Lorimer v. Julius Knack Coal Co.

The Detroit Coal Exchange was a voluntary unincorporated association composed of approximately 50 retail coal dealers. From 1914 to 1917, the law firm of Beaumont, Smith Harris rendered certain professional services to the association and incurred certain expenses for which suit was brought by this firm of attorneys against the association and the various members composing it. Both the plaintiffs and the defendant herein and a large number of other members of the association were served with process, among them C.F. Sweeney, who was doing business as the C. F. Sweeney Coal Company. Following the entry of default for nonappearance, judgment for $4,332.50 was taken against the Lorimers and the Julius Knack Coal Company on December 19, 1917, and against C.F. Sweeney for the same amount on January 30, 1918. As to the other defendants on whom service of process was obtained, the suit was discontinued by stipulation. After an appeal to this court (Lorimer v. WayneCircuit Judge, 216 Mich. 587), execution issued against the plaintiffs here, and also against Julius Knack Coal Company. Having no other recourse, the judgment was satisfied by the Lorimers in the amount of $5,369.46 on January 11, 1923. Thereafter this suit was brought by the plaintiffs to recover from the defendant one-half of the amount paid in satisfaction of the judgment. Trial was had before the court without a jury, a judgment rendered in favor of the plaintiffs for one-half of the amount they had paid to satisfy the former judgment, which with interest accrued to June 11, 1928, amounted to $3,411.86. The defendant reviews by writ of error and the record presents the following questions:

1. When several persons assume a joint and several liability, and subsequently judgment is entered on such liability against less than all of them, which judgment is satisfied in full by one of the judgment debtors, is his right to contribution based upon the original assumption of liability or upon the judgment?

2. If the right to contribution is based upon the judgment (and not on the antecedent joint and several contractual liability) should it be between the plaintiffs and the defendant only and based upon the judgment taken against them on December 19, 1917; or should contribution be enforced on the basis of there being three judgment creditors, thereby including C.F. Sweeney, against whom judgment was taken in the same suit for the same amount and arising out of the same obligation but on a subsequent date, to wit, January 30, 1918?

It has often been stated by the courts that contribution is founded on principles of equity and natural justice. The doctrine rests on the principle that when parties stand inaequali jure, the law requires equality, which is equity, and one of the parties will not be obliged to bear more than his just share of a common burden or obligation to the advantage of his co-obligors. 13 C. J. p. 821. It is applied in those cases where one or more of several parties equally obligated have done more than their share in performing a common obligation. "And one who has paid more than his share of the joint obligation may recover contribution from his co-contractors."Comstock v. Potter, 191 Mich. 629, 637. But to work out an equitable result, the one seeking contribution should be allowed to recover only the proportionate share from each of the joint obligors from whom contribution can be had. There was error in the trial of this case in that the plaintiffs were allowed to recover one-half of the total amount they had paid out from the defendant who was only one of approximately 50 co-obligors, each of whom was jointly and severally liable on the original indebtedness. Evidently this was done on the theory that the plaintiffs and the defendant were joint judgment debtors and contribution should be between these two only. The injustice that resulted to the defendant is obvious. It was compelled to bear one-half of the total burden instead of its proportionate share as between itself and the other original obligors. This is not at all in accord with the principle of equity and equality that underlies the doctrine of contribution. Even on the basis of judgment debtors, there were three of them, including C.F. Sweeney. His obligation to pay was exactly the same as that of the plaintiffs and of the defendant. The fact that the two judgments were not entered on the same date is of no consequence. Our practice permits doing so. See 3 Comp. Laws 1915, § 12803. Payment of one of these judgments would have satisfied the other. But beyond this, there were also all of the other parties who were originally bound by the contractual obligation. Their duty to share equally with the plaintiffs the burden of paying the debt for which each and all were liable was not removed by the mere fact that those to whom the obligation was due saw fit to take judgment against only three instead of against all who were liable.

"The fact that the one from whom contribution is sought was voluntarily dismissed from the action by the obligee is no defense." 6 R. C. L. p. 1044; Dole v. Warren, 32 Me. 94 (52 Am.Dec. 640).

"No discharge by the creditor of one obligor which does not discharge all can impair the right to contribution." 6 R. C. L. p. 1047.

"The fact that judgment was taken against only one of several persons jointly liable does not affect the right of contribution." 13 C. J. p. 827; Hoxie v. Farmers', etc., Bank, 20 Tex. Civ. App. 3462 (49 S.W. 637).

"The principle of contribution is equality in bearing a common burden; and this equality may depend upon the circumstances and relations of the parties anterior to the judgment." 6 R. C. L. p. 1047.

At the time plaintiffs brought this suit for contribution, the right existed against each of the original obligors. Plaintiffs had the right to recover from each of them his proportionate share and no more. 13 C. J. p. 825.

If a co-obligor who has paid off a joint debt could proceed against the remaining co-obligors and obtain a single judgment against all of them jointly, one of them might be compelled to pay the entire amount, and then he would have to proceed anew against the remaining co-obligors, and thus a multiplicity of suits would be encouraged, rather than prevented."Hall v. Harris, 6 Ga. App. 822 (65 S.E. 1086); 13 C. J. p. 836.

It is well settled that, in determining the proportion of contribution, those of the obligors who are insolvent are excluded. As to the remainder of the obligors who are inaequali jure, each is liable for the payment of his just proportion of the obligation. The amount for which the defendant was found liable in this case was fixed by a wrong method and was excessive. The judgment is reversed, and a new trial ordered.

FEAD, FELLOWS, WIEST, CLARK, McDONALD, POTTER, and SHARPE, JJ., concurred.