Case Name: Eli Mitchell v. Columbus C. De Witt et al.
Court: Supreme Court of Texas
Jurisdiction: Texas
Decision Date: 1860-10
Citations: 25 Supp. Tex. 180
Docket Number: 
Parties: Eli Mitchell v. Columbus C. De Witt et al.
Judges: 
Reporter: Texas Reports
Volume: 25 Supp.
Pages: 180–187

Head Matter:
Eli Mitchell v. Columbus C. De Witt et al.
It is a just and salutary principle, which has been acted on by courts of equity, that a surety, who pays the debt due by his principal to his creditor, shall have the benefit of the securities for the debt placed in the power of the creditor by the principal.
It seems right that the creditor should transfer the means of indemnification, for which he has no longer occasion, to him, who, under a legal obligation to pay, in default of the principal debtor, has released these securities from the demand of the creditor, and paid the. debt for which they were furnished.
Where, however, such means consist of the responsibility of an individual becoming a later surety or guaranty for the same debt of the principal, there arises a conflict of equities, which may give rise to new questions as to the priority between the former and latter surety. Such latter surety stipulating, at the instance of the principal, to pay the debt, suffers no absolute injustice in being obliged to do so, since he is compelled to perform no more than he undertook, and has no right to complain that he is not allowed to use, as a payment by himself, the money which proceeds from another person, whom his principal was previously bound to save harmless.
How the equity would be, in a naked case of this kind, I give no opinion; it is sufficient that it is settled, that if the interposition of the second surety may have been the means of involving the first in the ultimate liability to pay, the equity of the first surety decidedly preponderates.
Where the original principal in a debt prosecuted a writ of error, and the original surety or indorser of the note afterwards paid the debt, he is entitled to have the judgment against the original defendants and sureties on the supersedeas bond assigned to him, upon the general principle, that a surety is entitled to the assignment of all collaterals, and that the second surety may have put him in a worse condition. (For the authorities on principal and surety, see Paschal’s Dig., Arts. 4783 to 4789, Notes 1070 to 1072, pp. 802-3.)
Appeal from Gonzales. The case was tried before Hon. Fielding Jones, one of the district judges.
Mitchell sued Be Witt and Jonathan T. Bateman, in which he declared that Clinton E. Be Witt-and John L. Harper had before that time executed their note to William P. McKean for $320; that Harper signed as surety; that McKean afterwards, becoming dissatisfied with the name of Harper, the petitioner, signed a new note for the debt, then $385 47; that he signed as surety only, having no interest, and being only substituted in the place of Harper, as the surety of Clinton E. Be Witt; that on the 10th of October, 1856, Kirkland and Baugher, the assignees of said note, recovered judgment thereon against Clinton E. Be Witt and the plaintiff; that Be Witt (without being joined by Mitchell) prosecuted error, and Columbus C. Be Witt and Jonathan T. Bateman became sureties on the super sedeas bond'; that the judgment was affirmed with damages on the 17th day of ETovember, 1857; that execution had been levied on the property of the petitioner, C. E. De Witt having become insolvent; that the plaintiff has paid the whole debt, costs and damages, $469 01; and, therefore, he claimed the amount against Columbus C. De Witt and Jonathan T. Bateman, and to have the judgment assigned to him, so as to collect the amount out of the sureties, Clinton E. De Witt having become insolvent.
The defendants answered by general demurrer and a special plea, stating that Clinton E. De Witt had conveyed certain lands to Mitchell as indemnity for his suretyship. The plaintiff amended, by more clearly stating the case, and averring that the land conveyed to him had been sold as the property of Clinton E. De Witt, the original debtor, and that it brought only $5.
The court sustained the general demurrer, and dismissed the petition, so that the precise point was, whether the security on the original debt, who did not appeal, is entitled to recover against the sureties on the supersedeas bond of his principal, against whom judgment had been rendered in the Supreme Court, and to have the judgment of affirmance in the Supreme Court assigned to him.
Mills, for plaintiff in error
.—This is a suit by Mitchell for subrogation, and for the recovery of a sum of money paid by him, for the use of defendants in error. Mitchell was security on a note for C. E. De Witt, due Kirkland, Baugher, & Co.; the latter obtained judgment on the note; subsequently, said C. E. De Witt took a writ of error, (in which M. was no party,) and gave defendants in error as sureties on his bond. Judgment was affirmed against C. E. De Witt and said sureties in the error-bond, execution was levied on Mitchell’s property, (C. E. De Witt having become insolvent,) and M. was forced to pay the debt.
