Daniel v. Joyner, 38 N.C. 513, 3 Ired. Eq. 513 (1845)

June 1845 · Supreme Court of North Carolina

38 N.C. 513, 3 Ired. Eq. 513

WILLIAM W. DANIEL vs. ANDREW JOYNER & AL.

Where A. B. C. D. E. and P. were sureties on an administration iioncl, •judgment was rfecovered at law against them and their principal, and ■an'd B. had the judgment assigned for their benefit — and then the principal' and the other Sureties filed an injunction, which was dissolved and jadg-ment rendered In the Court oí Equity against all the plaintiffs in the injunction bond and their sureties — Held, that A. & B., the sureties, who did not join in the'bill for an injunction, were not bound to contribution to the other sureties, parties to the injunction bill, though A. & B. were original sureties for the debt; because, the principal having joined in the'ihjunction suit, the otheré who were united with him, we'rfe his sureties in that suit, to the exclusion of A. & B.

Where Á., being the principal in' a bond, gave a deed in trust, one of the provisions of which was; that the trustee should “save harmfcss B.” who was1 his snrety in the bond, and another that the trustee, “ whenever required by the creditors of A. or by any surety, who may be threatened with loss by' reason of his suretyship, shall proceed to sell sufficient property to answer the ends of this deed in trust,Held that the trustee was not bound to wait until the surety was aetually damnified, by having been compelled to pay the money, but that it was the duty oi the trustee to relieve him from his1 responsibility, whenever he had the funds in hand for that purpose.

This was a bill for a perpetual injunction. The Court of Equity of Halifax County, in which the bill was pending, at the Spring Term, 1845, his Honor Judge Dick presiding, ordered the injunction to be dissolved, and from this order, by leave of the'Court, the plaintiff appealed. At the same term-by consent of the parties, the whole casé' was set for hearing upon the bill, answers and exhibits, and transmitted to the Supreme Court.

The following facts appeared in the ca'Se:

James Halliday died intestate, and his widow Anne administered oh his estafe, and gatm bond in the sum' of $100,600)' with Andrew Joyner, Michael Ferrall, Redding J. Hawkins, Robert C.- Bond, James Simmons, Joseph L. Simmons, John G. Purnell, George W. Gary, and James Frazier, her sureties. Afterwards, the said Hawkins and Mrs. Hallidayitifeimarried, atffi he wasted a very considerable port of the estáte. Edward Hall, a creditor of the intestate, brought suit on the administration bond against Hawkins and his wife, and against the sureties and in May, 1843, recovered a judgment thereon for $6,6’49, with interest and costs, as the damages for the breach of the bond. Jn October, 1843, a bill was filed in the Court of Equity against Hall, and Joyner, and Ferrall, by Hawkins and his wife, and the other sis sureties, on the administration bond, alleging that Joyner and Ferrall had procured an assignment of the Said judgment to some person in trust for them, and that they were the equitable' owners of if, and' that they had caused Redding J. Hawkins to be arrested on a capias ad satisfaciendurri issued on the said judgment, andhad then discharged' him from arrest; whereby the said judgment had been satisfied in law. For that and other reasons therein Set forth, it prayed an injunction against further proceeding at law on the judgment by Hall or by Joyner and Ferrall; and the injunction was accordingly granted.- A-n injunction bond was then entered into by Hawkins, Bond,- J'ames Sim toons, Joseph E. Simmons, Purnell, Gary and Fraser, as principals, and by William W. Daniel, the present plaintiff, and one Nathaniel Edwards, as their sureties.- The injunction was subsequently dissolved, and judgment rendered thereon for the amount of the recovery at law, and the interest and costs in Equity. Joyner and Ferrall sued out in the name of Hall a fieri facias from the Court of Equity, which was levied on the property of George W. Gary, sufficient to-satisfy the debt,, but the sheriff left it in- Gary’s possession and did not-sell it. Gary then filed a bill against Joyner and Ferrall, and-obtained the- usual preliminary injunction against raising a larger sum out of his property on the judgment than $1,050; and then Joynét and' Ferrall directed'the Sheriff to levy the residue of the debt on an alias fieri facias from the property of the plaintiff, Daniel. Edwards, the co-surety with the plaintiff,, had beconle insolvent and left the State. Hawkins and Frazier were' insolvent- and possessed no property,- and Purnell had also left the State, and had no property here. Before he went away, however, he deposited in October, 1844, with Joyner. as a security for his proportion of the said debt, a bond on some other person for $1,319 12 ; on which the sum of $800 was collected, October 21st, 1844. In February, 1844, both James and Joseph L. Simmons became insolvent, and made assignments to Mark H. Pettway of considerable property in trust to sell, and among other things,' “to save harmless William W,. Daniel, and Nathaniel Edwards, sureties for the said Joseph L- and others, in an injunction bond in the suit in Equity in Halifax, R. J. Hawkins and others, against Edward Hall and others.” The deed in another part of it is thus expressed; “And in order to accomplish the objects of this conveyance, the said Mark H. Pettway shall, whenever required by .any of the creditors of the said H. or by any of the sureties, who may be threatened with loss by reason of his surety-ship, proceed to sell sufficient property to answer the ends of this deed of trust.” Pettway sold all the estates conveyed to him, and the proceeds are insufficient to pay the debts, The present plaintiff applied to him to pay to his relief on the execution now served on the plaintiff's property, the parts of the Messrs Simmons as sureties, or such proportion thereof as this debt is entitled to, respect being had to the other debts secured by the deeds. But Pettway declined applying any thing, as the other creditors secured in the deed insisted, that the trust was not to secure this debt, but specially to save the plaintiff harmless, and that no part of the fund was applica» ble to that purpose until the plaintiff shall have suffered, and that he will not suffer at all, inasmuch as Gary is also bound to indemnify him, and he is able to do so. 1

