Case Name: JAMES MOORE vs. BOSTON ISLEY
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1839-12
Citations: 2 Dev. & Bat. Eq. 372
Docket Number: 
Parties: JAMES MOORE vs. BOSTON ISLEY.
Judges: 
Reporter: North Carolina Reports
Volume: 22
Pages: 372–378

Head Matter:
JAMES MOORE vs. BOSTON ISLEY.
If there be several sureties fcx the same principal, and one of them be fixed with the payment of the whole debt, or of more than his rateable part thereof, the others, who are solvent, shall be compelled to contribute, in order to equalize the loss. But if by any agreement between the sureties, one of them is released by the creditor, upon his securing the payment of a certain part of the debt, he shall not after-wards be called upon to contribute to one or more of the remaining sureties, for a loss arising from the deficiency of another of them.
One of three joint solvent sureties cannot sustain a bill against either of his co-sureties for contribution out of a fund alledged to have been received by that surety for Ms indemnity from the estate of an insolvent co-surety, without making the other a party.
While the relation of joint sureties exists, funds received by one of them, (except under special circumstances) for the discharge of, or, as an indemnity against, his liability,, are tobe applied for the common benefit of the sureties. But after that connection has been severed by an agreement among the sureties, each of them has his distinct and several claim to prosecute, because of what he has paid for his principal, or for an insolvent joint surety; and the others have no right to demand participation in what his diligence may enable him í to procure, while thus prosecuting his several claim.
In the year 1817. the plaintiff and the defendant, together with Daniel Harvey and "William Dickey, became jointly and severally the sureties of one James B. Dickey, for the faithful discharge of his duties as guardian to the infant children of Henry Shut!., deceased; and, as such sureties, executed with their principal, the ordinary bonds required by law to be given by guardians. The said James, mismanaged and neglected the estates of his wards — was removed from his guardianship — became insolvent, and left the State. In the year 1824, suits were instituted upon these bonds against all the sureties, and judgments rendered for upwards of six thousand nine hundred dollars. At the time of rendering these judgments, William Dickey was believed to be utterly insolvent; the defendant was regarded as in doubtful circumstances, and the plaintiff and David Harvey had- reason to fear that they would be compelled to pay the larger part of these judgments. The now guardian to the minors, was disposed to shew every lenity to the sureties which was con- 'sistentwith his duty, and readily assented to a proposition which was suggested by the plaintiff, with the assent of Harvey. It was proposed that he should endeavor to procure from the defendant, satisfactory security for the payment of one third of the judgments; and .he was authorised, if he could effect such an arrangement, to release and discharge the defendant from any further liability upon the judgments; and the plaintiff and Harvey undertook and engaged, that they would then severally secure the payment of a third each-. The guardian entered into a negotiation accordingly with the defendant, succeeded in making with him a satisfactory arrangement for securing the payment of the one third of the amount recovered, and, thereupon, on the 17th June, 1824, with the approbation of the plaintiff and Harvey, executed unto the defendant an instrument under seal, whereby, after reciting the judgments aforesaid, the payment of the one third thereof by the defendant, the assent of the plaintiff and Harvey, that in consequence thereof the defendant might.be wholly discharged from the said judgments, without their or either of them being released or exonerated from the two-third parts remaining unpaid, he covenanted with the defendant that neither he nor his said wards would further sue, arrest, prosecute or take the defendant, his lands, tenements, goods or chattels, by virtue of the said judgments. Harvey and the plaintiff did not either of them make the'arrangements which had been agreed upon, for securing the payment of the unsatisfied parts of these judgments; and the collection of them having been lately compelled, Harvey’s property was found insufficient to satisfy his portion; and the plaintiff was obliged to pay this deficiency. He then brought this bill against the defendant, and.prayed that the defendant might be decreed to divide with him the loss which he had sustained by reason of Harvey’s insolvency.
W. A. Graham for the plaintiff.
Waddell for the defendant.

