Court Opinion

ID: 8046754
Source: CourtListenerOpinion
Date Created: 2022-09-09 04:00:13.276+00
Date Added: 2024-06-11T16:37:31.739650
License: Public Domain

Bellows, J.
The plaintiff and thefiwo defendants were sureties of Otis Ayer, and at the time of making the note were equally liable as such, unless the liability of Mooney was affected by his name being put upon the back of the note. About a year after the note was given, and upon its being sued, John Ayer, who was also a co-surety with other parties, pledged certain notes, and among them a note of this plaintiff for $500, to David Tilton, as security for his liability as such surety. Afterward, this note of the plaintiff was withdrawn, and another note of the plaintiff for the same sum put in its place.
If this pledge was upon sufficient consideration and valid, then the case would be that the defendant, Tilton, held the plaintiff’s note as security against the claim which the plaintiff now makes for contribution, and upon making that contribution, the defendant would be entitled to recover back the amount so paid of the plaintiff. TTpon that view the surrender of the pledge upon the supposed release of Tilton’s liability, if that release was inoperative, would not, we think, discharge Tilton’s interest in the note so given up. "Was this pledge then a valid one ?
It is to be taken for granted that the notes pledged to *415Tilton by John Ayer were transferred in due form by indorsement or otherwise, and the only question as to the pledge is whether, by a formal transfer and delivery to Tilton, he acquired, as against John Ayer, the interest of a pledgee. Had the pledge been made by the principal or one bound to indemnify the surety Tilton, it would have been valid without doubt, although made long after the original note. This continuing obligation to indemnify the surety is ever a good consideration for the promissory note of the principal. The essence of such a contract is the delivery of the thing pledged as security, for some debt or engagement, but it is wholly immaterial whether such debt or engagement be that of the pledgee or some other person. If made by a third person at the time of the contract of suretyship, and as an inducement to it, there could be no doubt of 'its validity. If security were made afterward by the principal in the form of his own note signed by a third person as surety, or if a third person at his request pledge his own goods as security, we apprehend there could be no doubt that the third person would be bound.
In this case it appears that John Ayer, one of the signers of the original note, represented to Tilton and other sureties that he was a principal at the time he pledged the note to him, though in fact he was a surety only; and the inquiry is, does that fact make any difference. This may not be like the ease of a promissory note given by a third person who was not bound to indemnify the surety, and given without request of one who was so bound, and which might fail for want of consideration in case a suit was brought to enforce it. But the notes pledged here are assumed to be valid, and would pass upon indorsement and delivery, and by a mere gift perfected by delivery, would, as against the holder, confer a good title. If, then, John Ayer pledged the notes to Tilton, to be held by him until he was indemnified on account of his contract as *416surety, could he recall the pledge upon the ground that he was not bound to indemnify him ? We are inclined to think he could not.
In Story on Bailments it is laid down that such security may be made as well by a third person as the debtor, on the ground that if there is an assent by the proper parties, it is equally obligatory. “Again, in making this pledge, John Ayer assumed to be principal, and was so treated by Tilton, who received the notes so pledged, and as the subsequent transactions show, relied upon them. Could John Ayer be heard afterward to controvert the truth of his representation ? Beside, each of the sureties was bound to the others for his due proportion of the burden, and this form' of the pledge would cover John Ayer’s obligation to indemnify Tilton to the extent, at least, of his share. Under these circumstances, the plaintiff’ having f>aid the note, and, relying upon the principal to refund the money paid, delivered the note to John Ayer, with directions to allow Tilton to cut out his name from it, which was done, and Tilton thereupon surrendered to John Ayer the notes pledged as aforesaid. And it appears from the case that all the parties supposed that this cutting off' the name of the surety would or did end his liability upon it. Whether, independent of the giving up the securities, it would have that effect or not, is unnecessary to inquire, because we think that, being induced to surrender the securities by the attempted release, it must be regarded either that the plaintiff is estopped now to claim contribution, or else that Tilton’s security, by the notes so pledged, still remains ; in which case it would be inequitable to require Tilton to pay the amount of his share to the plaintiff, inasmuch as he would be at once entitled to recover it back of him.
As to the estoppel, it has been held that where the creditor had informed the surety that the debt had been paid, and in consequence the surety had lost an opportu*417nity to secure himself, he would he discharged. Baker v. Briggs, 8 Pick. 130. So when he told the surety he would exonerate him and look to the principal, it was held by Shaw, C. J., to be a good defense, upon the ground that it would tend to lull the surety into security and prevent his obtaining indemnity as he otherwise might; and that it would be a fraud afterward to call upon him to pay. Harris v. Brooks, 21 Pick. 195. If this be the law, as between the creditor and the surety, where the surety is held by an express contract to pay, it applies with much more force to the case of contributions between sureties, which stand not upon tlie ground of contract, but upon that principle of equity which requires an equality of burden. An action by one surety against another for contribution is an equitable proceeding, and if it appear that the defendant joined in the contract, at the request of the one seeking the contribution, he will not be held to pay. Taylor v. Savage, 12 Mass. 102, Cutter v. Emery, 37 N. H. 575. In Peck v. Ellis, 2 Johns. Ch. 136, Chancellor Kent says, “ a court of law will sustain an action for contribution between two debtors or sureties under an implied assumpsit arising from the general principle that equality is equity. But contribution between wrong doers will not be enforced.” So in Campbell v. Messer, 4 Johns. Ch. 335, it is laid down that the doctrine of contribution is founded not on contract, but on the principle that equality of burden, as to a common right, is equity. So, in Deering v. Winchelsea, 2 B. & P. 270, where the plaintiff and defendant were sureties for the .same thing, but by different bonds, still the defendant was held liable for contribution, not on the ground of contract, but on account of the equality of burden. In this case the bond signed by the plaintiff had been sued, and he compelled to pay. The court say that contribution is bottomed on the principle of justice and not on contract, though the contract may qualify it.' See Sir ¥m. Harbert’s *418Case, 3 Co. 11, b; Story’s Eq., secs. 477, 492, and note 1; sec. 495; Craythorne v. Swinburne, 14 Ves. 165. In these cases it is held that the obligation of a surety to contribute is not founded on contract, except, as is said, so far as an assumpsit may be inferred from the knowledge of the existence of this principle of justice which requires the sureties to share the burden equally. Craythorne v. Swinburne, above cited. So is Fletcher v. Swan, 11 N. H. 369; and in accordance with Cutter v. Emery is Blake v. Cole, 22 Pick. 97. It is true it does not appear that the plaintiff directed John Ayer to take up the securities pledged to Tilton, but he knew that they were so pledged, and that a discharge of the liability of Tilton and the other sureties upon the note, according to his direction to his father, would naturally cause the return of those securities, and he must therefore be deemed to have assented to it.
It is said by the plaintiff’s counsel that the attempted discharge applied only to the claim of the creditor; but we can not assent to this view, for the case finds that all, including the plaintiff, supposed their liability to be ended. The canceling of the note was, to say the least, quite as significant as the statement that the debt had been paid, or that the creditor would look to the principal and exonerate the surety, as in the cases before cited; and in addition to its tendency to lull the parties into security, and prevent their obtaining indemnity, it actually caused the defendant, Tilton, to change his position and give up the security which he already had, and which, in any view that can be taken, was of some value.
As to Mooney, the securities must be regarded as held by Tilton in trust for both, the said John Ayer having made to Mooney the same representation that he was principal, and given him notice of the pledge ; and it appears also that Mooney was discharged in the same way.
"We see, therefore, no reason for any distinction between the two defendants. There must, then, in both cases, be

Judgment for the defendants.