Joyner, Simmons, and the other sureties in the administration bond, filed a bill in the Court of Equity against Hawkins and his wife, in which there was a decree that the defendant should bring into court a number of bonds and securities for money belonging to the estate of the intestate Halliday, amounting to about $14,000, and they were placed in the hands of Joyner as a receiver, to be collected and applied in the pay-meat of the debts, and in due course of administration.

Present bib was filed against Pettway, Joyner, Ferrall, Bond and Gary, April 5th 1845, and besides setting forth the matterg before stated, charges that Robert C. Bond had assigned to Joyner .a bond of the Raleigh and Gaston Rail Road Company fo.r $1,000, as a pledge, for the security for his part of this judgment.

And the bill insists, that Joyner and Ferrall are bound to .contribute their equal share-of the recovery by Hall, now be.longing to them, with the other solvent sureties, after applying ■thereto such part of the effects now in the hands of Joyner, .as receiver, as is properly applicable to the same.

The prayer is, that the necessary accounts may be taken in ..order to ascertain the funds in Joyner’s hands as a receiver, .and the proportion thereof that ought to be applied to this debt, and that sixch application may be,decreed ; that the sums for .which each of the sureties for Mrs. Halliday’s administration, (including Joyner and Ferrall, and also James and Joseph L. Simmons, and Bond and Gary) .may be liable on this debt, be then ascertained, and that Joyner and Ferrall may give credit thereon for their proportion thereof as two of the original sureties, and Pettway pay out of the. trust funds in his hands the proportions thereof which fall on James Simmons .and Joseph L. Simmons, as two of the original sureties, and .also such sums as that fund maybe liable to pay as an indemnity to the plaintiff as the surety of the Messrs. Simmons and .others, in the injunction bond;; and that Joyner and Ferrall .account for the funds in their hands, derived from Purnell and Bond, as aforesaid,; and that Bond and Gary may be required to pay their said proportions of the said debt; .and fully to indemnify the plaintiff as their surety in the injunction bond, by paying what may be found due on the debt, after applying a due share of the Simmons trust fund. And the prayer further is for an injunction in the mean time.

The answer of Pettway submits the construction of the deeds of trust to the court, and to dispose of the fund under jibe directions of the court. He says it cannot be yet asceriained what debts are chargeable upon the fund, they are very uncertain, and the accounts are now in the Master’s office in another cause.