Opinion:
Gaston, Judge,
after stating the case as above, proceeded as follows: Courts of Equity interfere between co-sureties upon a principle of natural justice. If several persons have become bound as sureties for the same principal, whether these obligations be testified by one and the same instru-naent, or by different instruments, and whether the fact of SttCh common engagement be or be not known to the respective sureties, if, by the default of the principal; a loss must be sustained by some oí the sureties, it is the obvious dictate of justice that it should be divided equally among all. The interest, if any, was common — so should be the burthen; the hazard was common — and so should be the misfortune. But it may be, and it generally is, in the power of the creditor to command the payment of the entire debt from which of the sureties he pleases.1 His caprice shall not be permitted to destroy their natural equities as against each other; and if one of them be fixed with the payment of the whole debt, or of more than his ratable part thereof, the others who are solvent shall be compelled to contribute, in order to equalize the loss. Equality is here equity. The suffering surety is subrogated to the rights of the creditor, as against the other sureties, to the extent of their shares of the debt. The judicial recognition of this principle as a rule of right, may be the foundation of inferring a contract between co-sureties that the loss shall be thus apportioned. But, whether the liability to contribution rest directly upon this principle of natural equity, or upon the contract inferred from the presumed knowledge of the principle, it cannot be questioned but that such arrangements may be made between the co-sureties as will take them out of the operation of the principle, and negative the implied contract. Here the defendant was originally bound with the plaintiff and Harvey, in a common liability for the same principal; and there being no contract to the contrary, he was bound to share equally with each of them in the loss occasioned by the default of their principal. But, it was subsequently agreed between the parties to this common liability that it should be severed, and that each should secure to the creditor the payment of a third of the joint debt, and receive from him a release as to the residue. This agreement was executed on the part of the defendant, aiid he, with the assent of the others, obtained from the creditor a covenant, operating as an absolute release to him. ' The other two thirds of the amount recovered, then remained an onus upon the plaintiff and Harvey only. They had been before co-sureties with the defendant for the' whole amount — but after this release to the defendant they were alone co-sureties for the part remaining unpaid. The defendant, by their consent, was thus taken out of the reach of the principle which rendered him liable to contribution for an injury which either of them might sustain, by reason of the inability or default of the other. It seems to us, that an express agreement that the defendant should not be liable to such contribution, was not necessary. His original liability to the other sureties was founded on the tie of a common responsibility. This vinculum being severed by the consent of the parties — a common responsibility no longer continuing as to him, but a new responsibility, to a diminished amount, being created between the others — the plaintiff has no ground of natural equity or of implied contract,, on which he can demand of the defendant to share with him the loss sustained by reason of this latter responsibility. The creditor has no right or remedy against the defendant to which the plaintiff can claim to be subrogated. All the creditor's rights and remedies against the defendant have been extinguished by the assent of the plaintiff. The inducement to the defendant to exert himself to discharge a third of the debt was, to save himself from the hazard of being compelled to pay more. This object would be in a great degree defeated, if, after his release by the creditor, he might be obliged to pay more, in case either of the others should neglect to perform what was incumbent upon him. Had the plaintiff and Harvey executed the agreement on their parts, the present controversy could not'have arisen. Each of them relied upon the other for the performance of this agreement; and if this confidence has been misplaced, he who trusted must bear the consequences. It is the opinion of the Court that the bilF, so far as it seeks contribution from-the defendant, because of the loss thrown upon the plaintiff by Harvey's failure to pay a third of the judgments, must be dismissed. The bill has other objects. It charges that the defendant, since the departure of James B. Dickey from the State, has obtained property from or of the said James, which he hath converted to his exclusive indemnity; and prays that the defendant may be decreed to give the plaintiff an equal benefit of this indemnity. The defendant denies this allegation peremptorily and fully, and no evidence is offered to SUpp0rt it. The bill, therefore, must be dismissed also, so far as it seeks to charge the defendant because of property of the said James, alleged to have been thus received.