1. Mitchell may show by parol that he was surety on the original note. (2 Stark. Ev., part 2, marg. p. 1060, title Security; Hunt v. Chambliss, 7 S. & M. 532.) The rights of the surety are not affected by judgment in favor of the creditor.
2. We say the original security can demand reimbursement from the sureties in the error-bond on the plain rule in equity. (Parsons v. Briddock, 2 Ver., 608: approved in Wright v. Morley, 11 Ves., 12, 22.) The same principle is recognized in the following cases: ' Douglass v. Fagg, 8 Leigh, 598; Givens v. Nelson, 10 Leigh, 389; Sanford v. Perrin, 5 Id., 557; Stout v. Vance, 1 Rob., (2a,) 169,180; Patterson v. Pope, 5 Dana, 241; Smith v. Bing, 3 Ohio, 33; Burns et al. v. Huntingdon Bank, 1 Pen. & Watts, 395; Potts v. Nathans, 1 Watts & Serg., 155, cited in 1 vol. Lead. Cas. in Eq., pp. 115, 116.) I contend, that, as the creditor is entitled to the benefit of all the securities the principal debtor has given to his surety; the latter .has full as good an equity to the benefit of all the securities the principal gives to that creditor. Parsons v. Briddock, ubi supra, is a strong instance. Though the defendants in error are themselves but sureties, as between them and the principal debtor, yet, coming in the room of the principal debtor as to the creditor, they come in the room of the principal debtor as to the surety, hence the surety stands in the creditor’s place. Mitchell’s claim against them is through the medium of the creditor.
3. I contend that privity is not essential to subrogation; that, though all the parties stood in the relation of sureties to the principal, they stood in unequal equity between themselves, because the defendants in error had so identified themselves with the principal debtor as not to be distinguished from him; for they interposed to procure a personal advantage to the principal, to the detriment of the first surety. The right to substitution in this class of cases is more than reasonable; it subserves the ends of justice.
Mitchell being no party to the proceedings in error, the present defendants bound themselves to perform the judgment on affirmance; and whatever rights the creditor had, Mitchell is substituted thereto. (See 19 Tex., 444, and cases cited; see Ses. Acts 7 Leg., p. 114.) Had defendants in error paid the debt, Mitchell is not bound to them. (Dunlap v. Foster, 7 Ala., 734.)
Stewart, for defendant in error.
—The cases referred to in appellant’s brief establish simply the doctrine of subrogation of a surety to the .rights of the judgment-creditor as against his principal; but it is respectfully submitted, that none of those cases sustain clearly the doctrine sought to be derived from them, that of rendering liable the sureties in error-bond to contribute with the original surety in the note. Contra, Martin v. Rice, 16 Tex., 157; Kendrick v. Rice, 16 Tex., 254.
The sureties in the error-bond bear more analogy to the several indorsers on a promissory note executed by principal and sureties. The indorsers become such because of the responsibility of the surety in the note; and in the case at bar, being a joint and several note, it is not pretended that the sureties in the error-bond knew that the makers of the note stood in relation to each other of principal and surety; and possibly Mitchell’s responsibility was the cause of their going on the bond. Mitchell has been guilty of great laches. Wilson v. Stanton, 6 Blackf., 507; Cowan v. Duncan, 1 Meigs, 470; Burnett v. Courts, 5 Har. & I., 78; Semmes v. Naylor, 12 Gill & John., 358.

Opinion:
Wheeler, C. J.
