Shuford v. Cook, 164 N.C. 46 (1913)

Nov. 26, 1913 · Supreme Court of North Carolina

164 N.C. 46

A. A. SHUFORD, Jr., v. F. P. COOK.

(Filed 26 November, 1913.)

1. Pleadings — Answer—Admissions—Prior Demand — Waiver—Principal and Surety.

Where tbe plaintiff brings suit for contribution against a co-surety on a note, alleging bis liability as sucb, and tbat be bad failed or refused reimbursement 'to tbe extent of bis liability to tbe plaintiff, wbo bad paid tbe same, and tbe defendant answers, denying liability, 'and there is no averment tbat demand bad been previously made on tbe defendant, tbe right to a demand is waived by tbe answer, and the statement of tbe cause of action being only defective, is cured.

2. Principal and Surety — Cosureties—Equity—Contribution—insol-vency of Principal — Actions—-Interpretation of Statutes.

Where it appears tbat tbe principal on a note bas secured his discharge in bankruptcy from bis obligations, including a note paid at maturity by one of two sureties thereon, and that a few months thereafter the surety who paid the note brought bis action for contribution against his cosurety, who has paid nothing, the right of action given by Revisal, sec. 2844, will not, without more, be denied upon the ground that it requires the insolvency of the principal, in such cases, to be shown at the institution of the action.

3. (Principal and Surety —Cosureties—Primary Liability — ^Trials— Evidence. 0

Evidence that one signing a note with another did so only as “supplemental surety,” with primary liability resting upon his cosurety, is not sufficient which only tends to show that' the cosurety represented that the principal was thoroughly solvent, and there was no danger, and thereupon he indorsed the note as surety with the other one.

Appeal by defendant from Gline, J., at June Term, 1913, of Buree.

Civil action to recover tbe pro rata alleged to be due from defendant as cosurety on á note for $2,400, executed to First National Bank of Hickory, dated 5 June, 1909, payable sixty days after date, by one J. E. Wheeler as principal, and plaintiff and defendant as sureties.

There was evidence on paid of plaintiff tending to show the execution of the note; that at maturity of same the bank demanded payment, and plaintiff, having paid the entire amount due, instituted the present action for contribution; that plaintiff has received nothing on said payment from defendant or otherwise. The evidence further tended to show that, at the time of tuaturity of the note and the payment of same and at the institution of suit, the said J. E. Wheeler, principal, was resident in Knoxville, Tenn.; that he was insolvent and had been duly adjudged bankrupt by the United States District Court for Northern Division of the Eastern Distinct of Tennessee., and had received his discharge in bankruptcy.

The defendant denied any and all liability on said note, and alleged, further, that no demand had been made upon him for contribution before bringing suit.

The following issues were submitted and responded to by the jury:

1. Was J. E. Wheeler a nonresident of this State at the time plaintiff alleges that he paid off the note of $2,400 to the bank ? Answer: Yes.

2. Was the said J. E. Wheeler insolvent at the time plaintiff alleges he paid the amount of said debt to- said bank? Answer: Yes.

3. In what amount, if any, is defendant indebted to the plaintiff? Answer: $1,200, with interest from 8 September, 1909.

Judgment on the verdict for plaintiff, and defendant excepted and appealed.

W. A. Self and Bdgby & BlaclcwelcHer for plaintiff.

Avery & Brvin for defendant.

IIoke, J.

It was chiefly urged for defendant that no demand upon him was alleged in the complaint before bringing suit, and therefore no cause of action was stated. The complaint alleges: “That defendant did not pay and has not. paid, directly or indirectly, any part of said obligation, and has failed and refused to reimburse plaintiff in any measure for the sum so paid by plaintiff, and refuses to make contribution as the demands of justice and equity require.” And this might well be interpreted as sufficient allegation of demand to permit evidence that same was made before suit brought; but, however that may be, it is uniformly held, in cases of this character, that the right to a demand or notice will be considered as waived when all liability is denied in the answer. It is only a defective statement of a good cause of action, and the defect is cured by such denial. Woolen Co. v. McKimmon, 114 N. C., 661; Bufkins v. Eason, 112 N. C., 162; Felton v. Hales, 67 N. C., 107.

It was further objected that our statute, Revisal, sec. 2844, giving a right of action to a surety who has paid the debt against a cosurety when the principal is insolvent or out of the State, by correct interpretation refers to the time when the action is instituted by the surety, and not to the time of payment. This construction has been given the statute in Leak v. Covington, 99 N. C., 559; but, in the present case, the note was paid, at maturity, 5 August, 1909. The action was instituted on 11 September following. There is no evidence or suggestion that there •had been any change, meantime, in the pecuniary condition of the principal; in fact, the discharge in bankruptcy issued to the principal as to any and all debts existent on 7 September, 1909, would seem to be conclusive on this question, and, under the pleadings and all the facts in evidence, we are clearly of opinion that the issues are sufficiently determinative to justify and uphold the judgment.

It wás further insisted that there was evidence on part of defendant tending to show that the defendant was not in fact a cosurety with plaintiff, but only a “supplemental surety,” and that, as between the two,, the plaintiff was under.the primary liability. The position and the testimony tending to support it is sufficiently indicated from this excerpt from the examination of defendant as a witness in the cause:

“I was in Hickory when I indorsed the $2,400 note of Wheeler with Shuford. Mr. Shuford had the note when I first saw it. It had already been indorsed by Mr. Shuford when he handed it to me and asked me to indorse it. . . . He said Mr. Wheeler is all right; that he was not uneasy about him; that as I had indorsed the first notes, he wanted me to go on with -him. I agreed to indorse it with Mr. Shuford, and did.”

Q. “What was the inducement for your indorsement of this first note?” (Defendant proposed to show that his inducement to indorse the note was the request of the plaintiff an(l his assurance that there was no danger in it; that Wheeler' was perfectly all right.) ' . •

Plaintiff objects. Sustained. Defendant excepts, and this is defendant’s sixth exception.

And further: “I will state again that Shuford came to my house and said Wheeler had written to him and asked him to indorse it, and asked me to indorse it with him. I told him I had been on it by myself, for a while, and now he could go on by himself. Shuford said there was no> danger in it; that Wheeler is perfectly all right; there is no danger. I told him all right, and I indorsed it. That is about all that was said in the conversation between me and Mr. Shuford.”

Under authoritative decisions, here and elsewhere, there is nothing in this evidence, either that admitted or proposed, which tends to establish a primary liability on the part of plaintiff nor which makes or tends to make any change in the position of these parties as ordinary cosureties on the note. Atwater v. Farthing, 118 N. C., 388; Daniel v. McRea, 9 N. C., 590; Claffel v. John, 45 Col., 45.

A perusal of the entire evidence bearing on this transaction will disclose that the defendant was the original indorser for Wheeler in this indebtedness, and later the plaintiff came to share it with him, and thereby relieved him of a part at least of his obligation. There is nothing in the record to excuse or which tends to excuse defendant from contributing his just share of the joint liability, and the judgment on the verdict is therefore affirmed.

No error.