Lead Opinion
delivered the opinion of the Court.
On the 31st of October, 1824, McCurdy and others conveyed to J. Harvie, for the use of th©President, Directors and Company of the Bank of‘ Kentucky, a house and lot in Frankfort.
The consideration expressed upon the face of the deed is $4,248. McCurdy mortgaged the same pro* perty in 1819, to Hickman and others, to indemnify them against loss in consequence of their being-sureties for him. One of the debts mentioned in the1 mortgage was due to the Bank of Kentucky, and for Hiis debt, amounting to $1,700, Hickman was on©’ of the sureties. All the mortgagees united in the execution of the deed to Harvie. McCurdy, Hickman, and Taylor were jointly bound, as sureties for Pearson, to the Bank of Kentucky for the payment of $2,780. The Directors of the Bank accepted1 the deed for the house and lot as a full discharge of the balance of the debt due by McCurdy, and, in satisfaction of $2,254 92 of Pearson’s debt. The* property was not worth $4,248. According to the evidence, about half that sum would have been a lair cash price for it, at the time the Rank received it.
in 1827, McCurdy filed his hill, alleging that Pearson was insolvent, that Taylor had paid him a tlii rd, and that Hickman had failed to pay the third of the amount settled with the Bank for Pearson. Wherefore, he asked a decree against Hickman for his third, and for general relief. By an amendment t o the bill, Pearson was made a party. But no dec ree was asked against him in express terms.
The circuit court decreed that Hickman and P eárson should each pay McCurdy $1,061, and that Hickman should pay the costs of suit.' To reverse these decrees, this writ of error is prosecuted.
It appears that McCurdy sued Hickman, in assumpsit, with a view to recover the proportion of tiie Pearson debt, for .which he was liable. The declaration contains a single count, in which the drawing of the note by Pearson, payahle to Hickman, Taylor,' and McCurdy jointly, their endorsement of it to Hunter, its discount by the Bank of Kentucky, its non-payment at maturity, the recovery of judgment thereon, by the Bank, against drawer and endorsers, and the payment of the judgment by McCurdy in property of the value $4000, are all distinctly and at large averred. Pearson’s insolvency is likewise averred.- Upon the facts thus stated,the declaration, as a deduction of law, alleges the assumpsit, on the part of Hickman, to be a “ promise to pay $2,000, being the amount of his proportion of the value of the properly aforesaid, by whit it the judgment aforesaid was satisfied.” The breach is then assigned in the non-payment of the money. HÍc’hman demurred to the declaration, and the court tiiC^eupon gave judgment in bar of the action. It is the judgméíd thus rendered, which Hickman has pleaded in bar of the relief sought by the present suit. Several depositions have been taken, proving that the reason given by the court for deciding in .Hickman’s favor, upon the demurrer, was that McCurdy had remedy exclusively in chancery. Exceptions were filed to the reading of these depositions for urant of notice, and because they were taken in term time.
Without enquiring into the propriety of the exceptions, we are of opinion that the depositions should have been rejected. The effect and opera-Con of a record cannot be controled by proving that the reasons of the judge for entering the jndgmer,t were erroneous. Where the form of the count is general, as the common counts in assumpsit, testimony may he introduced, to show what matters Were embraced by the trial, and what were exclud'
Under the opinion of a majority of the members of this court in the case of Hunt vs. Terrell’s heirs, not yet reported, the judgment upon the demurrer must bar this suit, if the declaration be good. The case of Ford’s executors vs. Wilson’s administrators, II Bibb, 538, cited in argument, isnot decisive of the question under consideration. There the court refused to permit the defendant to make any defence at law, entertaining the opinion that the matters of defence contained in the pleas were only cognisable in chancery. But here a full trial at law was had upon the matter contained in the declaration. If the pleas offered by Wilson’s administrators had been filed instead of being rejected, and the court had given judgment upon demurrer against the pleas, the cases would then have been analogous. If the pleas had been filed and the matters set forth in them had been sufficient to bar the action, and the pleas had been adjudged bad upon demurrer, wc appre