The answer of Joyner aud Ferrall states, that, being restrained by an injunction from proceeding against Gary, for more than $1,050, and the Messrs Simmons having assigned their estates, and the other defendants being insolvent, (except R. C. Bond) they had no alternative but to have their execution served on the plaintiffs property for the residue of the debt. As to the said Bond, the defendant Joyner answers, that in February, 1843, Bond placed in his hands a Raleigh and Gaston Rail Road bond for $1,000, as an indemnity to him and Pettway, for being his sureties for $250 to the bank, and for $247 50 to one Mabry, and to one Summrell for $442; that Bond paid the debt to the Bank, but the others remain unpaid; and that last winter, the said Bond requested Joyner to pay his proportion of the debt to Hall, proposing to pledge fhe residue of the Rail Road bond as a security, but that he,. Joyner, declined it, as the whole of his visible property had been conveyed in trust for honest purposes in November, 1,841.

The defendant Joyner further admits, that he was appointed receiver, and took into his hands the securities for debts as before mentioned, to be applied for the equal benefit of all the sureties for the administration to discharge claims on the estate for which they were liable: that he has not collected a large part of the debts, though he has been diligent in his efforts to do so, and that the sums which have been collected have been duly applied towards the payment of a judgment obtained on the administration bond by the only child of the intestate, for $6,070 and costs, for her distributive share of the estate, and towards the payment of a judgment obtained by John Y. Mason, a creditor of the intestate, on the same bond for $3,243 50-; and that those two judgments have large.balances still due on them, and the payments on them go in exoneration of the sureties for the administration equally.

These defendants insist that as between them and the obiigorg in (he injunction bond, including the plaintiff as their Sl3rety> *hey are not to contribute any part of the stun originally recovered by Hall.

They admit that the judgment was entitled to a credit for the sum of $800 collected on the bond received from Purnell, and they say they had directed the Sheriff to give credit therefor, and that the plaintiff could have been informed thereof, if he had applied to either of them or to the Sheriff.

Upon the coming in of the answers, and on the motion of Joyner and Ferrall, the injunction (which had been granted on the bill) was dissolved, except as to the above mentioned sum of $800, and the plaintiff was allowed to appeal. Subsequently in the term, the parties set the cause down for hearing on the bill, answers, and the exhibits of the deeds of trust made by the two Simmons, and it was transferred to this court.

Bragg and Iredell for the plaintiff.

Badger and B. F. Moore for the defendants.

Ruffin, C. J.

There are only two questions of any consequence in these causes. The one is, whether Joyner and Ferrall, who were two of the original sureties for Mrs. Hawkins’ administration, remain liable to contribute to the payment of this judgment, in exoneration of their original co-sureties, or of the plaintiff, as one liable to their responsibilities and entitled to their rights. Upon that point, we have not much to add to what was said on it in the opinion given in Hawkins v. Hall, 3 Ired, Eq. 880. It appears distinctly now upon the present bill, that Joyner and Ferrall are the owners of the judgment at law; Mr. Hall having assigned it to a trustee for them. The object, then, in the former equity cause, was to obtain a perpetual injunction against the judgment, upon the ground, that by the acts of Joyner and Ferrall, in conducting their execution against the body of Hawkins, the debt was satisfied, and therefore those two persons could not equitably raise their shares from the co-sureties, who Were plaintiffs in that suit, nor eten raise the whole from the principal debtor, Hawkins. We need not perplex ourselves' with considering the extent of the rights and obligations of the parties to that bill and of the sureties for the injunction, if it had been a bill by one portion of the sureties against another merely. For that was not the case. Hawkins was one of the plaintiffs in the bill, and, besides occupying the character of one of the co-sureties, he filled that of principal; having married the administratrix,- and in her right got the possession of the assets, and then wasted them. Unquestionably, then, he had no right to contribution from the original co-1 sureties; fvho were the defendants, nor from any who united with him in the suit. But upon a dissolution of the injunction, if he had been the sole plaintiff, the defendants in equity would have had a right to a decree against him and his sureties on the injunction bond for the whole debt, without abatement. Now, because, the' other persons, who were also sureties in the administration bond, happened or chose to join with him in that suit, it did not release him from the obligation to pay the whole, or impair the rights the defendants would have had against him, if he had sued alone. On the' contrary,- by their joining in a common suit and injunction bond, each and all of those plaintiffs undertook that what may be decreed against each or any of them, shall be paid by him or them, against whom it is decreed, or that the others will pay it. Therefore each one of the obligors in the injunction bond is Surety for each and all of the others; and, in respect to this debt, they, severally and as a body, engage with Joyneí and Ferrall, that they will make the liability of any one and each of the plaintiffs in the suit a common one upon them all. They sink their character of co-sureties with Joyner and Ferrall for Mrs. Hawkins, and assume the new one of joint and several sureties for Hawkins himself to Joyner and Ferrall. Therefore those' of the sureties, who joined in the bond with Hawkins for the injunction between them and the other two original sureties, Joyner and Ferrall, thereby made this debt their own, because it was exclusively a debt of Hawkins those persons, and he was bound to pay them the whole tii it without abatement. They were endeavoring to aid Hawkins in throwing the whole loss of it upo'n Joyner and Ferrall; ancj jn (j0¡ng so they took the risk, in case of failure, of the whole loss falling on themselves, as it has done.

