White v. Banks , 21 Ala. 705 ( 1852 )

GOLDTHWAITE, J.

— Sureties have the right to claim contribution from each other, in proportion to tbe amount paid by each upon tbe common debt; and this right is tbe result, not of any implied contract between tbe parties, but of an acknowledged principle of natural justice, which requires that those ,who voluntarily assume a common burden should bear it in equal proportions. Burge on Suretyship, 384; Story’s Equity, § 493. It*is upon this principle, that sureties are entitled to the benefit of all securities which have been taken by any one of them, to indemnify himself against the principal debt. Theobald on Principal and Surety, ch. 11, § 283; Story’s Equity, § 499. Tbis right, it is true, may be affected by circumstances which would render tbe application of tbis rule inequitable; as, ¡¿where one of tbe sureties, before joining in tbe bond, stipulated for and obtained security from the principal debtor for his sole benefit, Moore v. Moore, 4 Hawks’ Law and Equity R. 358; and upon the same principle, we think it clear, that if one surety should obtain indemnity, for a consideration paid by him, the other could not claim the benefit of such indemnity, without paying his proportion of the consideration. So also, if an offer of security is made by the principal, upon the condition that the sureties should execute a release, the refusal by one to accept the terms offered would not prevent the other from acceding to the proposition ; and in such case, although the surety refusing would have the right to demand that the proceeds of the securities received should be fairly devoted to the reduction of the common debt, sucb proceeds could in no other way inure to his benefit; and the payment, so far as the right of contribution is concerned, would be considered as made by the paying surety out of his own funds, and if it amounted to his proportion of the debt, ■it would discharge him from contribution. The offer had been made to all; and there would be no equity in allowing the party who had refused to accede to the proposition, and had paid nothing, to share equally in the indemnity purchased under such circumstances by the other surety.

In the case under consideration, the offer of partial indemnity was made by Cummings, Pitcher & Co., through the medium of the assignment, to both Banks and White. The former refused, and the latter accepted the proposition; and, upon the principle which we have stated, it is clear, that Banks would not be permitted to share equally in the indemnity which White had received, -unless the fact of the deed of assignment’s being fraudulent upon its face, as it is conceded to be, would have the effect of changing the equities which would otherwise exist between the parties.

Our first impression was, that this circumstance would have that effect, and that the refusal of Banks to become a party to a deed of this character, could not deprive him of any right of contribution, as against the other surety; but, upon more mature consideration, we are satisfied that such is not the law. The deed is only fraudulent as to creditors, but is capable of confirmation by them; and it is clearly deducible from the authorities of this State, as well as of other States, that after the deed has been executed, and the creditors who assented to its provisions have been paid from the effects assigned, the transaction, as to them, will not be disturbed. The assignee, who must, as the deed is fraudulent on its face, be regarded as having notice, cannot be held responsible, either in law or equity, after he has executed it — Wakeman v. Grover, 4 Paige 23, 42; Hazard v. Franklin, 2 Ala. 349; and if a creditor cannot, after the execution of such a deed, hold.the as-signee responsible, a fortiori the same rule of protection must apply to the parties whom the deed was intended to secure.

Under the influence of the cases cited, after White had received the proceeds of the assignment, no creditor could have pursued it with success; and the principle being settled, that tbe assignment is valid so far as it has been executed, it is too late for Banks to impeach it.

Neither are there any considerations of natural justice, which should allow Banks to participate equally in this indemnity. Although he refused to assent to the provisions of the deed, he has remained passive and inactive, realizing to a certain extent the benefits of the assignment, by the application of its proceeds to the reduction of the debt upon which he was bound as surety; and after it has been executed, and after he has received all the .benefits which can result from its execution, he claims the right to impeach it, as against his co-surety. To allow him to do so, would be contrary to those principles upon which the rights of sureties, as between themselves, depend.

Our conclusion is, that the amount received by White upon the assignment of Cummings, Pitcher & Co. must, under the circumstances disclosed by the record, be considered as his separate indemnity; and as this has been applied to the payment of the principal debt, and exceeds one half of the amount due upon the same, it follows that Banks had no right of contribution' as to him, and the ruling of the court below was therefore erroneous.

The judgment must be reversed, and the cause remanded.