The merit of Hickman’s defence, so far as it dc-pends upon the judgment in the action at law, turne upon the sufficiency of McCurdy’s declaration. We think it is fatally defective, and that the demurrer was properly sustained. The law raises no such as-sumpsit as that set lorth. il the value ol the property paid in discharge of Pearson’s debt, exceed the amount of tiie debt, then it would follow thattiie surety matting payment in property, would have a right to recover of his co-sureties or of Pearson, a Sreatei' s!,m ^iaii ^lat which he owed, provided the assumpsit raised bylaw be to pay the value of the property, instead of the amount of the debt. The extent of liability cannot exceed the amount of the debt. Upon no pretext can it be said that a surety has paid for his principal and co-sureties more than was owing by them. The law cannot estimate the sacrifices, the trouble and expense which he incurs in raising the money with which to pay the debt. If property is sold under execution at half or a fourth of its value, the surety can only ask indemnity for the price or money brought by the sale. So likewise if he voluntarily pay double the debt in property, when fairly valued, his recourse must be limited to the amount of the debt. He cannot be regarded as expending more than that for his principal and co-sureties, because they did not owe more. Tiie declaration in the suit at law avOrs the property paid to be of greater value than the amount of the debt for which McCurdy was bound as surety, and the attempt is to recover from Hickman, the co-snrety, ids portion of the value of the property. Thus the declaration attempts to impose a responsibility beyond the measure which the law allows. Consequently no such assumpsit arose upon the facts averred as that set forth, and hence the judgment on the demurrer was correct. The declaration being defective according to the case of Kendal vs. Tal bo f &c. I Marsh. 322, the judgment upon the demurrer constitutes no bar to another action for the same canse.
There can be no doubt as to the jurisdiction of the chancellor in affording McCurdv appropriate ■relief. Indeed, the liability of co-sureties for con tribntion. originally grew out of a rule of equity •which at length ripened into a principle of law, so that at this day courts of law and chancery entertain concurrent jurisdiction-in giving remedv to the suretv, paying the debt. See I Maddox. 233, and Lansdales administrators &c. vs. Cox, VII Monroe, 403.
The next question for adjudication relates to the amount which McCurdv has a right to recover. And here it may be asked, whether his recourse against Pearson, the principal, is to he regulated by the same rules which must govern as betwern co-sureties. According tQ the civil law a surety, at the time .he paid the debt, had a right to stipulate with the creditor fora cession of his actions, and in that case the surety was subrogated to all the rights and ■actions of the creditor, and might prosecute them against the debtor with the same effect that the ereditor could have done. This rule would allow the surety to recover of the principal debtor the full amount of the debt, without regard to the sum which the surety mav have paid in discharge of it. Where the surety neglected to acquire this subrogation, he was still allowed to proseoute an action in his own right against the principal debtor, in order to be reimbuvsed what be had paid. This doctrine may be found in Potbier on obligations,’chap. 6, section 7, article I. Wherever the surety stipulates with the creditor for all his rights against the principal debt- or, we see no reason why he should not he fully substituted in the place of the creditor so as to recover the whole amount without, regard to what the surety pays. The principal debtor cannot object that he is-charged with the whole amount of his obligation, because he has received value to that extent, and it cannot matter whether he pays it to the creditor or to the surety, to whom the creditor may-have transferred it by express stipulation. But where the creditor receives from the surety less than the foil amount of the debt in discharge of the whole, and makes no contract to put the surety in his place, then all that the, surety can ask, is an indemnity for'
Tiie rule as between co-sureties must, under all circumstances, be that of ecpiality in bearing the burden cast on any one of them by the insolvency of their principal. Sureties cannot be required to pay the whole debt to that one who discharges the whole by the payment of a less sum, under the idea of substitution, because if there he three sureties, A, B, and C, and A pays the creditor with half, if he recovers the whole of B, he has the right to the substitution and can then go back on A for his full proportion, and thus it amounts at last to a division of the loss among them. As, then, McCurdy made rib contract with the bank whereby he became entitled to the rights of the bank, in enforcing the payment of the whole debt from Pearson, bis right to recover from Hickman and Pearson stands upon the same foundation.
We deem it unnecessary now to decide whether our statute giving a remedy', by motion, in favor of the surety' discharging the debt, changes the measure of responsibility and the amount which maybe recovered from the principal debtor and his co-sureties. Be that as it may, McCurdy has not pursued his statutory remedy. He has applied to the chancellor and must be redressed according to the principles by which the chancellor’s conscience is and ought to be governed.
