Peebles v. . Gay

On objection of defendants' counsel that the statement of the case on appeal was not properly in this Court, it not having been sent up with the transcript of the record, affidavit was made by plaintiff's counsel and a certiorari issued, and the same treated as served and return made thereto, it being admitted that the case properly certified was now on file.

There is no merit in the objection of defendant that the exception to instructions given by the court, of itself, is too general and therefore ought not to be considered. It will be seen that there was but one question in the case, and that is fully presented in the second instruction of his Honor: "That if the jury believed that William Grant, one of the sureties, paid with his own money to Spivey, the plaintiff, with the understanding and agreement that Spivey should satisfy the judgment as to one-half and transfer it as to the balance to J. M. Grant, as trustee for the use and benefit of William Grant, with a view to keep the judgment alive as to one-half, and that Spivey did thus transfer it, still the jury should answer the first issue ``No,' and the second issue ``Yes,' for the reason that in the opinion of the court one surety could not thus keep alive half of a judgment as to his co-surety."

Upon general principles of equity a surety, paying the debt of hisprincipal, was entitled to be substituted to all the rights of the creditor in the premises, as to collaterals, and could enforce the same in a court of equity. This is the doctrine of subrogation, and in it is included the right of the surety, on payment of the judgment, to have an assignment of the same to a trustee for his benefit. Indeed, it was early laid down by our Court that the only way for a surety to preserve the (41) lien of the judgment against his principal in his own favor was, upon payment by his of the same, to have the judgment assigned to a trustee for his use. If he permitted the judgment to be satisfied without any assignment, the remedy of subrogation was lost. Hodges v.Armstrong, 14 N.C. 253; Sherwood v. Collier, ib., 380; Tiddy v. Harris,101 N.C. 589; Liles v. Rogers, 113 N.C. at page 200. The Act of 1777, sec. 2093 of The Code, provided him a summary method at law of obtaining judgment against his principal for the amount paid as his surety, but his equitable remedy still subsisted. Calvert v. Peebles, 82 N.C. 334. In some jurisdictions these equitable rights are administered without an actual assignment. 2 Brandt Suretyship, 309. Upon the same principle of equity and natural justice the right of one surety to compel contribution of another exists, and might have been enforced in a court of equity; as, also, might the right of one surety to the benefit of an indemnity given by his principal to another surety.

The Act of 1807 (sec. 2094 of The Code) provides that where one or more sureties have been compelled to satisfy the contract of their principal, they may sue their co-sureties for their ratable part of the debt paid for the principal. And it was held that a co-surety who pays the bond debt, for which the other surety is equally bound, shall be deemed a bond creditor in the administration of the estate of the deceased co-surety. Howell v. Reams, 73 N.C. 391. And it is broadly stated in Brandt Suretyship, supra, that "A surety who pays his principal's debt is entitled to be subrogated to all the rights and remedies of the creditor against his co-surety in the same manner as against the principal." This is founded in reason and justice, and up to the adoption of our present Constitution was enforced in the courts of equity. Art. IV, sec. 1, of the Constitution abolished the distinction between actions at law and suits in equity, leaving such rights and remedies to be enforced in the one court, which theretofore had administered simply legal rights. (42)

In Rice v. Hearn, 109 N.C. 150, where a co-surety, who paid the amount due upon a judgment against his principal, himself and the other surety, had the whole judgment assigned to a trustee for his benefit, in order the more easily to obtain contribution from his co-surety, this Court, through Merrimon, C. J., pronounced this assignment a legitimate transaction; and when the trustee attempted to assign the judgment for value to a third party it was held that the surety for whose benefit it was assigned could compel a due observance of his equitable rights and have the judgment marked satisfied.

It would not have been improper for the defendant William Grant, in this case, to have the whole judgment assigned to the trustee for his benefit, as the same could only have been enforced in his favor as against his co-surety Capehart for his pro rata liability. The same end is accomplished by the satisfaction of one-half of the judgment and the assignment to a trustee of the other half for his benefit, as against his co-surety. This Court, exercising its equitable jurisdiction, will see that he retains no further security than would cover the pro rata part, for which he is entitled to contribution. Thus he is afforded now just the same relief as he would have had under the former system. Principles are preserved without the necessity of resorting to different courts.

Any question as to the effect of satisfaction of the judgment being entered of record is taken away by the action of the court at a subsequent term in amending the record by striking out the entry of satisfaction. This order has been certified from the court below and made part of the record here, without objection being made thereto, and, we presume, by the consent of all parties.

Error. New trial.

Cited: Browning v. Porter, 116 N.C. 64; Holden v. Strickland, ib., 196; Davison v. Gregory, 132 N.C. 395; Patton v. Cooper, ib., 794; Bankv. Hotel Co., 147 N.C. 598; Fowle v. McLean, 168 N.C. 542.

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