Moore v. Moore, 11 N.C. 358, 4 Hawks 358 (1826)

June 1826 · Supreme Court of North Carolina

11 N.C. 358, 4 Hawks 358

m equot.

Augustus Moore v. Isaac Moore.

From Hertford.

Contribution among1 co-sureties was originally founded on tile maxim that “ Equality is Equity” among those who stand in the same situation. This maxim can only be applied to those whose situations are equal, otherwise equality is not equity ; and hence if one surety stipulate for a separate indemnity, the equality of situation between him and his co-surety ceases, and the maxim does not apply.

The indemnity taken by one surety, can be reached by the other only in two cases, either when it was taken in fraud, or for the benefit of the other.

Hence if one surety, for his own benefit, fairly take an indemnity, he may use it until indemnified’.

If a surplus remain in such case, the other sureties may have the benefit of it.

The bill set forth, that about 14th day of August 1815, the Complainant and Defendant, at the request of James Jones, now deceased, became his sureties in a bond which was then executed to one John Coffield for ~950 ; that said Jones, at the same time, executed a bill of sale by which he conveyed unto the Defendant five negro slaves, conditioned to he void, if the said Jones should well and truly pay said debt to Coffield, else to bo in full force. That Cofield, a short time before the filing of the bill, had sued the Complainant and Defendant on said bond 1 and obtained judgment ; that Janies Jones died utterly insolvent, having first made his will and authorised his executors to sell all his property ; that said executors were about to sell the aforesaid five negro slaves which had been mortgaged as aforesaid, when the Defendant set up his claim to them ; but he afterwards permitted the executors to sell said slaves, upon condition the executors would pay to the Defendant the amount for which said negroes were mortgaged, or apply said amount in such manner as ¡should be directed by the Defendant; that the Complainant has been compelled to pay one-half of the aforesaid judgment,at law, with interest, and the Defendant the other half, viz. §1016, on the 25th February, 1818 ; that the Defendant hath received glG50 out of the proceeds of the sale of said negroes, and besides this, another sum arising from said sale, and sufficient to cover the other half of CoffieWs debt (paid by the Complainant) was applied by said executors, by direction of the Defendant, to the payment of other debts due by the estate of said Jones, for which the Defendant was responsible as surety, but for which said negroes were not bound in any manner. The Bill then prays for relief, &c.

The Defendant insisted iu his answer, that the bill of sale executed to him for the negroes, was intended for his sole benefit, for that James Jones being indebted to the Complainant, went with Complainant to Coffidd to borrow the sum named.in the bill; that Coffidd refused it, unless the Defendant would join in the bond for the repayment of the sura loaned ; that James Jones applied to this Defendant to join him in the bond, which the Defendant refused to do, unless said Jones would give him some indemnity, when said Jones agreed to give the bill of sale aforesaid, and that the Complainant knew nothing of this; that the Complainant had previously signed said bond with said Jones, and without indemnity, and tha't said bill of sale was executed entirely for the benefit of the Defendant, and would not have been taken at all by the Complainant. He farther answered, that the no groes were sold by the executors of Jones, though lie forbade the sale, and claimed the negroes ; that, the executors contended that three of the negroes had been levied on by executions before the date of his bill of sale. The Defendant admitted, the executors liad paid him §800, and agreed to pay him the balance that may be due him on account of his aforesaid suretyship ; that tile two negroes which were uncmcumbered by the lien of executions prior to the bill of sale, sold for §1050, and the executors refuse to pay more than that sum.

Henderson, Judge. —

Contribution among co-securities, arises not from any contract between them, but from a principle of natural equity — that equality is equity among persons standing in the same situation. And this being now the established and well understood doctrine of a Court of Equity, it is sufficient to infer an understanding among them of mutual contribution; formen are presumed to act in reference to the laws governing the transaction. Hence it is, that a Court of Law never sustains jurisdiction in cases where one surety seeks contribution from the other; but this principle of Equity can only apply in cases where their situations are equal, for equality among persons whose situations are not equal, is not equity. If one surety stipulates for a separate indemnity, in this respect his situation is different from that of one who - makes no such stipulation ; and this indemnity is reached in favour of his co-security, upon the ground, either that it was intended for the benefit of all, or that the taking it was a fraud upon the others. In such cases, Courts of Equity convert him into a trustee, not permitting him to allege his own turpitude or selfishness as a protection ; for they enter into the agreement under a belief of perfect equality, trusting apparently to the same law's of indemnity, and to the united exertions of each other, to avoid harm severally; therefore, to take an indemnity, is a fraud upon the rest, and more especially, as it lessens the ability of the principal to indemnify the others, and if taken without such* secrecy, it is presumed to be designed for the benefit of all, and an indemnity fairly obtained. And such indemnities may be fair, and which the surety has a right to use exclusively for his own benefit, while he is indemnified ; if more than sufficient for that purpose, the excess should be communicated to the other .sureties, first, because it gives to the creditor an equitable lien on such indemnity, and the creditor should cede, and in Equity is supposed to cede, to a suffering surety, all his means and facilities in enforcing and securing payment; and secondly, from the intimate connection subsisting between them, as being engaged in one common league, we have only to appeal to our own bosoms to ascertain the benevolent feelings excited by such connection, and the dictates of benevolence become duties, when not prejudicial to ourselves ; but in observing its dictates, we. are not bound to encounter hazard or trouble, and therefore, where this surplus lien is sacrificed to our good or safety in that transaction, the co-surety has- no right to complain.

The facts of this case preclude all idea that the Complainant entered into the engagement, under a false appearance of equality, and it affords as little evidence that it was designed also for his benefit, for he attested the instrument creating the lien. In truth, this appears to be a fair and explicit transaction. The Complainant was willing to become Jones’s., surety without a lien, and without the participation of -tire Defendant. Such proffer was made before tbe Defendant was called on. Application was then made to the Defendant, not at the instance of the Complainant, to aid him in encountering the risk, but tiie money could not be procured without an additional name on the paper; in this situation, the Defendant stipulates for a lien, and this within the knowledge and presence of the Complainant, who required none, ami negatived all idea that the Defendant was acting for their joint benefit, by attesting the instrument creating the lien. He has therefore, no claim, either ont the g-j-onml of fraud or intention, and the claim to the excess, I think, stands on an equally slender foundation. Had the Defendant wantonly or capriciously discharged the excess of the lien, the Complainant would have had cause of complaint. But if the Defendant, for his own-case and convenience in the transaction, sacrificed it, lie has none. All he can ask is, that he should have it, when it is not longer of any service to the Defendant. Good faith as to this, is all that equity requires. If, by sacrificing the excess, he more promptly, and with less trouble and risk, obtained an indemnity, who has a right to complain ? On whose rights or labours has he trespassed ? Noton the Complainant’s. But i do not view the transaction at the sale of the npgroes, by any means as an abandonment; it may be so, but the Answer does not admit it. But, as Í have said before, that is entirely immaterial. If lie did so, it was for his accommodation, to avoid controversy, to make himself perfectly safe. In this he has violated no obligation, at least none which a Court of Justice recognizes.

The Biue dismissed with costs.