According to the view already taken, McCurdy lias a right to claim an indemnity for his loss and no more. The question is, how much has he lost? His counsel contend that he sold his property' to the
Hickman is a party to the deed which conveys tqie property to Ilarvie for the use of the bank, and deed states that the conveyance was made “in consideration of the sum of $4,248 in hand paid, &c.” The deed concludes with a warranty of title ^Y McCurdy alone. If it can be viewed in the light of an estoppel upon Hickman, because he as a party to the deetl has acknowledged the payment of $4,248 for the property, he cannot now be permitted to question that it was worth that sum; for if that amount in money was actually paid as the acknowledgment purports, Hickman should account for his portion of the money applied to Pearson’s debt. It was decided in the case of Gilly vs. Grubbs, 1 J. J. Marshall, 389, that the acknowledgment in the deed of the payment of the consideration, was only prima facie evidence of payment, and that it might be contradicted by parol testimony. We are satisfied with the doctrine of that case, and it results that Hickman is not estopped to prove that $4,248 were not actually paid. This he has done, by showing that the bank paid doubtful debts instead of money. The amount of McCurdy’s loss must, therefore, be ascertained by proof of the fair money value of the property, and not by what it was rated at in the compromise.
R was contended in argument, that McCurdy’s res-possibility on the warranty contained in his deed, should induce us to regard the value of the properly as Pr operly fixed at $4,248, because in the event of its loss by a paramount claim, lie would be compelí* ed, upon the warranty, to answer for that sum. Were R cel't;un that McCurdy would be compelled to pay that amount upon the warranty, we should hold Hickman and Pearson responsible for it. In such an event McCurdy’s loss would equal that sum, and under the principles laid down, his recovery should be measured by it. But there is no intitna•tion in the record, that the title to the property is in
Another question yet remains. What portion of the value of the house and lot shall Hickman and Pearson pay? Does equity require that the amount of McCurdy’s own debt (so to speak) shall be deducted from the value, to be ascertained as required by this opinion, and then, that Hickman and Pearson each be decreed to pavone third of the balance, 0r shall the value of the house and lot, to be ascertained as herein directed, be apportioned between MeCurdy’s own debt and Pearson’s debt, according to their amounts, and Hickman and Pearson each be required to pay one third of that ■ portion applied towards the extinguishment of Pearson’s debt? We think that the value of the house and lot should be apportioned between the two debts according to their amounts, and that Hickman and Pearson should each pay one third of the portion applied to the ex-tinguishment of Pearson’s debt. In legal estimation, McCurdy was equally bound to pay both debts. His property was received in payment of both, but it passed at a higher price than its true value. In the arrangement made, the property paid the balance of McCurdy’s debt and $2,254 92 on Pearson.’s debt. Therefore, as the aggregate of the balance of Mc-Curdy’s debt and the said $2,254 92 is, to the true value of th'e house and lot at the time the payment was made, so will be the said $2,254 92 to the portion- of the value applied to the extinguishment of Pearson’s debt. This rule will work tire case, and show what portion of the value of McCurdy’s property lias been applied to the payment of the debt for which he and riickman were bound in conjunction with' Taylor, as sureties. One third of this portion, with interest from the time it was paid up to the date of the decree, is the measure of Hickman’s liability. It was erroneous to charge Hickman with the costs expended in suing Pearson.
We have thought it best, to save trouble upon the return of the cause, to fix the value of the house and lot. Under all the circumstances, we are disposed to allow as high a price as’the evidence will warrant. Iiarvie says, in the consultations had on the subject, the opinion prevailed that the property was worth $3000; Brown says the bank held the property at $2500, and he thinks it was sold too low to Page at $2000; the other evidence fixes on $2000 as a fair price, and one witness brings it down to $1400 or $1500. We shall take $2250 as the true value, being a medium between the highest and lowest value spoken of, and the circuit court in entering their decree must take that as the true value.
The decree of the circuit court is reversed, with costs, and the cause remanded for further proceedings not inconsistent with this opinion.
Rehearing
Counsel for plaintiffs in error, filed the following petition for a re-hearing, which ivas overruled.
The counsel for the plaintiffs in error, move for a re-hearing of this cause, on the question of the measure of the liability of Pearson, the principal and of Hickman, one of the sureties, to Mc-Curdy, the co-surety, who compounded with the creditor, and thus satisfied the debt.
The opinion delivered by the court, on this point, would establish principles of extensive operation, and introduce into our code, new rules, without the sanction of a single book of authority; and which, the counsel verily believes, arc contrary to the sense of society, and the consequent practice in the. country.
