46 Miss. 449 | Miss. | 1872
The complainant filed his bill in chancery, to be substituted to the benefits of a deed in trust, executed by S. O. Capers, to protect and indemnify Winters, Myers and
The complainant grounds his right upon doctrines well established in the courts of equity: “That, if a creditor obtains a mortgage or other security from the principal debtor, the surety is entitled to its protection. So, if the surety has obtained indemnity from his principal, the creditor may avail of it, and have satisfaction of his debt out of it.” 1 Story’s Eq., § 481. For a statement of the general principle see, also, Bowen v. Hoskins, 45 Miss. 183.
In disposing of this case, it is necessary to look somewhat closely into the principle invoked : to trace its origin and see upon what considerations it rests; what is its extent and limitation. It is universally conceded by the jurists, that the principle known in our jurisprudence as “substitution,” was brought from the civil laws, where it was known as “ cessio actionem.” As, if the surety pays voluntarily or compulsorily, the creditor must make good to the surety any actions or remedies he has against the principal debtor, also all the accessories thereof, his actions against other sureties and his pledges. If the creditor has put himself in such condition that he cannot assign his securities and remedies against the principal and other sureties, he is barred of his remedy against him upon whom he makes claim. Potier Pan., book 46, § 5. In Hopeland v. Bank of Cumberland, 10 Leigh, 220, it was thought to be wise to recur to the civil law, to derive aid in determining the scope of the doctrine of substitution. There could be no “cessio actionem ” if there never had been a cause of action and a remedy. Where one is bound for the debt of another and pays it, equity will treat the securities and remedies of the creditor, against the principal debtor, as still subsisting for the benefit of the surety. Some of the cases hold, that the rule only embraces collateral securities, while others have so extended it as not to treat the princi
The rule, that a creditor is equally provided for, when the principal has created an indemnity for his surety, does not arise out of any notion of mutual contract between the parties, but is rather the offspring of natural equity, independent of contract, to prevent the surety, in the first instance, from being harrassed with the debt, and then turn him round to seek redress out of the collateral indemnity.
Where the conveyance is made to or for the security of property not by the terms of the instrument specifically bound to the creditor, the primary intent apparent on the face of the writing is that the property is not pledged to him for the debt. The extent of the burdens, trusts and conditions annexed to a grant, is to be learned by reading the instrument, and gathering from it the intent and purpose. The owner has a right (if he does no fraud, -or violates no prohibition of law) to dispose of his property at pleasure. Courts enforce contracts, or give redress for the violation of them, as made by the parties. By construction, they cannot enlarge them beyond their fair intent and meaning, nor, on the other hand, so limit them as to fall short of that. An subrogating, therefore, the creditor to the surety’s place,' as to any indemnity given him, there can be neither increase nor diminution of rights, as they actually existed in favor of the surety. If, therefore, the indemnity is against a contingent liability, there can be no substitution until the liability has become absolute. Bank of Virginia v. Boiseau, 12 Leigh, 370; 10 ib. 222.
If a mortgage or other security is given to the surety, not to secure the debt or provide a fund for its payment, but to
An analysis of the cases in this state and elsewhere will, we think, show the distinction we have attempted to enforce though not always adverted to, that where the creditor seeks to appropriate to his debt the collateral indemnity of the surety, it must appear that the security is for the debt as well as the ultimate protection of the surety. If such be its character, it is of no moment whether it was given at the time the principal obligation was incurred or afterward, or whether it was known at the time to the creditor or not. The creditor has an interest in it, and becomes a cestui que trust. The fund or property at once takes on a trust character, and the surety can do no act which will discharge the trust or release the property from the burden, to the prejudice of the creditor. Thus in Paris v. Hulet, 26 Vt., the mortgage to the surety was upon the condition that the mortgagor would pay the notes and hold the surety harmless. So in Eastman v. Foster, 8 Metc. (Mass.), and Collin ads. Roberts Colvin, 8 Gratt. 363. In Ohio Life Ins. Co. v. Ledyard, it was said the indemnity was for the better security and protection of the debt. In Moses v. Murgatroyd, 1 Johns. Ch., it was said by Chancellor Kent, that it made no difference whether the creditor knew of the securities or not, they were
In Daniel v. Joyner et al., 3 Ired. Eq. 913 (to which reference was made by counsel for appellee), the terms of the trust deed were “to save harmless B” (the surety), “and whenever required by the creditors of A (the grantor), or by any surety who may be threatened with loss by reason of his suretyship, the trustee shall proceed to sell sufficient property to answer the ends of this deed in trust.” There the creditors on request to have a sale to pay their debts, and the surety was not obliged to remit until he was injured, it was held, that the trustee need not remit until the surety was actually damnified. The trustee had sold all the property before the suit was brought, and the points of law arose on its distribution among several claimants.
While the language of the courts when speaking to the general proposition has not, perhaps, been quite harmonious, we think the principle has been stated and enforced, that if the security be purely personal, as to indemnify, and save harmless the surety, and not for the better protection of the debt, or intended as a fund for its payment, a trust does not attach to it for the creditor. In such instances no breach occurs until the surety has been damnified, nor is there an action or remedy to which the creditor can be substituted. The general doctrine which we have traced with more or less distinctness elsewhere has, we think, been laid down with emphasis by our predecessors in Dick et al.
We are of opinion, therefore, that the demurrer ought to have been sustained to the bill.
Judgment here accordingly.