18 S.E. 104 | N.C. | 1893
The demurrer was sustained, and plaintiffs appealed.
The purpose of the action and the facts are stated in the opinion ofChief Justice Shepherd. This case comes before us on demurrer to the complaint, from which it appears that the defendant Rogers, as sheriff of the county of Wake, executed three bonds to the State, one conditioned upon the payment and collection of county taxes, one conditioned upon the payment and collection of State taxes, and the other conditioned upon the due execution of process, etc. It further appears that the sheriff, being engaged in the collection of said taxes, used a part of the money collected by him as county taxes in his settlement of the State taxes with the State Treasurer, but it is not alleged that the State Treasurer or the defendant sureties to the State tax bond had any knowledge whatever of the misapplication of the said money. This action is brought by the sureties on the county tax bond against the sureties on the State tax bond, and the prayer is that the defendants be required to "refund" to the plaintiffs the sum of twenty-seven hundred dollars, the amount misapplied by the said sheriff.
Conceding for the purposes of the argument that the sheriff held the money in the character of a trustee, it is very plain that it cannot be followed into the hands of the defendant sureties, as it does not appear that any part of the said money ever came into their possession. In the absence, therefore, of any averment connecting them with the alleged breach of trust, their liability, if any, must result from their contractual relations with the State. It is only through this medium that the plaintiffs can look for relief, and hence it is insisted that they are entitled to recover upon the principle of subrogation.
Subrogation is the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised (199) succeeds to the rights of the creditor in relation to the debt. Sheldon on Subrogation, sec. 1. The doctrine is distinctly a creature of equity, and the ground of relief does not stand entirely upon the motion of mutual consent, either expressed or implied. Brinson v. Thomas,
Tested by these general principles, it would seem that the plaintiffs are not entitled to the relief prayed for, since it is not pretended that they or any one pursuant to their directions have actually paid any money for the benefit of the defendant sureties, or that by reason (200) of their contractual obligations or otherwise they were in any manner compelled to do so. Extending to them, however, the doctrine insisted upon, let us consider whether it can aid them in the present action.
As soon as a surety has paid the debt an equity arises in his favor to have all of the securities which the creditor holds against the principal debtor transferred to him, and to avail himself of them as fully as the creditor could have done. The securities referred to do not include those which are extinguished by the payment of the debt, such as the bond securing such principal debt, and unless the surety procures it to be assigned for his benefit to a third person, it is utterly extinguished both at law and in equity, and he becomes a simple contract creditor (Briley v.Sugg,
While many of the American courts have conformed their rulings upon this subject to the principle declared by the Act of Victoria, supra, this Court and the courts of Alabama, Vermont, and perhaps other States, continue to follow the original doctrine as declared by the courts of England, the only modification of the rule in North Carolina being in favor of a surety who has paid the debt of a deceased principal. Rev. Code, ch. 110; The Code, sec. 2096. According to these principles, the bond to which the defendants were sureties was discharged by the payment and settlement made with the state Treasurer, and cannot be revived in favor of the plaintiffs.
It is further to be observed that the party for whose benefit the doctrine of subrogation is invoked and exercised can acquire no greater rights than those of the party for whom he is substituted, and if the latter had not a right of recovery the former can acquire none. Sheldon,supra, sec. 6; Clark v. Williams,
Suppose the defendant Rogers had borrowed money from a bank and given these defendants as sureties on the note, and when the note matured he had paid it with county funds in his hands, without the knowledge of the bank or of the defendants, could the sureties on the country tax bond of Rogers have recovered of sureties to the note which had thus been discharged? Very clearly not, and such a case differs in nothing, we think, from the case before us. This may appear to be very hard on the plaintiffs, but it is, we hear, a common practice for sheriffs to settle with the State out of the county tax funds, and it is better that sureties who assume such risks should suffer by reason of the unfaithfulness of their principals than that the Court, in the effort to extricate them, should disregard well-settled principles and introduce uncertainty and confusion into the administration of the laws.
After a careful consideration of the case, we are unable to see how this action can be maintained. The judgment of his Honor, therefore, must be
Affirmed.
Cited: Board Education v. Comrs.,
(203)
