Hall v. Equitable Surety Co.

126 Ark. 535 | Ark. | 1917

Wood, J.

(after stating the facts). Section 7921, Kirby’s Digest, provides: “Any person bound as surety for 'another in any bond, bill or note for the payment of money or the delivery of property may at any time after action hath accrued thereon by notice in writing require the person having such right of action forthwith to commence suit against the principal debtor and other party liable.”

Section 7922 provides: “If such suit be not commenced within thirty days after the service of such notice and proceeded in with due diligence, in the ordinary course of law to judgment and execution, such surety shall be exonerated from liability to the person notified.”

Section 7923 provides: “The two preceding sections shall not extend, first, to the bond of any executor, administrator, guardian or other person given to secure the performance of his trust or the duties of his office; nor, second, to any bond with collateral conditions except bonds with collateral conditions exclusively for the payment of money or the delivery of property, or exclusively for the performance of a covenant or agreement for the payment of money, or delivery of property.”

The court correctly ruled that sections 7921 and 7922, supra, had no application to the bond under consideration.

Cornelison was not the principal in the,'bond. He did not sign the same, nor did appellants sign the same as his sureties. The case of Town of Monticello v. Cohn & Kuhn, 48 Ark. 254, cited by the appellants has no application, for that case was a suit against a principal and his sureties for the payment of a certain sum of money. There the recitals of the bond show that it was signed by the principal and by the sureties. They were designated respectively as such.

The court held in that case that the sureties having given the notice provided by the statute to the obligee to sue the principal in the bond, which the obligee had failed to do, the sureties were thereby exonerated.

The bond under consideration is not a contract of suretyship in any respect, nor is the contract under review one with any collateral undertakings whatever, in the sense contemplated by the statute. Sections 7921 and 7922, supra.

Manifestly the statute is applicable only in those cases where there is a principal debtor, or obligor, and a surety. In such cases where the surety has notified the creditor or obligee as prescribed by the statute, then such creditor or obligee cannot maintain an action against the surety until he has brought suit and pursued the same with diligence to judgment and execution against the principal debtor or obligor.

Where the contract takes the form of ordinary suretyship, “the agreement of the surety is that he will do the thing which the principal has undertaken.”

If the contract assumes the form of a guaranty, then “the agreement of the guarantor is that the principal will do what he is bound to perform.” 12 R. C. L. 1057, sec. 6, but the bond in suit is not that of suretyship in any form. It is an original contract of indemnity between the appellants and the appellee, by which the appellants undertake to indemnify the appellee against any “demands, liabilities and expenses,” which it may have incurred, or any sums of money which it may have paid in good faith, or have become liable for by reason, or in consequence of having executed the bond to the railway company.

Contracts of indemnity “are distinguished from those of guaranty and suretyship in that in indemnity contracts the engagement is to make good and save another from loss upon some obligation which he has incurred, or is about to incur, to a third person, and is not as in guaranty and suretyship a promise to one to whom another is answerable.” 22 Cyc. 80.

“A contract of indemnity is original and independent, to which' there is no collateral contract and with respect to which there is no remedy against the third party.” 20 Cyc. 1402 and cases cited in Note 33.

In Vandiver & Co. v. Pollak, 107 Ala. 547-553, it is said: “Indemnity springs from contract express or implied, or in a general way may be defined as an obligation or duty resting on one person, to make good any loss or damage another has incurred while acting at his request or for his benefit.” See also 14 R. C. L. 43, secs. 1 and 2.

The bond under the above definitions is clearly an indemnity contract, and not one of surety or guaranty. There is nothing in the record to show that the appellee — the obligee in the bond — had any remedy whatever against the third party, Cornelison. The bond sued on does not show that Cornelison was indebted to appellee. Nor does it show any undertaking upon the part of appellants to pay any debt of Cornelison to appellee.

There were no exceptions to the instructions of the court, and there was evidence under the instructions to sustain the verdict. The judgment is therefore correct and it is affirmed.

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