Court Opinion

ID: 7172140
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:27:34.810591+00
Date Added: 2024-06-11T16:15:46.067491
License: Public Domain

On Rehearing.
PROVOSTY, J.
The Laurel Lumber Company, of Laurel, Miss., of which jdaintiff and defendant’s son were the principal stockholders, needing' a line of credit, plaintiff and defendant and the First National Bank of that town entered into a written agreement by which the bank was to furnish money to said company up to'$12,500, and plaintiff and defendant were to be sureties for the reimbursement of same and of whatever expenses might have to be incurred in connection with same.
The company executed two notes in favor of the bank, for $1,000 and $6,500, respectively, in ■ pursuance of that agreement; and, these notes.maturing after the company had gone into bankruptcy, plaintiff .took them up, paying one-half cash and giving his individual note for the other half. The bank transferred them to him without recourse.
He did the same thing with another past-due note of the company for $5,000, in favor of the Merchants’ & Manufacturers’ Bank of Ellisville, Miss., on which plaintiff and defendant figured as indorsers, but were in reality sureties, as the indorsement had been contemporaneous with the execution of the note, and the parties had at the same time .waived presentation for payment, protest, and notice of protest.
There is another note in the case, but as. to' it no defense is made. •
The petition alleges that plaintiff “took up and paid” the notes, which would imply that he paid the full amount in cash, whereas in point of fact one-half was paid by means of plaintiff’s individual note.
Plaintiff sues as transferee of the bank, thereby exercising the right of action which the bank had, and also as subrogee by operation of law, thereby exercising the equitable right of action conferred by article 3058 of the Civil Code upon the surety who has paid fhe suretyship debt against his cosurety for the latter’s half of the debt. That article reads:
“Art. 3058. When several persons have been sureties for the same debtor and for the same debt, the surety who has satisfied the debt, has his remedy against the other sureties in proportion to the share of each; but this remedy takes place only, when such person has paid in consequence of a law suit instituted against him.”
The petition does not allege that the payment made by plaintiff was “in consequence of a lawsuit instituted against him,” and does not allege that the law of the state of Mississippi applicable to the case is different from the .law • of Louisiana, nor what the law of that state is, and because of the absence of these allegations the defendant filed an exception of no cause of action; and the argument is that, in the absence, of any allegation of what the law of Mississippi is, the presumí)*459tion must be that it is the same as that of Louisiana, and that a surety who has paid the suretyship debt has no recourse against his cosurety in Louisiana unless the payment, has been made in consequence of a lawsuit having been instituted.
We need not go into that question, since, if so be that plaintiff has not properly set forth in his petition the equitable right of action conferred by said article 3058, he certainly has in a very full manner set forth a right of action as transferee of the bank. This he has done by alleging all the facts, and praying judgment for the amount shown by them to be due by defendant. The notes are annexed to the petition, and they show the indorsement, the waiver of presentation for payment and of protest and notice of protest, and the transfer by the bank to plaintiff without recourse. -
A question much discussed among the civilians is whether in case one of several sureties has paid the debt and has been contractually subrogated to all the rights of the creditor he may sue any one of the cosureties for the entire debt save his own proportional part of it. Vo. Cautionnement Fuzier-Herman, No. 650; Dalloz, Rep. de Legis. No. 291. Laurent is of the opinion that he may. Du Cautionnement, No. 267. His reasoning is that, there being no contractual, relation between the sureties, the conventional subrogation must be allowed its full effect. And Hue is of the same opinion. Com. on Art. 2033, C. N., Du. Cautionnement, No. 235. But Pothier was of a different opinion (Obligations, No. 445), and so are' Troplong, Du Oautionnement, No. 432, and other authors. The reason is that each of these'other sureties, when thus sued for the whole and required to pay, would be legally subrogated to the rights of the creditor, and thus in his turn might sue' the surety to whom payment has been made, with the result that there would be circuity of actions. But plaintiff in this case is not suing for the entire debt, but only for defendant's just half of it; and, there being no contractual relation between them, and no equity standing in the way (since defendant does not pretend not to owe the debt), there can be no reason why the petition should be held not to show a cause of action.
