere question of the liability of BossLewin to the defendant on his obligation would not affect or postpone plaintiffs’ rights; but when it is charged that Boss-Lewin has been released, his liability to defendant, as well as the question of his release, become vitally important in determining the liability of defendant to plaintiffs. Section 16 of our civil code provides:
“The court may determine any controversies between the parties before it when it can be done without prejudice to the rights of others, or by saving their rights; but when a complete determination of the controversies cannot be had without the presence of other parties, the court shall order them to be brought in.”
By virtue of this provision it has been decided that where there are persons not parties whose rights must be ascertained and settled before the rights of the parties to the action can be determined, such persons must be made parties, upon proper application to that end being made. — Pollard v. Lathrop, 12 Colo. 171; Bliss on Code Pleading, § 96; Pomeroy’s Remedial Rights, § 418.
Under this rule it is manifest that Ross-Lewin was a proper party. If determined that he was liable originally, and that this liability continued because plaintiffs had not released him, then the de
It is contended on behalf of plaintiffs and BossLewin that the cross-complaint fails to state a cause of action; because, if it be true, as contended by defendant, that he has a right to resort to the BossLewin obligation upon payment of the judgment, the release of Boss-Lewin by plaintiffs would not affect his rights. This contention is not tenable. Plaintiffs have the right to elect upon which obligation they will proceed to collect their judgment, and they have the right to. absolutely release Boss-Lewin from all obligations to them prior to defendant discharging his bond; but if they do so, that, for reasons we have previously given, would prevent the defendant from holding him upon his bond, and this would operate to discharge the defendant from his obligation.
The judgment of the district court is reversed and the cause remanded for further proceedings in harmony with the views expressed in this opinion.
Reversed and remanded.