Randolph v. Billing , 115 Ala. 682 ( 1896 )

HEAD, J.

This is a bill by F. M. Billing against F. C. Randolph, Lombard Loan and Investment Company, Lucy E. Prescott and Charles P. Nunn, to enforce subrogation to the statutory lien of the State upon property of Randolph, mentioned in the bill, arising from an alleged defalcation of Randolph, as judge of probate of Montgomery county, the amount of which was paid by the complainant as a surety of Randolph.

The original bill was filed December 9, 1895, and averred that on the 22d day of August, 1886, said Ran'dolph was elected judge aforesaid; that on July 31, 1891, he executed an official bond in the sum of $25,000, complainant being one of the sureties thereon; that while acting under said bond, Randolph became a defaulter to the State for moneys received by virtue of his office in the sum of $1,500 ; that on August 1, 1895, the State brought a suit upon said bond against complainant and T. J. Williams, as sureties thereon, in the circuit court of Montgomery county, and on November 30, 1895, a judgment was rendered in said suit against the defendants therein for said sum, and on December 6, 1895, complainant paid the amount of said judgment and costs, amounting in all to $1,400. The bill then avers the ownership of Randolph of the land described in the bill, at the same time of the execution of said bond, and proceeds further to aver that, on May 1,1890, Randolph and his wife executed a mortgage on said land to the said- Lombard Loan and Investment Company to secure a loan to him made contemporaneously with the execution of the mortgage ; that the mortgage purported to have been transferred to Lucy E. Prescott, and on October 21, 1895, 'it was foreclosed, under power of sale therein, and Charles P. Nunn became the purchaser. It is averred that said Lucy E. Prescott and Charles P. Nunn are still interested in said property in a manner unknown to complainant.

On April 13, 1896, the complainant filed an amendment to said bill, adding thereto additional paragraphs, in which it was averred that Randolph, on August 12, 1886, executed an official bond in the penalty of $25,000 with H. C. Moses, W. D. Brown and C. T. Pollard as sureties thereon ; that he continued in office for the' full term of six years thereunder. It is further averred that, on July 26, 1891, he was required by the grand jury to execute an additional bond, and thereupon he executed, as an additional bond, the bond set out in the orignal bill upon which the complainant and Williams were sureties ; that on the same day of the suit against complainant, the State of Alabama instituted suit against W. D. Brown and O. T. Pollard, as sureties on said first bond. It is then repeated that complainant paid the judgment rendered against himself, stated in the original bill, and is averred further that the State of Alabama, through its legally constituted authorities, has agreed to transfer to complainant the lien of the State which it held, by virtue of the execution of said bond, upon the said property of Randolph. It is next averred that said Brown paid the judgment recovered against him, amounting to $1,405, with cost of suit, on the 30th day of November, and on the same day filed his bill in this court to be subrogated to the lien of the State on said property, which bill is now pending. The prayer of the amended bill is that it be decreed that the execution of said bonds created a lien on the property described in the bill which operated a mortgage on the property enforceable in this court, etc.

There was a subsequent amendment alleging that the judgment paid by Brown is the sole recovery upon the first bond; that there are no suits pending on the first bond, and complainant is not informed that there is any other claim against it. Said Lucy E. Prescott and Charles P. Nunn appeal from the decree of the chancellor overruling their demurrers to the bill as amended.

Section 265 of the Code provides that the bond of the judge of the probate court ***** is a lien upon the property of the principal from the date of its execution.

Sections 279 et seq. provide for the requirement and giving of additional bonds by certain officers, including judges of probate, which must be in the same penalty, and payable, conditioned, approved and filed in the same office, as the first official bond. Section 284 provides that: “Every such additional bond is of like force and obligation on the principal and sureties thereon, from time of its approval, and subject to the same remedies, as the first official bond.” Section 285 provides that the giving of the additional bond does not discharge any bond previously executed, “but each remains of the same force and obligation as if the additional bond had not been given ; and any person aggrieved can have his remedy upon either or all of such bonds, in the same or in separate proceedings.” Section 268 secures the right of contribution among the several securities on the several bonds, treating all as co-sureties, with the rights and remedies among themselves of co-sureties.

