53 Vt. 321 | Vt. | 1881
The opinion of the court was delivered by
The principal facts on which the questions in this case arise, are, that Wright & Bugbee, partners, Oct. 8, 1873, borrowed for partnership purposes of Pierce $3,000, and gave their note therefor, secured by a mortgage on the partnership property in Rochester, and by a mortgage from Wright, contemporaneously executed, of his individual property in Bethel; that April 13, 1874, Wright further mortgaged his Bethel property to defendants Cushing & Co. to secure his private debt to them ; that in May, 1874, defendants Cushing & Co. duly attached Bugbee’s half of the partnership property in Rochester to secure a debt they had against Bugbee, regularly obtained judgment in the suit, and levied regularly the execution on an undivided interest therein May 31, 1875 ; that Wright September 16, 1874, conveyed his half of the Rochester property conditionally and subject to the Pierce mortgage to Bugbee; that December 25, 1874, the orator attached the Rochester property on a debt against the partnership, but obtained service of the writ, and judgment thereon, only upon and against Wright, and June 6, 1876, attempted to levy the execution on the residue of the Rochester property covered by the Pierce mortgage, which was left unlevied upon by defendants Cushing & Co., but treated in making said levy the Pierce mortgage as resting both upon the Rochester and upon the Bethel property; that Cushing & Co. bought the Pierce note and took assignments of the mortgages given to secure the same Oct. 11, 1875; brought a bill to foreclose the mortgage on the Rochester property to the December Term, 1875, making the orator a party defendant, and obtained a decree of foreclosure, the time of redemption to expire in one year ; that the orator was notified in March, 1876, that the Pierce note was given for money to use in the partnership of Wright & Bugbee, and that the mortgage to secure the same on the Rochester property covered
And the creditors of a surety have the same right of subrogation which he has ; Neff v. Miller, 8 Pa. St., 348, 350. The principle extends beyond the ordinary relation of principal and surety, and applies in every instance where one man has paid a debt for which another is primarily liable, and which should in point of equity and good conscience, have been discharged by the latter. Morris v. Oakford, 9 Pa. St. 498. Thus while subrogation will not ordinarily be enforced as between joint or principal debtors, Bailey v. Brownfield, 8 Harris, 41; Hogan v. Reynolds, 21 Ala. 56, it will be so whenever the circumstances are such as to make it the duty of one to pay the whole in case of others ; • as when upon the dissolution or reconstruction of a firm, one or more of the partners promises to pay the partnership debts in consideration of receiving, or retaining the assets, which will place the rest in the position of sureties; Aflalo v. Fourdrinier, 6 Bing. 306; Wood v. Dodgson, 2 M. & S. 195; and entitle them to subrogation,
It is only in cases where the person paying the debt stands in the situation of a surety or is compelled to pay in order to protect his own interests, that a court of equity substitutes him in the place of the creditor as a matter of course, without any special agreement. A stranger paying the debt of another will not be subrogated to the creditor’s rights without an agreement to that effect. Swan v. Patterson, 7 Md. 164; The Bank of United States v. Winston, 2 Brockenborough, 254; Burr v. Smith, 21 Barb. 262. Such a payment absolutely extinguishes the debt and security. Sanford v. McLean, 3 Paige, 117, 122; Banta v. Garnes and others, 1 Sanf. Ch. 384; Wilkes v. Harper, 1 Coms. 586; The Bank of U. S. et al. v. Winston’s Exrs. et al., 2 Brockenborough, 252, 254; Douglass v. Fagg, 8 Leigh, 588, 602.
In Averill v. Loucks, 6 Barb. 470, on an application to direct the sheriff in regard to paying over surplus funds realized from the sale of real estate, it is held, that a partner, who gives a mortgage upon his separate property to secure a partnership debt, thereby becomes a surety for the firm, and is entitled to the rights and privileges of that character; and that his separate creditors succeed to his rights and privileges as such surety; and that in the distribution of the surplus funds derived from the sale of partnership property the partner and his separate creditors had the right to insist the partnership property, being primarily liaible, should be first applied towards the payment of the debt.
In Johns v. Reardon and wife, 11 Md. 465, the husband and wife executed a mortgage of real estate, belonging one-half to each, but so defectively executed by the wife that it only bound the husband. Afterwards they both duly executed a mortgage of the same real estate. Both mortgages were to secure the payment of the husband’s debt. The property was sold under the second mortgage, which was adjudged to have the priority in right of payment, and which absorbed more than the husband’s interest in the land. It was held that the wife’s interest therein was related as surety to the debt; and that the surplus belonged to the wife and not to the first mortgagee.
Our court has recognized the same doctrine. In Stevens et al. v. Goodenough, 26 Vt. 676, the husband and wife gave their note for the payment of part of the purchase money of land which was conveyed to the wife, and secured the same by a mortgage of the land. Subsequently, she, through the intervention of a third person, conveyed to the husband three-eighths of the land on his agreement to pay the note. He did not pay the note. His creditors, the orators, attached and undertook to levy executions on his equity in the three-eighths of the land. Meantime the mortgagee foreclosed the mortgage; and she had obtained a divorce from her husband. The orators paid three-eighths of the mortgage debt? and she five-eighths of the same, to redeem the premises from the foreclosure. The orator’s levies on the three-eighths proved ineffectual to convey the land, through the officer’s failure seasonably to return the executions for record. The wife brought a suit against her former husband to recover what she had been obliged to pay to redeem her land from the foreclosure of the
In the case at bar, the orator, before the levy of its execution on the Rochester property, was notified that Wright’s Bethel property, to which the defendants Cushing & Co. had succeeded, occupied the relation of a surety for the payment of the Pierce mortgage debt. Hence, in equity, by the levy- it would only succeed to the rights of the partnership, or of Bugbee in the Rochester, or partnership property.' Bugbee had received a conveyance of the same, charged with the payment of the Pierce debt. If Pierce had foreclosed the mortgage on the Rochester property, and the partnership or Bugbee had redeemed, they could not keep the debt on foot against the Bethel property. Such redemption would have been a payment of the debt by the principal. If they had failed to redeem, and Pierce had taken the Rochester property, it would have been an extinguishment of the debt as to him to the
The result is, the pro forma decree of the chancellor is affirmed as to all parties, but without additional costs in this court to the parties confessing the bill.