Opinion ID: 1057830
Heading Depth: 2
Heading Rank: 3

Heading: Joint Indebtedness

Text: According to the written statement of facts, Grace and Lloyd executed the $50,000 note as co-makers. 5 Whether that note was secured or unsecured[] is not material in fixing 5 The actual note is not in the record of this case. 9 liability. Brown v. Hargraves, 198 Va. 748, 751, 96 S.E.2d 788, 791 (1957). Where the obligation to pay the debt is personal, joint and several, as here, it is the nature of the obligation which controls. Id. The debt evidenced by a note is created when the note is executed. Id. at 752, 96 S.E.2d at 791. Thus, as co-makers, Grace and Lloyd became primarily liable, jointly and severally. See id. at 751-52, 96 S.E.2d at 791. When two or more persons are jointly liable to pay a debt, [t]he law implies a contract between [the co-obligors] to contribute ratably toward the discharge of the obligation. Van Winckel v. Carter, 198 Va. 550, 555, 95 S.E.2d 148, 152 (1956). A party's right to contribution does not arise out of any express contract or agreement between the parties to indemnify each other, but on the broad principles of equity which courts of law enforce that where two persons are subject to a common burden it shall be borne equally between them. Houston v. Bain, 170 Va. 378, 389-90, 196 S.E. 657, 662 (1938). Lloyd argues that nothing under the augmented estate statutes makes him, as a co-maker of the $50,000 note, liable for more than one-half of the principal amount of that indebtedness. Henry contends, however, that the circuit court correctly found Lloyd liable for one-half of the first $25,000 draw from the loan proceeds because that sum was used to improve 10 the Farmville residence, thus increasing both the value of that property and the value of Lloyd's elective share. Henry argues that because Lloyd withdrew the second $25,000 for his sole benefit, unlike the first $25,000 draw that benefited both Lloyd and Grace, the circuit court acted within its discretion by requiring Lloyd to pay a disproportionate amount of the indebtedness. We do not agree with Henry. In Brown, the administrator of an estate sought guidance on whether a decedent's personal estate should be used to pay a debt evidenced by two notes jointly executed by the decedent and the surviving spouse. 198 Va. at 748-49, 96 S.E.2d at 789. While the defendant did not question the general rule that a personal debt of the decedent . . . is to be paid primarily out of his personalty, the defendant asserted that an exception applied when the entire estate is vested in the surviving joint tenant[] and the estate of the deceased [took] nothing in the property. Id. at 750, 96 S.E.2d at 790. We disagreed and held the decedent and the surviving spouse, as the makers of the notes . . . . made and signed personal obligations, whereby each of them became personally liable to the holders of the notes for the full amounts thereof, and, as between themselves, jointly and severally liable. Subject to a common burden to be borne equally, each had the right to look to the other for reimbursement for any amount expended beyond the proportionate amount required to be paid by each of them. Thus each was entitled to the right of contribution, an equity which arises when one of several 11 parties liable on a common debt discharges the obligation for the benefit of all. Id. at 751, 96 S.E.2d at 791. Here, both Grace and Lloyd, as co-makers of the $50,000 note, became personally liable to the holder of the note for the full amount owed and as between themselves, jointly and severally liable. Because both Grace and Lloyd became [s]ubject to a common burden to be borne equally, each was entitled to the right of contribution from the other for onehalf of the joint indebtedness evidenced by the note. Id. Thus, the circuit court erred by charging Lloyd with more than one-half of the total indebtedness.