Court Opinion

ID: 8005382
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:52:53.536069+00
Date Added: 2024-06-11T16:35:51.734544
License: Public Domain

Sherwood, Judge,
delivered the opinion of the court.
Eetzner and Bell were partners in business, and became indebted to plaintiff in the sum of $1,687.50, evidenced by their note for that sum, and this note was- secured by deed of trust on the land of Eetzner. Afterwards the latter purchased Bell’s interest in the firm, giving a bond to Bell, with the defendants, Krug and Demond as his sureties, conditioned to pay off and discharge all the debts and liabilities of the firm, and to save Bell harmless respecting the same. This bond was executed and delivered, upon a valuable .consideration, the assumption of the indebtedness of the firm being a part of the consideration by means of which the purchase of Bell’s interest was effected.
The property and assets of the firm of which Fetzner thus became possessed, were amply sufficient to discharge all the debts of the firm. Shortly subsequent to the transaction referred to, Bell became insolvent, and also Eetzner, and each of them made an assignment to the defendant Smith for the benefit of their creditors, and Smith is the holder of the bond mentioned.
The land mortgaged by Eetzner to secure the payment of the note of plaintiff proved unavailable, in consequence of prior incumbrances. The claims of the other creditors of the firm were satisfied in full out of the assets turned over to the assignee, and the claim of the plaintiff is the only firm debt remaining unsatisfied, to satisfy which there is nothing remaining, either of the *111partnership assets nor of the individual assets of Bell or Eetzner. Under these circumstances the plaintiff sought, by equitable procedure, to compel the payment of the debt from the sureties on the bond.
The court below, on demurrer, held the foregoing allegations insufficient, and judgment was entered accordingly, to reverse which this appeal is brought.
The doctrine that a surety may avail himself of securities executed in behalf of and for the benefit of the creditor, and that the latter may also resort in like manner to similar instruments given for the protection of the surety, is too well settled, both on reason and authority, to admit of question. (1 Sto. Eq. Jur. §§ 327, 499, 502, 637, 638a; Haven vs. Foley, 18 Mo. 136, and cases cited; Homer vs. Savings Bank, 7 Conn. 478, and cases cited; Vail vs. Foster, 4 Comst. 312.) And no doubt is entertained that Bell stood in such an attitude towards Fetzner as to readily admit and authorize the application of the principle referred to. Thus it has been held, even in an action of assumpsit, that where notes are signed by three persons for a joint debt, each is a principal for one-third, and a co-security for the other two-thirds. (Goodall vs. Wentworth, 20 Me. 322, and cases cited.)
But whatever view might he entertained of the result of such joint contract at law, there could surely be no hesitancy by a court of equity in looking at the transaction under discussion in its proper light, divested of all mere technical formality. When Bell sold out his interest in the partnership to Fetzner, and the latter, in consideration of the sale, covenanted to save the former harmless, and to pay the entire partnership debts, Fetzner became immediately, in contemplation of equity, the principal debtor, and Bell assumed towards him the relation of surety. (Crafts vs. Mott, 4 Comst. 604, and cases cited.)
It will be seen from the foregoing authorities that there is ample equity to support the petition, and warrant equitable interposition, and that there is nothing in the point that there was no privity between the plaintiff and the sureties on the bond. No *112privity in such Cases is required in order to give equitable relief. Nor is there anything of force in the objection that Smith, the assignee, was not a necessary party. He was the assignee, and had the possession and control of the bond, the very identical collateral security on which the plaintiff relied to obtain the only measure of redress which was open to him.
For these reasons we shall reverse the judgment, and remand the cause.
Judge Vories absent; the other judges concur.