The demurrers aptly raise the question whether the lien of the State, which arose out of the execution of the first bond, which was anterior to the mortgage in question, (which lien, confessedly, attached to the property now involved, paramount to the mortgage lien, as security to the State for the amount of defalcation which complainant was put to pay), can, equitably, be made the basis of the right of subrogation in favor of this complainant, as against the mortgagee and those claiming under it, whose mortgage was executed before the execution of the additional bond upon which complainant first became a surety. This right of subrogation is a creature of the court of equity, intended for the accomplishment of right and justice ; and it is bound by no arbitrary, rigid rules of law, which, in any case, might work wrong or injustice. The question, then, before us is determinable by those principles of equity which shall be found most conservative of justice to the parties.

The mortgage out of the way, there can be no doubt that the complainant, disch arging, by virtue of his obligations as a surety, the lien which the State had upon the property of Randolph, became entitled to enforce the State’s lien, for his own use, under the principle of subrogation now invoked. The State held, as against Randolph and any one deriving title from him after the execution of' the first bond, a lien for the defalcation, under that bond ; and under the additional bond,- also, as against Randolph and anyone deriving title from him after the execution of such additional bond ; and when complainant paid for a default occurring after he became bound as a surety his equity against them became clear.

But complainant rested under none of- the obligations of the first bond. His bond had no retroactive effect. Watts v. Eufaula National Bank, 76 Ala. 474. He became liable only for defaults occurring subsequent to the execution of the additional'bond. Before he assumed this obligation, and of course, before the State had, or could have had, any lien upon the property of Randolph, perfect or inchoate, under and by virtue of the additional bond, the mortgage under which appellants claim was executed by Randolph.

It is'a sound rule of law, and equity as well, that the rights of persons arising out of their acts, must be judged by the facts and circumstances comprising and surrounding the acts when performed, considered in the light of the existing rules of law or equity applicable to them. In the absence of some intervening equity or positive rule of law which postpones or estops a party in the assertion of a right, no subsequent, voluntary act of other parties will be suffered to impair in the slightest degree a right fairly acquired under conditions of law and fact existing at the time the same was acquired. On May 1st, 1890, the State, by virtue of a bond executed by Randolph, as principal, and Moses, Brown, and Pollard as sureties, on August 22d, 1886, preceding, had an inchoate lien upon the property of Randolph to secure any default on his part, as judge of probate, which might occur during his term of office, which would expire in November, 1892. This bond was the sole basis and cause of the lien, then having any existence. By it alone, did the law measure the existing rights of all parties connected with, or growing out of it. A bond executed by Randolph, as principal, and complainant and Williams as sureties, on July 31st, 1891, having by law no retroactive effect, could, of course, exert no influence, in any manner or form, upon independent transactions occurring on May 1st, 1890 ; nor could it be looked to, or invoked, in the px’osecution of any supposed legal or equitable remedy which would have the effect of impairing rights growing out of those transactions, or which would, in any manner, subject the parties to such transactions, to remedies, suits or causes of action of any kind, which were not legally incident to, or involved in such transactions, by reason of facts or conditions then existing, and with reference to which the parties are presumed to have contracted. On that day, May 1st, 1890, the Lombard Loan and Investment Co. loaned its money to Randolph, and took from him the mortgage security. This security it acquired subject to the lien of the State then existing. It acquired it subject to all equitable rights of subrogation which might arise in favor of Moses, Brown and Pollard, by virtue of their being sureties on the then existing bond of Randolph. The mortgage contract was entered into without reference to any lien in favor of the State, to be created by any additional bond to be after-wards executed, and without reference to any right of subrogation, or other right or remedy of complainant, which might spring from any bond he might afterwards execute, as a surety for Randolph. To subject the mortgage now to the remedy of subrogation which the complainant seeks, would lie to impose upon it burdens it never assumed, manifestly prejudicial to the rights secured by the contract.

The fact that the State has agreed to transfer its lien to complainant, even if it appeared that the agreement was made before the original bill was filed, does not affect the result. It adds nothing to complainant’s supposed equity. The debt to the State was paid. Its lien was discharged. If complainant had no equity, by succession, under the doctrine of subrogation, the State could confer none by an attempt to transfer a debt that was paid and a lien that was discharged.

We are of opinion there is no equity in the bill, and that the demurrers ought to have been sustained; and a decree will be here rendered to that effect, with leave to the complainant to amend within such time as the chancellor may allow.

Reversed, rendered and remanded.