76 Ark. 171 | Ark. | 1905
(after stating the facts.) This is a suit in equity by certain creditors of the estate of Samuel Dickens to be subrogated to the rights of the sureties on the bond of the administrator of that estate in a mortgage executed by the administrator to them to indemnify and protect them from liability on such bond. The complaint .also set up that certain conveyances made by the administrator to his children were fraudulent, and asked that they be set aside. The chancellor found against the plaintiffs on both issues, and in the brief and argument in this court counsel for plaintiff do not ask us to review the finding of the chancellor as to the conveyances made by the adminstrator to his children many years ago. But they insist that under the facts they are entitled to be subrogated to the rights of the sureties in the mortgage executed to them by the administrator.
Now, there seems to be a distinction between those conveyances made by a principal to a surety both for the purpose of protecting him and to secure the payment of the debt and those executed merely to indemnify the sureties against liability. If the conveyances are made to the surety for the purpose of securing the payment of the debt, the creditor has an interest therein which the surety cannot destroy. But if the conveyance to the surety is only to indemnify him, then such security does not, in the first instance, attach to the debt, and whatever equity may arise in favor of the creditor with regard to the security arises afterwards, and in consequence of the insolvency of the parties principally liable for the debt. Until this equity arises, the surety has a right in equity as well as at law to release the security. Even after such insolvency the mortgagee may surrender the security, if he does it in good faith, and before any claim is made upon him for it. The application of it for the benefit of third persons can only be accomplished by the interposition of a court of equity, and in case the mortgagee still claims the security, or when he has conveyed it under circumstances tending to show bad faith or collusion betwen him and the mortgagor. Jones v. Quinnipiack Bank, 29 Conn. 25; Daniel v. Hunt, 77 Ala. 567; Fertig v. Henne, 197 Pa. 560; Pool v. Dosier, 59 Miss. 258; Steward v. Welch, 84 Me. 308; Jones, Mort. (6th Ed.) § 387; Harris, Subrogation, 591 594.
But in this case the mortgage was executed in 1875 to the six sureties on the bond of Jacoway. At the time the mortgage was executed, J. M. Cole, one of the sureties named therein as a grantor, had been dead three years, and neither he or his heirs took any legal interest by virtue of the mortgage. Brown, another one of the sureties, died in 1876. Afterwards, in 1882, the four remaining sureties executed a release to Jacoway, in order that he might sell the land. The facts show that this release was executed in good faith, and that afterwards the land mortgaged ¡massed into the hands of parties who paid a valuable consideration therefor, and came through mesne conveyances into the possession of the defendants, Brooks, Neely & Company, who are bona fide holders for value. The only surety who took any interest by such mortgage that did not join in the execution of the release was Brown, who had been dead six years before the release was executed. But plaintiffs can secure no rights through him in this proceeding for the reason that none of his heirs or legal representatives were made parties to this action. Bond v. Montgomery, 56 Ark. 563; Harris v. Watson, lb. 574.
The release of the other sureties was executed in 1882, and it was twenty years afterwards before it was questioned, and before the creditors brought this action to be subrogated to the rights of their sureties. Even if the cerditors originally had the right to enforce this mortgage for the payment of these debts, we think that it is too late to do so now, twenty years after the execution of such release. The recent case of Wallace v. Swepston, 74 Ark. 520, is conclusive on that point, on the doctrine of laches, and we refer to the opinion in that case for a full discussion of the question.
Finding no error on the points presented, the judgment is affirmed. u
