Case ID: tenn_27/html/0197-01.html
Source: Caselaw Access Project
Author: {"author": "Green J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Goss vs. Gibson et als.
    
    A decree of discharge in bankruptcy does not discharge one surety from the claim of another surety, who pays money for the principal after the decree.
    In February 1840, S. B. Marshall was appointed marshal for the Middle District of Tennessee, and in March 1840, he executed an official bond, with complainant and defendants ás sureties. In October 1841, he was removed fromoffi.ee; but while in office he collected a large sum of money, which he failed to pay over as the law required.- In December 1842, all of the defendants filed their petitions in bankruptcy, and on the 24th of April, 1843, they were discharged as bankrupts, and received their certificates. In September 1843, judgments were recovered against complainant, as surety of Marshall, for the default of Marshall, which judgments complainant af-terwards paid. In the petitions and schedules of defendants, complainant is not set forth as a creditor, nor did they give him any notice of their proceedings in bankruptcy. Complainant files this bill in the chancery court at Franklin, for contribution, and defendants plead their certificate of bankruptcy.
    Chancellor Cahal dismissed the bill, and the complainant appealed.
    
      Houston, for complainant.
    1. By the 4th section of the bankrupt law, it is provided, that provable debts‘are barred; and by the 5th section it is'provided, that “sureties, endorsers, bail or other person having uncertain or contingent demands” shall be permitted to prove their debts.
    A co-security is not embraced by the letter of the act, nor by its spirit. Surety and co-surety have entirely different meanings.
    2. This distinction is clearly maintained in the decisions made under the English bankrupt law. The 52d section of the 6 Geo. 4, c. 16, and the 5th section of our late act áre in substance the same, so far as sureties are provided for. Neither provides for co-sureties; and by the English decisions, it is established, that a co-security is not embraced by their act. For the English bankrupt law, see Chitty’s Statutes, 103. For its-construction, see 12 vol. Eng. Com. L- Rep. 294. 27 do. 97, and Burge on Sur. 488,
    3. A co-surety not embraced by the words “persons having-uncertain or contingent claims,” &c. The same provision is substantially contained in the bankrupt law of England, 56th section of the 6 Geo. 4. Chitty’s Statutes, 104. By construction, a co-surety is not embraced. 38 vol. Eng. Com. L. Rep. 397. Burge on Sur. 429, 431.
    4. Complainant had no claim or “demand” of any ldnd against defendants until judgments were obtained' against him, or until he had paid the ‘money. He could have proved no debt, because he had nothing against defendants that was susceptible of being valued.
    5. There must be a demand against the petitioning bankrupt either “uncertain or contingent;” still it must be a “demand” amounting to a “debt or claim.” Such debt cannot exist except by contract — but the liability of-co-sureties does not arise from contract, either express or implied. 1 Story’s Eq. sec. 493. 6 Ves. 805. 14 do. 159. 4 J. Oh. 334-8. 4 Ves. 752.
    
      A. Ewing and Lindsley, for defendants.
    
      J. Trimble, for complainant.
   Green J.

delivered the opinion of the court.

This is a bill against co-sureties for contribution. The following facts are agreed on: — That on the 17th of January, 1840, Samuel B. Marshall was appointed marshal of the Middle District of Tennessee, and that he entered upon the discharge of his duties after giving bond, dated 6th March, 1840, with John D. Goss, the complainant, and all the defendants, and one James Barrett as his sureties. S. B. Marshall continued to act until — October, 1841, when he was removed. During his continuance in office he collected monies which he failed to pay over, and which were collected from the complainant, judgments having been rendered against him on the 21st of September, 1843, which were afterwards discharged by him. In the month of December 1842, all the defendants filed their petitions to be declared bankrupts, and were duly declared such,, before the judgments were obtained against the complainant and before he paid the money.

Upon 'this statement, the defendants insist that they are discharged from all liability to contribute, as co-sureties of the complainant, by their certificates in bankruptcy. We do not think the complainant’s demand is embraced by the words, “other persons having uncertain or contingent demands,” used in the 5th section of the bankrupt law. At the time these defendants were declared bankrupt, the complainant had no debt or demand against them. Their liability to him does not exist as a matter of contract between themselves, but arises out of the equity that exists between them, as co-sureties for another. 1 Story Eq. sec. 493. The complainant had no demand-that he could prove at the time the defendants were declared bankrupt. The possibility of the claim that now exists, was incapable of valuation.

We think the certificate of discharge in bankruptcy, is no protection against the complainant’s right of recovery.

Reverse the decree, and decree for the complainant.