Court Opinion

ID: 8177340
Source: CourtListenerOpinion
Date Created: 2022-09-09 22:22:52.202188+00
Date Added: 2024-06-11T16:40:02.142996
License: Public Domain

Williams, Judge,

(dissenting):

I think the decree in Taylor v. Taylor, sustaining the demurrers of the United States Fidelity and Guaranty Company and the Citizens Trust and Guaranty Company, and dismissing the hill as to them, is an adjudication against the Central Banking and Trust Company of any right to contribution. The principal and all the sureties were there sued, and a decree rendered holding the principal and- one surety only liable, and releasing the other two. What is the effect of that final and unreversed decree? In the absence of fraud, or collusion between the obligee and the discharged sureties, is it not conclusive- upon the co-sureties as well as upon the creditor? If not, why so? There is a privity of relation and obligation between principal and surety; and it is out of regard,to that relation that a judgment against a principal, bound for a collateral undertaking, is conclusive of the amount for which his surety is liable. Crim v. England, 46 W. Va. 480; State v. Nutter, 44 W. Va. 385; Turner v. Stewart, 51 W. Va. 493. No one, I imagine, will question that a judgment recovered against a principal and all the sureties, in a subsequent suit for contribution by the surety, who paid it, would be conclusive of liability to the creditor. They would be estopped to deny liability. Why? Because the right of contribution rests on liability to the obligee, and that liability was an issue adjudicated by the judgment. Why then is not a judgment of discharge as to some of the sureties, equally conclusive? It will not do to say that a judgment against them has one effect, and a judgment for some of them and against others, on the same issue, has another effect. The judgment must have the same force in either ease. The right of contribution is not a primary right; it depends on a common liability to a third person. The sureties must occupy toward the creditor exactly the same attitude. The right to have contribution springs out of a common burden resting on two or more persons occupying the same position in relation to the creditor., 27 A. & E. E. L. 483. Therefore, if a surety *213is not liable to the creditor, he is under .no obligation to help hear the burden; he is not then liable to his co-surety. A surety who pays a debt for which another surety is not liable can not have contribution. 1 Brandt on Suretyship & Guaranty, sec. 267. “He takes the place of the original creditor, and may be resisted on the same principles, and in the same way.” Lowndes v. Pinckney, 1 Rich. Eq. (S. C.) 155. A surety paying a debt can occupy no better position than the creditor did. 2 Brandt on Suretyship & Guaranty, see. 316. In a suit for contribution, by a surety who paid the judgment, there is involved the same identical issue that was litigated in the suit by the creditor against the sureties, and that issue, having been determined by a final judgment, is res judicata. It matters not that the issue was not joined between co-sureties. It was joined between the creditor on the one side and the principal debtor and sureties on the other, and, in the absence of fraud, it is conclusive on all parties. It is on the ground that a judgment in such ease has a conclusive effect, that equity subrogates the surety who pays it to all the rights of the creditor, not only as against the principal debtor but against the other sureties as well. Hawker v. Moore, 40 W. Va. 49; Woods v. Douglas, 46 W. Va. 657; Hess’s Estate, 69 Pa. St. 272; 2 Brandt on Suretyship & Guaranty, see. 309. "What are the rights then of a creditor who has obtained a judgment against principal and sureties? Why, he has a final judgment conclusive upon all of them, which the law makes a lien upon their lands. Now, is it not clear that if, in a suit for contribution, a co-surety could controvert the judgment, the surety who paid it would not be enjoying the rights of the creditor? Says Chief Justice Marshall in Lidderdale v. Robinson, 2 Brockenbrough (U. S. Cir. Ct.) 155, after reviewing some early Virginia decisions: “The principle which the cases decide is this: Where a person has paid money for which others were responsible, the equitable claim which such payment'gives him on those who were so responsible, shall be clothed with the legal garb with which the contract he has discharged was .invested, and he shall be substituted, to every equitable intent and purpose, in the place of the creditor whose claim he has discharged. This principle of substitution is completely established in the books, *214and being established, it must apply to all persons who' are parties to the security, so far as is equitable. The cases suppose the surety to stand in the place of the creditor, as completely as if the instrument had been transferred to him, or to a trustee for his use. Under this supposition, he would be at full liberty to proceed against every person bound by the instrument.
“Two co-sureties were sued jointly, and judgment was rendered in favor of them both. The creditor appealed to the supreme court from the judgment in favor of one of them, and such judgment was as to such surety reversed, and judgment in the supreme court was rendered against such surety for a large amount, which he paid. Held, he could not recover contribution from the other surety. The judgment which as to him remained in force in the court below established the fact that he was not liable to the creditor, and consequently not liable for contribution.” 1 Brandt on Suretyship & Guaranty, sec. 267. The author cites Ledoux v. Derrive, 10 La. Ann. 7, which is not in the library. But I have no doubt he correctly states the principle decided.
Mr. Black, a very eminent law writer, in his work on Judgments, see. 591, says: “'Where, in a suit against one of two sureties, judgment is fairly obtained against him, and no collusion existed between him and the party recovering the judgment or the principal obligor of the bond, if notice of the pendency of such suit has been given his co-surety, the latter stands virtually in privity with him against whom the judgment has been obtained. The co-surety in such case is bound to avail himself of any defense which he may have, and he will not be permitted afterwards, in a suit for contribution brought against him by his co-surety who has paid and satisfied the judgment, to set up any defense which he ought to have pleaded in the original suit upon the bond, by becoming a party for that purpose. It was his duty to join in the defense to the action. Having failed to do so, though he had full notice of the pendency of the action, he waives all defenses he might have had, and in the suit for contribution the matter is res judicata. ’ ’ The author here states a proposition even stronger than the one I am contending for, but he is supported by Love v. Gibson, 2 Fla. 598, and other authorities. *215I would give the judgment conclusive effect only in case the Sureties were parties to the suit. The exact principle for which I contend arose, and was decided, in Hood v. Morgan, 47 W. Va. 817. But the majority opinion, in effect, overrules that case. The question was also decided by the supreme court of Tennessee in Cross v. Scarbro, 6 Baxter 134. That case is almost identical with the one at bar. There some of the sureties, as in this case, had executed several obligations. In a suit by the creditor against all of them some were discharged and others held liable. Those that were held liable paid the debt and sued the others for contribution, and the court held that the former judgment of discharge was an adjudication of their non-liability, and was binding on the co-sureties. The following cases are also pertinent: Preslar v. Stallwarth, 37 Ala. 402; Hess’s Estate, 69 Pa. St. 272; Fletcher v. Jackson, 23 Vt. 581, 65 Am. Dec. 98. In fact, after a very careful examination of the subject, I do not find that any court, except the supreme court of Ohio, holds to the principle decided by the majority opinion. The cases of Pomeroy National Bank v. Huntington National Bank, Hudson v. Land & Mining Co., and Bierne v. Ray, decided by this court and cited in the majority opinion, in my opinion, are not applicable.