“In becoming sureties for the same debtor the sureties have contracted no obligation as between themselvies.” Fuzier-Herman, Vo. Cautionnement, No. 641. “They have not con-contracted any engagement between themselves.” Pothier, Obligations, No. 445.
The case is now before this court only on the $5,000 note, it having been otherwise finally disposed of by judgment of this court from which a rehearing was granted only as to this $5,000 note.
On the merits, as to this $5,000 note, defendant contends that the balance due on the note was extinguished by novation when plaintiff executed his individual note for it, and that this had the effect of releasing the cosurety entirely. In that connection defendant cites article 2198 of the Code, which reads:
“Art. 2198. By the novation made between the creditor and one of the debtors in solido, the eodebtors are discharged.
"The novation that, takes place with regard to the principal debtor, discharges the sureties.
“Nevertheless, if the creditor has required, in the first case, the accession of the codebtors, or in the second, that of the sureties, the former credit consists, if the codebtors or the sureties refuse to accede to the new. arrangement.”
This article means nothing more than that an obligation which is extinguished by novation is extinguished as to all parties connected with it, just and precisely as happens when an obligation is extinguished by payment or in any other way. Very plainly the giving of plaintiff’s note to the bank in consideration of the bank’s transferring the suretyship note to plaintiff did not have the effect of extinguishing the debt as to *461defendant. That the transaction should have that effect would be strange indeed. Marcadé in his Com. on Art. 1279 of the C. N.t very appositely observes:
“If the debt were guaranteed by sureties these would be liberated at the same time as the principal debtor, no matter by whom the novation was effected, even though it were by one of the sureties, provided, however, that the novation boro on the debt itself and not exclusively on the suretyship; for if the intention was to novate only the accessory obligation, it is very clear that the principal obligation would continue to exist, and hence it would be necessary to consider if the intention was to extinguish the obligation of all the sureties or only that of the surety who made the novation.”
This matter is so plain, and besides was gone into so extensively in the original opinion, that we do not think there can be any need of saying more about it here.
In Fuselier v. Babineau, 14 Ba. Ann. 764, the court seems to have taken the view that any convention made between one of the sureties in solido and the creditor inures to the benefit of the cosureties; but the court gave no reason for this, and, so far as we can see, would have been at a loss to give any if called upon to do so. Since neither contract nor equity stands in the way of such a convention, why should it not be perfectly valid? That there exists no contractual relations between such cosureties is a point that has been fully settled since the days of the Homans. One such cosurety is therefore not the agent of his cosurety when dealing with the creditor; and so long as nothing is done to make the position of the cosurety any worse, no question of equity can arise.
A creditor may release one of the debtors in solido and retain his claim against the other debtors in solido for the proportional parts of these other debtors. Oiv. Code, art. 2100 et Seq. Why, then, may not a creditor deal with a surety in solido for the latter's part of the debt and retain his full right against the cosureties for their parts? Suppose the creditor made a donation of his claim to one of the sureties, would the debt of the cosureties be thereby extinguished, except for the proportional pai;t of the donee? No one, we imagine, would say so. And if one of the sureties may thus acquire the claim against his cosureties by donation, why may he not acquire it by purchase, or in any other legitimate mode of acquisition? When he acquires the whole debt, his part of it becomes extinguished by confusion, but the part of his cosureties continues in full force. Of course, if instead of acquiring the debt he simply extinguished it by payment or novation, the sureties would be released; and the only recourse against the cosureties would be the equitable remedy-provided for by article 3058. But if he neither pays nor novates the debt, but simply purchases it, why may it not. be as valid in his hands as in t-he hands of the party who sold it to him, as to that part which as between himself and his cosureties he does not owe.
The decree heretofore handed down herein is reinstated in full, and made the final judgment of the court.
O’NIELB, J., concurs in the result.