Carpenter v. King

The decision was made at September term 1846.

Shaw, C. J.

There are several grounds, appearing in the oil! of exceptions, upon which the court are of opinion that a new trial must be granted. But as both parties have re quested the opinion of the court upon one aspect of the case, which we suppose embraces its true merits, and may be decisive, we have so considered it. We assume then, that King, the defendant, entered into a contract, by promissory note, jointly, or jointly and severally, with Cyrus Alden, for the payment of money to the plaintiff; that the note did not express that either was principal or surety; that in point of fact, if it is competent to prove it by evidence aliunde, King was surety for Alden, and that known to the plaintiff; that Alden gave the defendant security to indemnify him against such liability; that an action was brought and a joint judgment recovered against Alden and the defendant, which was satisfied in part only ; that the plaintiff, not intending to deceive or defraud the defendant, informed him, that the debt was paid in full, when in fact it was not so ; after which, the defendant relinquished his security, Alden died insolvent, and this action was brought against the defendant, as survivor, to recover the balance of the judgment.

This case, we think, presents three questions: 1st. Whether it is competent, when two or more have signed an obligation for the payment of money jointly, or jointly and severally, for one to show, by evidence aliunde, that he was surety for the other. 2d. Whether, if such evidence were admissible in a suit on the original contract, that contract is merged and consolidated by the judgment, so that a new debt arises, in which all must be deemed principals, and so that, in an action of debt on the judgment, it is no longer competent to go into evidence aliunde, to show that the defendant was surety. 3d. Whether, if a creditor, without any intention to deceive or mislead a surety, informs him that the debt is paid by the principal, and the surety afterwards relinquishes his security, this is a good defence in a suit against the surety.

1. It appears to us very clear, that the fact may be proved, by any competent evidence, that, in a contract executed by two, one was principal and onp surety, and that it is not necessary that it" should so appear by the contract. It is a fact collateral to the contract, and no part of it. It may .appear in the body of the instrument, or the term “ principal ” may be annexed to the signature of the one, and “ surety ” to that of the other. In that case, the fact and notice of it accompany the note or obligation, into whose hands soever the same may come. Still it is a collateral fact, showing the relation in which the promisors stand to each other. Baker v. Briggs, 8 Pick. 122. Harris v. Brooks, 21 Pick. 195. In the last case, the point was directly decided. So, in order to ascertain the relation of the promisors to each other, with a view to a remedy, when one pays the whole, or more than an aliquot part. These remedies are not secured by the original contract, and form no part of it; they are given by law, and do not depend on the fact of their having united in signing the instrument. The instrument is resorted to for the purpose of showing that both were bound. Therefore, where parties were sureties, on different bonds, for the same debt or duty, the law gave a remedy for contribution, in the same manner as if they had united in signing the same bond. Deering v. Earl of Winchelsea, 2 Bos. & Pul. 270. So where two or more have signed a note, not designating either as principal or surety, prima facie both are principals, and if either pay the whole, he shall have contribution. But it may be always shown by evidence aliunde, as between themselves, that the note was made wholly for the accommodation of one, showing him to be the principal debtor. If he pay the whole, he has no contribution; if the other pay the whole, he shall have an action for money paid, for the whole amount. Austin v. Boyd, 24 Pick. 64.

2. Nor do we think that any change, in this respect, is made in the rights of the parties, hy the judgment. The proof offered does not contradict the judgment. The original cause of action, as between the parties, is merged by a judgment, because the judgment itself is a security of a higher nature. But when it becomes necessary to inquire and ascertain on what contract a judgment was rendered, it may be done. Wyman v. Mitchell, 1 Cow. 316. There is the same reason for admitting evidence aliunde, to show the relations of parties who are joint debtors in a judgment, as in a contract. Prima facie, they are equally as well as jointly liable. Take the common case of a bond, where on the face of it one is principal and the other surety, yet the judgment is joint. By the record, apparently, both are principal debtors. If the grounds of the judgment could not be inquired into, so as to rebut the presumption of an equal liability, the surety, in case of paying the judgment, would have no remedy over against his principal for money paid; and in case the principal should pay it, he would have an action against his own surety for contribution. If it can be inquired into, to adjust the relations of the debtors to each other, it can be to determine the relation of the creditor to each debtor,' where the fact becomes material to the respective rights. Suppose the creditor himself holds collateral security of the principal; it has been often decided that the surety is entitled to the benefit of it, and if the creditor voluntarily surrenders it, he discharges the surety wholly or pro tanto. Hayes v. Ward, 4 Johns. Ch. 123. Would not this principle apply, as well after a joint judgment against the debtors as before ? And yet it would involve the necessity of an inquiry into the judgment, to show that it was rendered on a contract in which one was principal and the other surety. The judgment is technically a security of a higher nature, but it is a security for the same debt or duty, as the contract on which it is founded. Davis v. Maynard, 9 Mass. 242. So if a judgment be rendered on several demands, for some of which a third person is liable, but not for all, the fact may be shown by evidence aliunde. Stedman v. Eveleth, 6 Met. 114.

3. In regard to the other point, we consider it well settled, by numerous authorities, that when a creditor, who knows that one debtor is a surety, gives him notice that the debt is paid by the principal, and such debtor, in consequence, changes his situation, as by surrendering security, or forbearing to obtain security when he might, or otherwise suffers loss by it, he is discharged. And although the debt has not been paid, and such notice was given by mistake, and without any fraudulent design, it is a mistake made at his own peril, and he shall rather bear the loss than throw it upon one who has been misled by it. Baker v. Briggs, 8 Pick. 122. Harris v. Brooks, 21 Pick. 195. Greenl. on Ev. §§ 207, 212. Dewey v. Field, 4 Met. 381. In general, that which would afford a surety a remedy in equity against his creditor, by injunction, is a good defence at law, when suit is against the surety alone. King v. Baldwin, 2 Johns. Ch. 554, and 17 Johns. 384. A doubt was suggested in Baker v. Briggs, 8 Pick. 128, whether the surety could avail himself, in any form, of such matter of defence, in a joint suit against him and the principal; a doubt which has not been resolved, that we are aware of, by any subsequent judicial decision. Here the point does not arise, because the suit is against the surety alone, as survivor.

Verdict set aside, and a new trial granted