Stovall v. Border Grange Bank , 1883 Va. LEXIS 27 ( 1883 )

Lacy, J.

(after stating the case), delivered the opinion of the court.

The first ground of exception to the decree complained of is raised by the demurrer, that the bill on its face does not show that a resort to equity was necessary and proper. Executions had issued on the judgments, which were not made part of the bill, and the bill does not show what had become of the executions, although it alleged that they had been issued, and that garnishments had issued on the executions and judgment recovered on them, and there is no statement of how much had been thus recovered ; and that this court should reverse the whole decree for that reason. Also, that the lands of the appellant were ordered to be sold, when it was neither alleged or proved that the complainants had exhausted their remedy at law to obtain satisfaction of their judgments out of the personal estate of the appellant.

By the ninth section of chapter 182 of the Code of 18.73, which is the act of 1849, it is provided that “ the lien of a judgment may always be enforced in a court of equity. If it appear to such court, that the rents and profits of the real estate, subject to the lien, will not satisfy the judgment in five years, the court may decree the said estate, or any part thereof, to be sold, and the proceeds thereof applied to the judgment.” This court, in a late case, quoting the above statute, declared tbat, looking to tbe policy of tbe legislature and to the broad and comprehensive language of tbe enactment tbat a judgment creditor, if be should so elect* might resort to a court of equity to enforce tbe lien of bis judgment against tbe real estate of bis debtor, without first proceeding by execution at law to subject tbe personal estate, or assigning any reason for not doing so.

Tbe remedy against tbe real estate in equity is declared* not dependent upon tbe inadequacy of tbe legal remedy to satisfy tbe judgment out of tbe personal estate, or the insufficiency of such estate for tbat purpose, but tbat it may always be resorted to, whether there be or be not personal estate of tbe debtor sufficient to satisfy tbe judgment.

Tbe remedy is given in general terms, and if it bad been intended to limit its application to cases in which there was no personal estate of tbe debtor, or when such estate was not sufficient to satisfy tbe judgment, it would doubtless have been so provided in express terms. Tbe court goes on to say tbat all tbe property of tbe debtor, except what is exempt under tbe law, is liable for tbe payment of bis debts, and if tbe debtor feels aggrieved by tbe attack upon tbe real estate, be can, if be has enough personal property, proceed to sell it himself and pay tbe debt, and so save bis real estate. Tbe ruling of tbe court below upon this point was in accordance with tbe decision of this court in tbat case. Price v. Thrash, 30 Gratt. 515. Tbe second ground of demurrer was tbat one of tbe defendants in the suit at law, in which tbe judgment was obtained, and who was one of tbe judgment debtors, was not made a party defendant in this suit. All persons who are interested in tbe relief sought by a bill should be made parties defendants to tbe bill, unless they are already joined as plaintiffs, and tbe prayer for process must be so framed as to bring all persons interested in tbat relief before tbe court, either as plaintiffs or defendants. This is elementary.

But the complaint here is that T. J. Lee is not a party ■defendant, while it is admitted that he is joined as a party plaintiff. The demurrer was properly overruled on that ground also. The plea being dependent upon the same question, was also properly overruled. The first ground of ■exception upon thé merits was that the court erred in deciding that Lee was not equally bound with Stovall under the judgment on the $1,500 debt, and that, though Stovall should pay the whole debt, he would be entitled to no contribution from Lee.

This question depends upon the evidence. The note was as follows:

Danville, Va., June 3d, 1880.

“$1,500.

“ Sixty days after date, we, A. P. Whitfield & Co., principal, and John T. Stovall, Thomas J. Lee, securities, promise to pay Border Grange Bank, or order, fifteen hundred dollars, without offset, negotiable and payable at the banking house of Border Grange Bank, Danville, Va. Value received. We hereby waive our homestead exemption as to this debt.

“A. P. Whiteield & Co.

“Jno. T. Stovall.

“Thos. J. Lee.”

Lee, in his deposition, says he signed this note as security, along with Stovall, to enable Whitfield to raise money to pay him, Lee, a debt of $1,629.27; that Whitfield discounted the note, and the next day paid him his debt; and that Whitfield promised that there should be no trouble about the note; that he, Whitfield, and Stovall, would take care of it. It is not pretended that Stovall was present or knew anything about the promises of Whitfield, outside of the note.

One witness testifies that he declined to sell a lot of tobacco on thirty days’ time to Whitfield & Co., but sold it to Lee, and Lee paid for it.

The cashier of the bank testifies that the bank refused to discount the $1,500 note without Lee’s name, and did discount it with Lee’s name, and that the bank considered Lee bound for the note.

We are not favored with any note of argument by the appellee, nor with the reasons of the court for its opinion that Lee was not equally bound with Stovall upon this note. The note itself, Lee’s own act, declares Lee to be a security on the note, and Lee’s deposition shows that he was solicited to become a security upon the note, because the bank refused to discount it without additional security. The bank must have so regarded him when suit was brought upon the note. Under the statute the bank, if so inclined, might have brought suit against all or one of those jointly liable on the said note.

