Opinion ID: 1479054
Heading Depth: 1
Heading Rank: 2

Heading: The claim of contribution.

Text: The question is this: If husband and wife jointly incur an indebtedness secured by a mortgage on property held as tenants by the entireties, and one spouse dies, is the estate of the decedent liable to contribute to the survivor one-half of the common debt? There is no decision of a court of last resort in Delaware upon the question. In addition to the decision below in this case, denying contribution, there is a decision of the Court of Chancery in a like case, granting contribution. See Carpenter v. Webb, February 21, 1958, unreported, [] and later withdrawn by the Chancellor to permit him to resolve certain factual issues found to be in dispute. There is no dispute about the general principle of contribution. If a lien, charge, or burden of any kind, affecting several, is discharged by one only, he should receive from the rest what he has paid on their behalf. Eliason v. Eliason, 3 Del.Ch. 260. But the application of this principle to cases like the instant case has caused difficulty. There is involved in such a case not only a common burden or obligation arising from the bond or note evidencing the debt, but also the mortgage lien on the land in which both obligors have an interest when the debt is incurred, but which on the death of one passes by operation of law to the other. There are two lines of decisions in other states dealing with the question, one line denying contribution and the other granting it. Cases denying contribution are: Ratte v. Ratte, 260 Mass. 165, 156 N.E. 870; Lopez v. Lopez, Fla., 90 So.2d 456; Geldart v. Bank of New York & Trust Co., 209 App. Div. 581, 205 N.Y.S. 238. Cases granting contribution are: In re Dowler's Estate, 368 Pa. 519, 84 A.2d 209; Cunningham v. Cunningham, 158 Md. 372, 148 A. 444, 67 A.L.R. 1176; Brown v. Hargraves, 198 Va. 748, 96 S.E.2d 788; Wachovia Bank & Trust Co. v. Black, 198 N.C. 219, 151 S.E. 269; Magenheimer v. Councilman, 76 Ind.App. 583, 125 N.E. 77; Newson v. Shackleford, 163 Tenn. 358, 43 S.W.2d 384. The reasoning of the first line of decisions is that at the time when the debt is paid there is no common burden upon the land subject to the mortgage lien because the title has passed to the surviving spouse. It is therefore held inequitable to compel contribution from a joint debtor who has no interest in the land. In this view the debt is treated as a mere incident to the mortgage lien, and the right to contribution between joint debtors thus is made to depend upon the nature of the collateral held by the creditor. This view is approved in two articles in 13 Pittsburg L.Rev. 760 and 3 Hastings L.Jour. 161. The reasoning of the second line of cases is founded upon the well-settled principle that where two or more persons are under a common burden or liability the joint debtor who is compelled to pay more than his share is entitled to contribution from his co-obligors. In this view the right of contribution flows from the debt, not from the mortgage lien. The incidental existence of collateral in the hands of the creditor is regarded as immaterial in enforcing this right. Of the two lines of reasoning we think that the latter expresses the correct view, for the following reasons: A joint and several obligation of two parties, whether or not husband and wife, creates an obligation which is, on its face, for the benefit of both. Upon the death of one party his estate is still liable for the debt. And if the right of contribution, upon payment of the debt during the lifetime of both, is an attribute of the joint liability, we fail to see why it does not exist upon payment made after the death of one. The payment of the debt by the survivor is certainly a benefit to the estate because it discharges a liability of the estate. This is true whether or not there is any collateral in the hands of the creditor. Certainly if there were no collateral contribution would be allowed. And what of the case in which one obligor has pledged his own collateral for a joint debt? Unless his co-obligor is a mere accommodation maker, it is held that he is entitled to contribution. Commerce Union Bank v. Weis, 27 Tenn.App. 433, 181 S.W.2d 764. In such a case the co-obligor has no interest in the property  the collateral  but must contribute if the other obligor discharges the common liability. There are of course cases in which the right of contribution flows not from a joint debt but from a common interest in property subject to a lien. See Eliason v. Eliason, supra. In that case a widow's dower was charged by will on land specifically devised, and the owner of that land was held entitled to contribution from the devisees of other lands which by law were subject to her dower. The authorities denying contribution seem to us to treat cases involving mortgage liens on estates by the entirety exactly as cases in which there is no joint debt, at least in cases of purchase money mortgages. The debt is treated as a mere incident of the mortgage lien. Thus the Lopez case goes so far as to hold that the attributes of the estate by the entireties, which constitutes the collateral security, become the attributes of the debt itself  the bond or note. The case holds that the debt, like the land, must be considered, as between the tenants themselves, as being a debt owed wholly by the wife and wholly by the husband. We do not think that this holding agrees with Delaware law. A joint and several obligation under our law may be enforced by the creditor against both or either; but as between obligors each of them, in the ordinary case, is liable for one-half the debt. In our opinion, a common interest in the land or property mortgaged or pledged for a joint debt is not the element that controls the right to contribution. The liability to contribution flows directly from the debt, and the mortgage is only the security for the debt. Counsel for the legatees make the point that the proceeds of the loan were in this case used to improve the jointly-owned property, and that the wife will now receive the benefit of the loan. Of course at the time the loan was made it was for the benefit of both. And this argument suggests a rule that the use of the proceeds of the loan may determine the existence or non-existence of the right to contribution. This would, in our opinion, be a rule difficult of application. Of course, if it can be shown that one of the parties was in fact only an accommodation maker of the obligation contribution would be denied. But that is not shown here. This is the ordinary case of a joint debt, contracted by both parties for their common benefit. In such a case we think the estate of the deceased debtor is liable to contribute one-half of the debt. A further observation must be added. Both parties agree that although the debt in this case has not been paid the executor is entitled to instructions respecting his liability. Consequently, we have not considered or passed upon the question whether contribution may be enforced prior to payment. Nor do we consider what provisions should be incorporated in the decree of distribution to protect the rights of the widow. For the reasons above stated, we are compelled to disagree with the holding in this case by the Orphans' Court, and to agree with the holding of the Court of Chancery in the Carpenter case above referred to. It follows that the judgment below must be reversed. The cause is remanded to the Orphans' Court of New Castle County, with instructions to vacate the judgment below, and to enter a judgment consistent with this opinion.