Fidelity & Deposit Co. v. Phillips, 235 Pa. 469

Fidelity & Deposit Co. v. Phillips

235 Pa. 469 | Pa. | 1912

Opinion by

Mr. Justice Elkin,

In Com. v. Fidelity & Deposit Co., 224 Pa. 95, the judgment entered by the court below against the bonding company, appellant there and appellee here, was affirmed. The result of that judgment was to charge the bonding company with the entire default of the trustee, amounting at that time to $14,279.89. The appellee bonding company then brought this suit for contribution against the sureties on a former bond given by the same trustee to insure the faithful discharge of his duties and to secure a proper accounting of the trust funds. Unless the sureties on the former bond were discharged their liability to answer for the default of the trustee to those interested in the trust estate still continues, and it follows as a legal consequence, if there was a separate bond taken as an additional security, and the surety on the additional bond, paid the loss resulting from the default, the surety thus required to make good the default, may proceed against the sureties not discharged for contribution. The fact that there are two or more bonds instead of one, but all conditioned to be answerable for one general purpose, does not affect the primary liability of the sureties on each bond. While the bonds remain in force the cestuis que trustent may elect to proceed against the sureties on either bond, and if a surety on either bond is compelled to pay the entire amount of the default, he may proceed against his co-*475sureties on the same bond, or the sureties on all the bonds remaining in force, for contribution. This rule of law is of such universal application as to make it unnecessary to cite authorities in support of it. The only question that could arise on this branch of the present ease is whether the first bond still remained in force after the taking of the new bond. The learned court below held that both bonds remained in force, and this court is of the same opinion. There were two sureties on the original bond which was executed in 1889. Ten years later one of the sureties died, whereupon the cestuis que trustent through their counsel requested the trustee to give additional security. Neither the surviving surety nor the representatives of the deceased surety did anything by way of asking to be relieved from liability on the original bond, nor did they ask for additional security. The original bond as filed and approved by the court remains unchanged and is of record in the Orphans’ Court of Chester county. No petition was presented, nor was any request made by the sureties, nor by anyone else, when the new bond was taken, asking for a discharge of the sureties on the original bond. Indeed, the record and the facts show what the learned court below assumed as the basis of its findings, that the new bond was demanded and given as an additional security and not as a substitution for the original bond. There was no express discharge by order of court; and, certainly, under the facts and the rule of our cases such a discharge did not result by operation of law. We conclude, therefore, that both bonds continued in force and the liability of the sureties on the first bond was not discharged by taking the new bond.

It is further contended that the sureties on the first bond were discharged because the trustee and the cestuis que trustent entered into an agreement authorizing the investment of the trust fund in western mortgages without their knowledge or consent. The learned court below found as a fact, that one of the sureties advised this *476investment to be made, and must therefore be held to have given his consent, but as to the other surety, the evidence did not show, that he had any knowledge of such an investment being made, or that he had consented to such a disposition of the trust fund. The consenting surety was held bound according to his original undertaking, while the non-consenting surety was said to be discharged from all liability. There is a suggestion that the court may have erred in holding the one surety to be discharged, but no exception was taken, and as the point is not assigned for error, the question cannot be considered here.

It is strongly urged by counsel for appellants that the learned court below was not warranted in finding that Dr. Massey had consented to the investment of the trust fund in the securities from which the loss resulted. Any other finding would have disregarded the established facts and the plain inferences to be drawn therefrom. No other conclusion could have been reached without doing violence to the facts. It is further suggested that the discharge of the non-consenting surety had the legal effect of discharging the consenting co-surety. This position is without merit. As far back as Wolf v. Fink, 1 Pa. 435, it was decided, that where a second note was given in satisfaction of a first note, all parties to the first note were discharged, and the remedy is on the second; but if time only is given on the first note, and one of the joint sureties thereon assented, and the other surety dis sented, in a suit on the first note, an award in favor of the dissenting surety, unappealed from, does not operate as a discharge of the consenting surety and the maker. It has been frequently held that a plaintiff in a joint action against several parties may enter a nolle prosequi as to a defendant pleading matters personal to himself, and still recover in the same action against the other defendants. To this class of cases belongs that of a surety who seeks and obtains a discharge in equity by the conduct of the creditor. In such a case a judgment *477in favor of one surety so discharged from liability, does not operate to discharge a co-surety who is not in position to avail himself of a like defense personal to himself. See Schock v. Miller, 10 Pa. 401; Holt v. Bodey, 18 Pa. 207; Swanzey v. Parker, 50 Pa. 441; Weist v. Jacoby, 62 Pa. 110.

In the case at bar the consenting surety on the first bond is bound to make contribution to the surety on the second bond in proportion to the extent of their respective undertakings and the extent of that liability is the only remaining question to be considered here. If suit had been brought on the first bond, instead of the second, each of the original sureties would have been liable for the entire default, but could have called upon his co-surety for his share of the loss. But if one surety consented, and the other dissented, there would be no liability on the dissenting surety and the whole burden would fall upon the consenting surety. The consenting surety cannot escape the full measure of his liability upon the ground that his co-surety did not join in giving his consent. If, therefore, a judgment had been obtained against Dr. Massey, the consenting surety on the original bond, for the full amount of the default, he could only have claimed contribution from the sureties remaining bound. The rule must necessarily work both ways, and inasmuch as judgment here was obtained for the full amount of the default against the surety on the second bond, that surety has the right to demand contribution in proportion to the liability imposed upon the sureties on the first bond according to their several undertakings. The liability of each surety in the several undertakings is measured by the penal sum in the respective bonds. This is the settled rule of the English cases, and it has been approved and followed by most American courts: Deering v. Winchelsea, 2 Bos. & Pul. 270; Craythorne v. Swinburne, 14 Ves. Jr. 160; Loring v. Bacon, 57 Mass. 465; Bell v. Jasper, 37 N. C. 597; Moore v. Hanscom, 103 S. W. Rep. 665. The rule seems *478to be that if the sureties signed tbe same instrument there would be equal contribution among them, but where the sureties are bound by different sums in different instruments, they are liable in the proportion, of the amounts of the obligations signed by them respectively. This court very recently considered the question in Malone v. Stewart, in an opinion not yet reported, in which it was held that the liability of the sureties to contribute was in proportion to the penal sums in the respective bonds. In fixing the liability of the consenting surety in the present case this rule was followed by the learned court below and we think properly so.

Decree affirmed.