State v. Langford , 86 S.C. 217 ( 1910 )

OPINION. July 4, 1910. The opinion of the Court was delivered by (after stating the facts). The first question that will be considered is whether there was error on the part of his Honor, the Circuit Judge, in ruling that the defense interposed by the defendant, Langford, alleging that since this action was commenced, the claim of the plaintiff had been discharged by payment, could not be sustained. The contention of the appellant is predicated upon the theory that the agreement of the plaintiff to release the defendant, National Surety Company, was the sole consideration upon which the agreement was made. Not only did the Surety Company pay the $20,000, but it also agreed "that on the recovery of judgment against J.C. Langford, and its assignment to the Surety Company, said Surety Company shall, at its own expense, but with the assistance and full co-operation of the State and its associates, take such steps and file such proceedings as it may be advised might result in recovery of the whole or part of said judgment from the said Langford, or any other parties liable thereon, or by reason of any matters or transactions connected therewith."

It also agreed "that upon said recovery, if any, the moneys arising therefrom shall be disposed of as follows: (a) To the reasonable costs, expenses and professional compensation therein; (b) next, to the payment of the State of the excess over $20,000 of its recovery upon the judgment against J.C. Langford, and up to $24,171.02, the amount demanded in the suit pending on the bonds; (c) the balance to the National Surety Co.," thus showing that the plaintiff had a beneficial interest in the proceeds, arising from the enforcement of the judgment, and that under the assignment thereof, the Surety Company would become a trustee for the plaintiff to the extent of its interest. The agreement entered into between the plaintiff and the Surety Company was executory in its nature, and it clearly appears upon the face thereof, that it was not intended that the payment of the $20,000 should either discharge Langford or the Surety Company from further liability, unless it complied with the conditions of the contract as to the enforcement of the judgment for the benefit of the plaintiff. In the case of Massey v. Brown, 4 S.C. 85, the principle was announced, that although the general rule is that a release of one of several obligors discharges the others, yet equity will restrain the general effect of the release, according to the intent of the parties, and that such intent may be shown, even by parol evidence. In that case the Court uses the following language:

"Equity construes a release according to the intention of the parties, and will give it no operation beyond the design or the purpose it was intended to accomplish. The principle is so fully enforced by Chancellor Kent, in Kirby v.Taylor, 6 John. Ch., 242, that any further reference to authority in support of the rule is unnecessary. It is certainly in strict consistency with the doctrine of equity, which always seeks, if possible, to give effect to the intent which induced the act, if it can be ascertained without a violation of the rules of law. We cannot, however, refrain, because they appear so pertinent to the case before us, from referring in the language of the chancellor, to some of the authorities on which he rested his opinion: Lord Hardwicke said, in the case of Cole v. Gibson, 1 Ves., 503, ``That it was common in equity to restrain a general release to what was under consideration at the time of giving it.' And again, in Ramsden v. Hitton, 2 Ves., 304, he observed, ``That if a release be given on a particular consideration recited, notwithstanding that the release concludes with general words, yet the law, in order to prevent such surprise, will construe it to relate to the particular matter recited, which was under the contemplation of the parties, and intended to be released.'"

The Court thus states the rule in Brown v. Whittington, 33 Oregon, 300: "It is insisted at the outset that the plaintiffs cannot recover, because the complaint admits that the note upon which judgment against Whittington and Shull was recovered by Brown, was paid in full by Shull before the commencement of the action thereon. But the contention is not supported either by the allegations or the proof. The complaint alleges, that prior to the commencement of the action, Shull gave Brown sufficient money to satisfy the note, with the understanding and agreement that it should not be considered as payment, but that Brown should prosecute an action thereon in his own name, at the expense and for the use and benefit of Shull; and the testimony is to the same effect. This was no more than Shull could have compelled Brown to do. Mr. Brandt says: ``It is settled by a long-continued and unvarying current of authorities that the surety may, by a suit in chancery, after the debt becomes due, and before he pays it, compel the creditor to proceed to collect the debt from the principal, provided he indemnify the creditor against loss from a fruitless suit against the principal." 1 Brandt on Sur. (2 ed.), 528; Carson v. Richardson, 3 McC., 528; Potts v. Richardson, 2 Bail., 15;Thomson v. Palmer, 3 Rich. Eq., 139; Wilson v. Wright, 7 Rich. Eq., 399; Kinard v. Baird, 20 S.C. 377.

The second defense set up by Langford is as follows: "That the plaintiff, since the commencement of this action, has assigned its claim, to wit: The cause of action herein sued on, to the defendant, the National Surety Company, and hence the plaintiff has no further interest in the subject matter herein." Error is assigned on the part of the Circuit Judge in not sustaining this defense. The exceptions raising this question are overruled for the reasons stated by the Circuit Judge.

His Honor in his decree says: "It is not worth while to consider if the Surety Company may have from Langford, in the event of recovery, anything over what it has paid as under the sixth paragraph of the complaint, that is not in issue now." As the Circuit Judge has not passed upon this question, it is not properly before us for consideration.

It is the judgment of this Court that the judgment of the Circuit Court be affirmed.