We are cle&Hy of opinion, that the plaintiff’s construction 'of the deeds of trust to Pettway is the proper one. At law a party, who claims under an indemnity, must necessarily, shew that he has been damnified ; for, until that, he has no right to the money, and the law will not trust him with the application of it, as he might not make it, and then the original debtor would still be bound for the demand. But there is no such impediment to the action of the Court of Equity, for here the application of the money to its ultimate destination may, under the direction of the court, be immediate, without passing through the hands of the party indemnified. . And as it is manifestly jnst, that one, who holds a fund for the indemnity of another, should not keep it back to the prejudice of the other, and to serve no good purpose of the owner of the fund,- or of the party entitled to the indemnity, there can be no plainer equity, than that which compels him to apply it promptly.The trust is to be executed in the spirit in which it was created, for the equal benefit of all the cestui qu'e trusts-, and not So, by sticking to the letter, as to exclude ofie, merely to enlarge the dividend of another. It is true, that Gary and Simmons, and all the other plaintiffs in the former suit, who gave the injunction bond, are principals to the present plaintifF, who became the surety of all bf them jointly ; and therefore he Could look to Gary alone. But he could not do so in conscience, any more than he could claim the whole indemnity from Simmons. It would not be right and equitable to act so by either; hut he' is properly endeavoring to' obtain from each a contribution precisely in the same proportion, in which in ’equity they would be decreed to pay the debt, as between themselves, tailing into consideration the insolvency of the principal, Hawkins-, and some of the co-plaintiffs. Still there will probably-bé a deficiency in the assets of the' Simmons’ to pay their shares, which will, of course, fall on Gary, who is bound, as long as he has means, to protect the plaintiff from ultimate loss. We should thus have thought, if the question was upon the first provision of the deeds, “ to save W. W. Daniel harmless.” But the maker of the deed seemed to be aware of the keen casuistry of losing creditors and sureties, and to remove all doubt of his intention, he expressly provides for the relief of those sureties, “ tvho may be threatened with loss.” Therefore the proper proportion of the trust fund, to which the plaintiff would be entitled against Simmons, if he' had paid the debt, must be ascertained, and the trustee direct2' ed to' apply it in exoneration of the plaintiff.

We do not perceive any misapplication of the funds in the' hands of Joyner, as receiver, according to his answer, inas-’ much as the debts, to which he has applied that money, are' the common debts of all the sureties, whereas we have seen that the present debt, as far as Joyner and Ferrall are concerned, has been made the separate debt of the other parties, though’ among themselves, as a portion of the original sureties, it is still to be regarded as the debt bf the principal. But be that as it may, this fluid furnished no reason for keeping up the injunction, for two reasons. One is, that Joyner is to admin2 ister it under the direction of the court, which appointed him to the office of receiver; and there the plaintiff’s' application will be properly made. The other is, that the answer states there is nothing in hand from it, and the defendants ought not to be tied up until it can be collected. Let the plaintiff' pay the debt now, as it is due; and if he be entitled to any thing from the receiver, when the fund comes into court, he will get his share. The same may be said in respect to the residue of the fund received from Purnell. When in hand, it must be applied. Of course the plaintiff is entitled to his decree against Gary and Bond; and the extent of the decree against the former will depend upon the res'uít of an inquiry, (if asked for) as to Bond’s ability to discharge his own share of the iia-» bility.

Our opinion on the appeal from the order dissolving the injunction is, that it is not erroneous ; and upon the hearing, the decree is to be according to the directions herein given.

Per Curiam, Decree accordingly.