Upon what principle can Lee be held not to be a co-security on the note ? Endorsers are not co-securities unless their endorsement is joint, but are severally and successively liable. But this promise to pay at the banking house is joint; it is we, A. R. W. & Co., J. T. S. and T. J. L., securities, promised to pay, &c. And this Lee signs. The note itself, in terms, fixes the relations of the parties. Lee contracts to be a surety; the note shows it; his deposition admits it. And, as has been said by the court of appeals in another State: “If a person who pledges his responsibility to enable another to obtain credit, wishes to avail himself of a means of discharge which is peculiar to commercial paper, he must see to it that he becomes a party to the security in such a manner as will entitle him to the benefit and the privileges and immunities of commercial contracts. A party who unqualifiedly engages to be security for another has no equity to ask that his contract shall be qualified by annexing the incidents of a strict endorsement, instead of being construed as absolute as his promise, upon the faith of which the credit was given.” Chaddock v. Vanness, 35 N. J. p. 527.

The fact which seems to be relied on, that Stovall did not know that Lee was to sign the note, does not affect the question in this case. Lee did sign as co-security, and the bank, the creditor, has the right, and would doubtless hold Lee liable, if he were the only source to which it could look for payment of the debt. And it is a familiar principle with courts of equity that the security, paying a debt, is in-titled to be subrogated to all the rights and remedies of the creditor, and this applies between co-securities, and one paying, another equally bound is compelled to make contribution.

“There is no doubt that if the party add the word 'surety’ to his name upon the face of the paper, it is a distinct indication of the character in which he signs, and that he will be treated as a surety as against all parties.” Daniel on Negotiable Instruments, vol. 2, § 1332; Hunt v. Adams, 5 Mass. 358; Robison v. Lyle, 10 Barb. 512; Edwards on Bills, 572.

We have said that jit is of no consequence in this case whether Stovall knew that Lee had signed it or not, for where successive endorsers all endorse for accommodation of the maker, though at different "times and without communication or mutual understanding, they are in equity cO-. sureties and subject to common contribution. 2 Lorn. Dig. p. 173; Daniel v. McRae, 2 Hawks, 590.

In Stout v. Yause, 1 Eob. 179, a joint and several bill was executed by a principal and several sureties to enable the principal to discount at the bank. The purpose of the bill at bank could not be obtained because, according to the rules of the bank, a surety resident in the place was required, the seven sureties on the paper all being residents out of that place. The principal thereupon applied to Zane, a resident, to become his surety. Zane, having adopted it as a rule of life never to become endorser for any person, but being willing to accommodate the principal, applied to Yause to become bound as such endorser, with an assurance to Yause that if the principal did not pay off the note when due he (Zane) would pay it off for him. Under this assurance Yause executed the note, which was discounted for the principal, who failed to pay the same when it became due, and thereupon Zane, whose name was not upon the note, paid it off.

All these arrangements between the principal and Zane and Yause were made without the knowledge or agreement of the other sureties. It was adjudged by this court that Zane was to be regarded as one of eight co-securities, and that he was entitled to contribution from all except Yause. Of course not from Yause, because he had agreed to be responsible in the lieu and stead of Yause, and had paid for him.

Sow, suppose Lee had paid off this note in question, would Stovall be entertained to say he did not know Lee was on the note, and that for that reason he declined to contribute. Lee would be entitled to have contribution in such case, and why ? Because he had paid as co-security, and Stovall was bound to contribute as co-surety.

Now, then, if Stovall is made to pay all, shall not Lee contribute his due share ? And why should not the corporation court, with both parties before it, decree accordingly in the first instance, without discriminating against Stovall and leaving Mm to his suit against Lee ?

But the court below not only decreed that Stovall should pay the whole debt, but that he should have no contribution from Lee. We think this decree was therefore erroneous.

Another ground of complaint and assignment of error is that the court went directly against the surety without first) ascertaining and subjecting the lands of the principal.

In the case of Horton and als. v. Bond, 28 Gratt. 815, it is aptly said by the court: “While it is true that the sureties, as well as their principal, are all bound by the complainant’s judgment, and he has the undoubted right to resort for satisfaction to the property of each and all of them, yet in equity, in a suit in which all the parties are alive and before the court, the court will respect the equities of the parties inter sese, and administer them upon the principles peculiar to the forum, as far as that can be done without too great delay, and without prejudice to the rights of the creditor. The principal debtor’s lands should be first subjected to the exoneration of the lands of the sureties.

This case was cited approvingly in Gentry v. Allen, 32 Gratt. 254, and the court in that case said: “ The decree of the circuit court is erroneous in decreeing against the property of only one of the sureties. All three of these were made parties to the bill, and no satisfactory reason is given for the failure to decree against each his due proportion of the appellee’s judgment.” And so say we in this case.

It was error to appoint a receiver in this cause to proceed to intercept the revenues from one surety’s lands, before first subjecting the lands of the principal, and before taking any steps against the co-surety. It does not appear from this record that there was any necessity for the appointment of a receiver in the cause. The judgments bound lands which are estimated at many times the amounts of the same; executions had issued, and the tenants had been convened by garnishee summons, and it does not appear that the ordinary process of the law was likely to prove unavailing.

We are of opinion to reverse the decree and remand the cause to the corporation court of Danville for further proceedings to be had therein, in accordance with this opinion.

Decree reversed.