—It is a just and salutary principle, which has been acted on by courts of equity, that a surety who pays the debt due. by his principal to his creditor shall have the benefit of the securities for the debt placed in the power of the creditor by the principal. This equitable doctrine was fully recognized by this court in the case of Sublett v. McKinney, 19 Tex., 438. "It seems right (it was said by the Supreme Court of Pennsylvania in Pott v.' Nations, 1 Watts & Serg., 155, 157) that the creditor should transfer the means of indemnification, for which he has no longer occasion, to him who, under a legal obligation to pay in default of. the principal debtor, has released these securities from the demand of the creditor, and paid the debt for which they were furnished. Where, however, such means consist of the responsibility of an individual becoming a later surety or guaranty for the same debt of the principal, there • arises a conflict of equities, which may give rise to new questions as to the priority between the former and latter surety: such latter surety stipulating, at the instance of the principal, to pay the debt, suffers no absolute injustice in being obliged to do so, since he is compelled to perform no more than he undertook, and has no right to complain that .he is not allowed to use, as a payment by himself, the money which proceeds from another person, whom- his principal was previously bound to save harmless. How the equity would be in a naked case of this Mnd, I .give no opinion; it is sufficient • that it is settled, that if the interposition of the second surety may have been the means of involving the first in the ultimate liability to pay, the equity of the first surety decidedly preponderates." Applying this principle to the case, then, before the court, where, after judgments were obtained against a principal and surety, a third person interposed and gave his note for the debt to obtain a stay of execution for the principal, and the surety was afterwards obliged to pay the debt, it was held that he was entitled to have an assignment of the judgment on the note of the third person to indemnify him for such payment.
The same principle was acted on by that court in the case of Burns v. The Huntingdon Bank. (1 Penn. It., 395.) A judgment was obtained against the maker of a promissory note, who afterwards entered absolute security under an act of the legislature in order to obtain a stay of execution. After the expiration of the time stipulated in the stay of execution, judgment was obtained against the surety; and it was held, that one of two indorsers who paid the note, (who in point of law was but a surety) was entitled to an assignment of the judgment against the surety.
The principle appears to have been first applied to such a ease in England, in Parsons v. Briddock, 2 Vern., 608, which was approved by Sir Wm. Grant, Master of the Polls, in Wright v. Morley, 11 Ves., 22. There, where the principal in a bond had been sued and gave bail, and judgment was obtained against the principal and also against the bail1 by the creditor, and afterwards the sureties on the original bonds were compelled to pay, and then brought their bill in equity to have the benefit of the judgment of the creditor against the bail by having it assigned to them, it was held that they were entitled to an assignment of the judgment against the bail, and it was decreed accordingly. " So that (says Sir Wm. Grant) though the bail were themselves but sureties, as between them and the principal debtor, yet, coming in the room of the principal debtor as to the creditor, it was held that they likewise came in the room of the principal debtor as to the surety. Consequently, that decision established that the surety had precisely the same right that the creditor had, and was to stand in his place." (Ib.) The authority of this decision is supposed to have been shaken in England by some of the more recent decisions; but it appears to have .maintained its authority in this country; and Judge Story, while he supposes it to have been much shaken in point of authority, appears to approve of its equity and justice. (1 Story's Eq., § 499, a, et seq.) It was approved by Chief Justice Gibson, and adopted and acted on by the Supreme Court of Pennsylvania in Burns v. The Bank, (before cited;) was approved by President Tucker in Langford v. Perrin, 5 Leigh, 557; and appears to have been received with approbation and recognized as sound in principle generally by the American courts. (1 Barr., 512; 11 Leigh, 309; 5 Id., 557; 6 Paige, 32, 254; 1 John.'s Ch. R.,413; 1 Story's Eq., § 499, b, n, 2, 7th ed.) It was fully adopted and acted on by this court in the case of Sublett v. McKinney, 19 Tex., 438, and must be held to be decisive of the present case. The case of Parsons v. Briddock, and the other cases cited from the Pennsylvania reports, are in point, and fully maintain the right of the plaintiff in this case to indemnity from the defendants, on the principle of the right of the surety who steps into the place of the principal and pays his debt to come in the place of the creditor in turn, and be subrogated to all the means of indemnity in the hands or under the control of the creditor. And the doctrine seems reasonable and-just in its application to the present case. For, as was suggested in Pott v. Rations, the later sureties upon the writ-of-error bond suffer no absolute injustice in being obliged to comply with their undertaking, and cannot complain that they are not allowed to use as a payment by themselves the money which has proceeded from the original surety, whom their principal was previously bound to save harmless. But for their interposition the plaintiff may have been exonerated from his liability. The principal may then have had visible property subject to execution, of which, but for the interposition of the defendants to supersede the judgment and prevent execution thereof, the plaintiff might have availed himself to have satisfaction of the judgment. And "it is sufficient that it is settled, that if the interposition of the second surety may have been the means of involving the first in ultimate liability to pay, the equity of the first surety decidedly preponderates." (Ib.' 1 Watts & Serg., 157.) That is the present case. We are therefore of opinion that the court erred in sustaining the demurrer to the petition; for which the judgment must be
Reversed and the cause remanded.