Cannon v. Connaway

The Chancellor.

The above statement of facts, although long and minute, seems to be necessary to a proper determination of the questions in controversy between the parties to this suit.

Are Gonnaway and Willen, as cosureties with the plaintiffs of Robert H. Kollock, administrator of Joseph A. Kollock, deceased, who made default as such administrator in the sum $2,500, bound to account for the amounts they respectively received under the several bonds of indemnity executed in their favor by the said Robert H. Kollock, and the judgments recovered and the executions thereon issued; and are they bound to contribute an equal amount, respectively, with the other respective sureties, after the application of the monfey so received by them under their several indemnities, to the payment of the balance of the said sum of $2,500 ?

*565The money so received by them under their several indemnities was not their individual money, but was money received by them arising from the sale of the real estate of Robert H. Kollock. If they have paid only the amount so received towards the reimbursement of the amount of the defalcation of Robert H. Kollock, as administrator of his father’s personal estate, they have contributed nothing of their own individual funds towards the satisfaction of the joint and several bonds executed by all the sureties to the legal distributees of the personal estate of the. deceased, and it is not alleged or proved in this case that either of the defendants has paid, in satisfaction of said defalcation, any greater sum than he received under his indemnity. Their cosureties, it is proved, have paid each an equal share of the said sum of $2,500, and the interest thereon, without any deduction of the amount received by the defendants under their indemnity,—not having shared in the benefits of said indemnities. The whole amount of the -defalcation has been paid.

Shall the defendants be decreed to pay to their cosureties a sum of money sufficient to make all the sureties in the administration bond of Robert II. Kollock equal as to the amount of their respective payments, out of their own individual moneys, of the defalcation so as aforesaid by the said Robert II. Kollock ?

This depends upon well established principles of equity. Equality is equity.

A surety cannot, at the time he signs an obligation with liis cosureties, take an indemnity from the principal which shall, inure for his sole benefit.

If an indemnity be so taken, it shall inure to the benefit of all the sureties; and if that benefit be denied and refused, equity will afford relief. Such relief does not arise from any contract between the sureties, but from principles of equality, or from equitable considerations which govern' the relation of sureties, and from the fact that their interest is common as well as their burdens.

It matters not whether the taking of the several indemni*566ties by the defendants was known to the other sureties at the time they signed the bond, which knowledge on their part, however, is not proved.

One surety may agree that the principal may give a separate indemnity to a cosurety for his individual benefit, to induce such cosurety to become such in a bond or obligation; but without such consent by the surety he will be entitled equally to share the indemnity. If such consent be denied it must be proved. The taking of an indemnity secretly for the benefit of one or a part of the sureties is a violation of good faith.

All the sureties believe, and have a right to believe, that all who sign as sureties are equally answerable for the burdens and liabilities which suretyship imposes.

The very instrument signed warrants the belief of a common obligation; and any act done by a cosurety, intended to defeat the just expectations, of another, and to impose on that other surety greater liabilities than himself in the surety-ship, is a fraud in equity, and, if permitted to be successful, the principle which lies at the very basis of suretyship would be destroyed.

These principles are so fair and just in themselves that I am unable to perceive how they can be doubted. I never heard .it doubted before in any case, if one cosurety take security from his principal for his proportion of the burden, or for the whole, that the other’ cosureties should share the benefit of it.

' “Sureties,” says Story (1 Eq..Jur. § 499), “are not only entitled to contribution from each other for moneys paid in discharge of their joint liability for the principal, but they are also entitled to the benefit of all securities which have been taken by any one of them to indemnify himself against such liabilities.”

' It was contended in the argument in this cause that the indemnity which Connaway took was executed and delivered to him before he became security. The proof as to the exact moment when he took it does not appear. This fact is man*567ifest,—that he took it with the intention of becoming one of the sureties, if the indemnity should be given.

If not taken after the bond was signed by him, it was taken on the same day and immediately before signing the bond; and when he signed with his cosureties he did not disclose the fact that he then possessed his personal indemnity.

Under such circumstances all the other cosureties, relying upon the good faith, not only of Robert H. Kollock, but of all his sureties in the bond, trusted—as said by Henderson, J., in Moore v. Moore, 4 Hawks, 358—apparently to the .same laws of indemnity and to the united exertions of each other to avoid harm severally.

What would have been the consequence of permitting the defendants to take an indemnity, the benefits of which should inure only to themselves, and from the benefit in which their cosureties should be excluded ? If such should be the operation and effect of the indemnities taken by them, then the taking of them lessened the ability of Robert H. Kollock to indemnify the other sureties.

The same principles I have announced would equally -apply if it was distinctly proved that Connaway’s indemnity was taken before he signed the bond. The time of signing the bond is immaterial. The equality of the sureties will not thereby be affected; they all have equal equities which are enforceable in this court.

It appearing to me, from the proofs in the cause, that the plaintiffs have paid in different degrees in excess of their just proportions of the said sum of $2,500, the amount as aforesaid for which Robert H. Kollock made default of payment, I shall decree that the defendants reimburse the said sureties •severally, in proportion, out of the money which they received •under their several indemnities.

Let a decree be drawn accordingly.