The bill further charges that the defendant has received property of William Dickey, the supposed insolvent surety, and appropriated it to his exclusive indemnity, and prays the benefit of a participation in this. The defendant admits, that as the administrator of William Dickey, who it thus appears is dead, he has received certain notes; and that he has otherwise got into his possession bonds, in which the said William had an equitable interest; but insists that he has paid over to the plaintiff more than an equal share of these notes and bonds. The defendant also admits that he is prosecuting a claim against the heirs at law of William Dickey, with the view of subjecting a tract of land to sale, in order to remunerate the defendant for the excess he paid over a fourth of the judgments against James B. Dickey and his sureties. The Court forbears from considering the equity arising upon this part of the case, because it is of opinion that the same cannot be definitively decided, without making Daniel Harvey a party in the cause. Should the fund which the plaintiff seeks to charge, be one which the defendant is bound to apply to the indemnity of the plaintiff, it is also applicable to the relief of Harvey, so far as he may have been injured. The objection is not taken by the pleadings. The Court does not dismiss the bill on this account, but will retain it for a reasonable time, in order that the plaintiff may, if he thinks proper, take the proper steps to make Harvey a party to the suit. If the plaintiff does not move within the first twenty days of the next term, the bill is to be dismissed altogether, with costs.
Pee. Curiam. Decree accordingly.
The plaintiff having, under the leave given him in the decree made in this cause, in accordance with the foregoing opinion which was filed at a former term, taken the necessary steps to make Daniel Harvey a party, the cause came on to be further heard at the present term, when the following opinion of the Court was delivered by his Honor: •
GastoN, Judge. When this cause was heretofore heard, every thing was disposed Of except the claim set up by the plaintiff to have an account and contribution from the defendant, because of property of William Dickey, the supposed insolvent, and the defendant's intestate, which was alleged to have come to the hands of the defendant. Upon this part of the case we then forebore to decide, because we deemed it essential that Daniel Harvey should be made a party. The plaintiff hath since amended his bill, and therein stated that the said Daniel Harvey had died, and the plaintiff had duly administered on his estate, and insisting that the defendant was bound in equity to divide all the funds which had or might come into his hands, of the estate of the said William Dickey, in such manner as to make the loss fall equally upon the solvent sureties, prays for the necessary accounts, and for relief accordingly. The defendant insists by his answer, that the plaintiff hath no right to call upon him for any contribution, because of funds of the said William Dickey, either received or to be received by him, except for any excess thereof, after remunerating the defendant for what he paid, because of the said William's supposed insolvency, and states his belief that there will not be any such excess.
The position taken by the defendant is, in our judgment, correct. While the relation of joint sureties exists, funds received by one of the joint sureties, (except under special circumstances, not necessary to be now stated,) for the discharge of, or as indemnity against, his liability, are to be applied for the common benefit of the sureties. But, after that connection has been severed, each of the sureties has his distinct and several claim to prosecute, because of what he has paid for his principal — and the others have no right to demand participation in what his .diligence may enable him to procure, while thus prosecuting this several claim. So, when one of several sureties neglects to pay his part of the debt of an insolvent principal, and the whole is paid by the other sure ties, then as to the sums respectively paid by them to make up his deficiency, he stands to each of them as a principal, and each in like manner has a several claim to prosecute against pi¡xi to this extent.
The defendant administered on the estate of William Dickey, and has a right to avail himself of all the privileges of an administrator, to re-imburse himself out of the estate of his intestate for what his intestate owed him. The plaintiff's debt is of the same dignity. The demands are distinct — and the defendant, in conscience as in law, may retain as against the plaintiff, for the full satisfaction of his own demand.
The plaintiff has a right, if he chooses, to have an account of the estate of William Dickey, in the hands of the defendant, the administrator, applicable as assets to the satisfaction of the plaintiff after allowing this retainer to the defendant for the full amount of his own loss. It is for him, however, to consider whether he will run the risque of taking such an account. He may elect to do so at any time within the first twenty days of the next term — if he do not so elect, the bill to stand dismissed, with costs.
Per Curiam. Decree accordingly.