292 F. 757 | N.D. Ga. | 1923
Palmer-Murphy Company, claiming an indebtedness of $1,705 against Kimhrough-Veasey Company, now bankrupt, brought suit and garnished others. To dissolve the garnishment a bond to pay the eventual condemnation money was given by
One of several persons jointly liable as original debtors may purchase his discharge. If a technical release be executed it destroys the obligation as to all; but if the effect of the transaction is a mere agreement or covenant not to sue, there is no discharge of the others. Code Ga. § 4309, Roy v. Railroad & Banking Co., 24 Ga. App. 86, 100 S. E. 46; Kendrick v. O’Neil, 48 Ga. 631. By the weight of authority, however, since the creditor is entitled to but one satisfaction, no matter how many persons may be bound to render it to him, any payment so made must be credited as against the other co-obligors. In the cáse of a principal and surety, however, though they are for many purposes joint obligors as respects the creditor (Lumpkin v. Calloway, 101 Ga. 226, 28 S. E. 622), as between themselves it is quite otherwise. If the surety pay anything on the debt, he is instantly invested with a right of action for his reimbursement against the principal, and if he pay all is subrogated to the creditor’s position and securities. But he may, for a consideration moving from himself, compound with the creditor for his own release, foregoing any right of reimbursement fpom his principal, and the principal will not be entitled to a credit for what was paid by the surety. Gilstrap v. Smith, 101 Ga. 120, 28 S. E. 608, 65 Am. St. Rip. 290. By this means, if the principal be solvent, it would seem that the creditor may collect more than this debt; but, since the principal in any case should have paid it all, either to his creditor or his surety, he is in no position to complain at an arrangement which has cost him nothing. If any one could complain, it would be the creditors of the surety, if he were insolvent, in that his right of reimbursement against the principal had substantially been given away to the creditor.
But in this case, while in form the transaction was of the sort just described, and believed by the creditor to be purely such, in fact the surety, paid nothing, and the principal furnished the consideration for the surety’s release. Had the creditor known this fact, without question he must have credited the payment as against other creditors of the insolvent principal. But here, if not by direct, certainly by indirect, representation of the surety, approved and ratified by the principal, to
The referee’s judgment is affirmed.