83 Cal. 547 | Cal. | 1890
Lead Opinion
— After further consideration upon argument on rehearing, we are satisfied that the judgment in this case should be reversed.
The plaintiff with three other persons — Newell, Hamilton, and Hay man —were sureties on a promissory note made by defendant, Hammell, to one Byron Stevens for three thousand dollars, dated July 1, 1877, and payable one year after date. Plaintiff claims that one of said sureties, Newell, paid on said note something over two thousand dollars, and that plaintiff paid to Newell, as his pro rata contributive share, one thousand dollars; and this action was brought to recover said one thousand dollars of defendant, the principal on the note.
There are a number of interesting questions in the case, which, under the views which we take of it, need not be determined. For instance, defendant contends that he gave a mortgage to the sureties to secure them, and that the mortgage should have been foreclosed, and that the mortgaged property was sufficient in value to satisfy the note; that defendant was discharged from the liability sued on by a decree in insolvency; and that the one thousand dollars was more than plaintiff’s contributive share. We will assume, however, that the
It is not averred in the complaint or found by the court that the plaintiff, Stone, ever paid to his co-surety Newell any money or gave him any property in satisfaction of Newell’s claim for contribution. The only averment on the subject is as follows: “ That on the 1st of March, 1884, this plaintiff, in full satisfaction of the amount of money which he should contribute to said P. N. Newell for his aforesaid payments on the aforesaid note, made, executed, and delivered to said P. N. Newell his promissory notes in the sum of one thousand dollars, whereupon the said P. N. Newell gave to plaintiff his receipt in full for plaintiff’s liability to contribute to him for the aforesaid payments on said promissory note.” This is not a very clear averment that Newell took the notes in absolute payment of his former claim; but we will assume it to be sufficient for that purpose. There is no averment that plaintiff ever paid the notes, or any part of either of them. It appears, from the findings, that they were payable two years after date, and would not mature until more than a year after this action was commenced. The court below held that the giving of these notes, and their acceptance as payment by Newell, constitutes a cause of action in favor of plaintiff against defendant. In this holding, under the facts in the case at bar, at least, the court, in our opinion, erred.
The general rule is, undoubtedly, that a surety can recover of the principal only the amount or value which the surety has actually paid. If he has paid in depreciated bank notes taken at par, he can recover only the actual value of the bank notes so paid and received; if
There is authority, however, and perhaps a preponderance of authority, to the point that if a surety, by giving his negotiable promissory note, satisfies the claim of the creditor, and extinguishes the debt of the principal to the creditor, he may recover from the principal the amount of the debt, without showing that he has paid his promissory note. (Brandt on Surety and Guaranty, sec. 181, and cases cited.) But the authorities are not uniform upon the subject. In Indiana and North Carolina, and some other states, it is held that the surety cannot recover of the principal until he has paid the money, and that the giving of a note is not sufficient. (Brisindine v. Martin, 1 Ired. 286; Nowland v. Martin, 1 Ired. 307; Romine v. Romine, 59 Ind. 351, and cases there cited.) Many of the cases hold that if the surety discharges the debt by a negotiable note he can maintain an action against the principal, while if he does so by means of a bond or any non-negotiable instrument, he cannot, upon the theory that a negotiable note is analogous to money, —a distinction which is founded upon no apparent good reason. (Boulware v. Robinson, 8 Tex. 327; 58 Am. Dec. 117; Peters v. Barnhill, 1 Hill (S. C.), 237.) The rule is founded on the reason that if the surety, by giving his own obligation, discharges the original debt of the principal, the latter is as much benefited as if he had discharged it by actually paying the money; its weakness lies in the possibility of the surety recovering the whole amount of the principal, and never paying his own note, thus violating the cardinal rule that the surety shall not speculate out of the principal. But if we assume the rule to be as first above stated, it is not so clearly com
We think, also, that the cause of action averred in the complaint would have been barred by the statute of limitations, which was pleaded by defendant, even though
For the reasons above stated, the judgment and order appealed from are reversed, and the cause remanded for such further proceedings as respondent may be advised to take.
Concurrence Opinion
I concur. A surety who pays the debt of his principal has an undoubted right to recover the amount paid. But such is not the case here. The liability of the principal had been extinguished by the statute of limitations before any payment by the surety. The absence of the plaintiff from the state had kept the claim alive as to him, though it was extinguished as to the defendant. The plaintiff, therefore, did not pay the defendant’s debt, — he merely paid his own debt. By so doing he could not possibly acquire a right of action against the defendant.