Portier, the only book cited by the court, is an elementary treatise on the Homan law, as it prevailed in France, the author did not know the laws of England nor Kentucky, nor profess to treat of ou'r system. And therefore, his book is of no authority to prove the laws of this land. But an examination of the civil law of obligations, will show that the doc-> trines cited by the court from that author, are whol
According to the civil law, the obligations of the principal and surety, are not joint but several only, as we would term it; and moreover, that of the principal debtor is regarded as the principal, in the language of the school men, and that oí the surety an accessory obligation; and the surety cannot be subjected to the payment of the money until the principal has been, in our language, prosecuted to insolvency. It results from the character of the obligations of the parties, that the surety, under the civil law, not jointly bound with his principal, mav just as well purchase up the obligation of his principal, as any stranger to the matter, and proceed against him, with all the rights, and by all the means, the original creditor might. And in consequence of the ultimate liability of the sureties, in case of the insolvency of the principal, the law gives him rights a stranger has not; he may pay the money to the creditor, who might not be willing to sell and assign his debt, and thereupon demand an accession of liis action, and thus obtain the subrogation to all the rights and actions of the original creditor.
But the nature of our joint obligations of the principal and surety, to the creditor, makes the operation of accession, and subrogation, legally impossible. When one of a plurality of joint obligors, pays the debt, the debt is extinguished and the obligation gone forever; and there can be no accession to that which is extinguished and has ceased to exist. A joint obligation is “an unit,” and consequently cannot exist as to one obligor, and remain in force as to the others. A release or extinguishment by any other means, oreven a suspension of the obligatory force of an obligation, for a day, as to one of the parties, nullifies the whole obligation as to all the obligors forever. These are first principles of the common law of obligations, and no authority is necessary to prove them. They necessarily result from the nature of
But see here, in one case, the obligation of Pearson and his sureties, were all made joint, by.the law authorizing the recovery of one judgment, on the ■negotiable note, against, all the parties, and the actual recovery of the judgment, which extinguished the obligations on the note; and the obligations of the sureties were originally, joint and joint only, and moreover the one judgment was against all, the principal and all the sureties.
Wc would, therefore contend, that it was always Impossible for McCurdy to have purchased the debt on Hickman, or to have stipulated- for an accession of the rights of the creditor, or to have obtained a subrogation by any means whatever, without doing violence to all the principles of the common law; and as to Pearson, the operation could not have been effected after the judgment which merged the obligations of all the defendants recovered against, and made their liability joint and joint only.
The counsel are aware, that the court have determined that, the case made out did not come within the principles above combatted; but the court has laid down the doctrine in such terms, that it could actually be regarded as a rule in subsequent cases; and the counsel wouldsay, with the Barrons of England, “in nothing let the law of Kentucky he altered by the civilians;” and the court seem to have been conducted to the ground, on which the case is decided, by the civil law7 doctrine.
The ground of the opinion will he now discussed. McCurdy compounded the debt of Pearson for which he was bound as surety, and this debt only, fie did not compound bis own debt. His own debt was not a doubtful debt. It was not so considered by the parties, nor have this court so viewed it; it, Mc-Curdy’s own debt, was secured by a valid mortgage on a bouse and lot, of greater value, as the creditors considered it, and as the court valued it on the testimony, than the amount of his debt. We contend that it is unjust, that we should be charged, upon the same principles as if McCurdy had, in fact, com
The appropriation of the property to pay a good debt, for which it was already pledged, to the amount of that debt, and then, with the overplus, to compound a desperate debt, certainly ought not to be censtrned into a compounding of both debts. This being, in fact, the transaction, the form given, to it cannot be material. This principle the court-have, in substance, recognised in the opinion.
The doctrine here contended for may be illustrated by examples. Suppose McCurdy’s own debt to the Bunk had been secured by the additional obligation of undoubtedly solvent endorsers, or by a pledge of the stock of the Bank, by a third person, to any amount, and the Bank, merely to save the delay of an action, and the extraordinary expenses of the suit, had agreed to receive for the amount of his debt, and for that very doubtful debt for which he was bound with Hickman and others as surety for Pearson, tire twenty two hundred and fifty dollars in money, could it be said that both debts were compounded, and that McCurdy would be entitled to recover on that principle according to the rule laid down by the court?
Or suppose McCurdy had walked into the Bank and presented the cashier with $2,250 of notes on the institution itself, payable to his own order, and had assigned them to the cashier, in trust, to pay his own debt ; that it afterwards appearing to the Bank that this was all the whole of the parties bound for both of -the debts were worth, they had agreed.
McCurdy is exactly in the same ground where he was when he had conveyed the house and lot to the Bank, by his new deed, in extinguishment of both debts, except that he holds Hickman’s bond for the balance of the price of the house. Now, how will this matter be settled ? I would say Hickman ought to have a discount, out of his bond, for McCurdy’s one third of the amount of the bond, because the bond is for exactly the sum Hickman paid for Pearson’s debt. But if I could contend for Hickman, as McCurdy now does for himself, that the $2,250 was advanced by him to the Bank for both debts, at the same discount, then I might insist that he had paid about fifty per cent, on the surety debt, and purchased the mortgage debt at the same discount. And would this be right ? Certainly it would be, if the rule laid down by the court be correct. But McCurdy would answer, that Hickman had paid only the difference between McCurdy’s own debt and the $2,250 for the Pearson debt, as Hickman now contends; and Hickman could not deny that such was the fact. He was sure of recovering the amount of McCurdy’s debt when he made the purchase, because the house was bound.
And how can McCurdy now, in the present case, deny that he did first pay his own debt with the house and lot, which its whole weight rested upon?
But what would be the measure of Hickman’s recovery, in the above case, against Taylor, the third co-surety, and against Pearson ?
One father enquiry on this supposed case, and we leave it. Can McCurdy now say he was less benefitted by7 his extinguishment of his own debt in the transaction with the Bank of Kentucky than Hickman would have been by the purchase of that debt ?
Suppose I mortgage ten thousand dollars worth of property to my creditor, to secure the payment of my own debt of that amount; and at the same time
The error, in the opinion delivered by the court, is in the omission to enquire into the amount Mc-Curdy.parted with for Pearson and Hickman’s use. McCurdy did not part-with the legal title to the property. in order to satisfy Pearson’s debt, but only his - equity, of redemption.
Suppose this had been sold under an execution^ on the judgment recovered by the bank against'| Pearson and his sureties; and suppose it had sold for j Its-exact value, the difference between McCurdy’s - debt'and the #2,250, how much would McCurdy have been entitled to recover ? Certainly not more than the equity of redemption sold for : and can be entitled to recover more, because he himself sold exactly the samé interest in the same property, for exactly the same amount, for the same purpose.
We will- state another case. Suppose Hickman-had gone to the bank, and told the president that he could, by the assistance of his friends, raise a few hundred dollars in order to obtain a discharge, and that he would pay the bank #2,250 for a discharge against this surety debí, and an assignment of this debt upon McCurdy, and the bank liad agreed to-his proposition, and made the' assignment accordingly. Now, what would be the measure of Hickman’s recovery against McCurdy as the co-surety f Could he first have the-amount of McCurdy’s own debt he had thus purchased, first made for him out of the property,- and then turn ghout and say that both of the debts were equally bad, or doubtful, or-good, and that, therefore, he had bought them each-at the same discount; and that, therefore, McCurdy should contribute, as co-surety, by the rule the court have given us, to work out Hickman’s liability j? Hickman, by his purchase of the debt on McCurdy,
One more case only.
Suppose I am insolvent; that I am bound to one' creditor, in two several obligations, and for one hundred dollars; in one as the surety for an insolvent man, and in the other for a person entirely solvent, but the person absent, and the creditor wants th$ money, and I have the credit to borrow, upon my pledge to restore it when reimbursed by my principal; and the creditor proposes that if I will pay him one hundred dollars, he'will surrender to me both Obligations, and 1 obtain the money and pay it. — * Shall my solvent} but unprincipled principal be allowed to tell me, on his return, that I compounded both debts, and had paid for his debt but fifty dollars, and I am sued, therefore, for the other half the money, after my insolvent principal.
This case is put to shew, that in all such cases the court must ascertain what portion of the money was paid for each debt, and there is rió more difficulty in it than there is in the case oforé of your fraudulent retailers Of spirits, who sells Ms apples and gives away his whiskey.
The court have recognised the principle which this petition labors to establish, in having itself valued the house and lot on the testimony, instead of taking the nominal amount pt which it was “ called” by the Bank and McCurdy in their settlement. If the value of the thing itself, the entire estate in it, is-the proper criterion, when it is all paid by the surety in satisfaction of the debt, surely, when only an equity of redemption is paid, the real value of that ought to be the standard.
MOÑROE.