Court Opinion

ID: 7890164
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:47:52.86996+00
Date Added: 2024-06-11T09:15:57.432088
License: Public Domain

Archer, J.,
delivered the opinion of this court.
We are of opinion that, the complainant has no equity which would enable him to recover against the defendant, as co-security with him for Reynolds. The loan was in fact obtained for the mutual benefit of Reynolds and Talbott, by an understanding and agreement between Reynolds and Talbott, anterior to the loan. The money obtained was divided between them, each taking one half of the sum borrowed. This understanding and agreement we have no evidence was ever communicated to McPherson.
If we are to take Reynolds' evidence as true, then he was held out to McPherson as the principal, and he was by him invited to be his security with Talbott. Under such circumstances, it would not have occurred to McPherson, that the loan was to be equally for the benefit of his co-security.
Securities are always supposed to assume the same risks and responsibility, and to stand relatively to .the principal in the same situation, neither obtaining any benefit by the transaction, but each equally subjecting himself to responsibility, relying on the ability of the principal to meet the engagement, and relying on each other’s willingness to embark in the same risks and responsibility,. McPherson may have relied on the willingness of Talbdtt to go security, and may have been influenced to become the security by the confidence reposed by Talbott in the solvency and ability of Reynolds, supposing that Talbott was in the condition of an ordinary security. But if he had been informed, that Talbott's signature had been purchased by a promise to let him have half the money, as a consideration upon which he would give his name to Reynolds as securety, it is by no means certain that he would have incurred the obligation. The concealment of the fact by Talbott that he was to derive an advantage by the loan, operated as a fraud upon the co-security, who had a right to suppose that he was conferring a benefit solely upon the principal.
' The co-security might be very willing to obligate himself for the principal, but unwilling to assume responsibility for the surety, and to the extent of that part of the loan, which pas*503sed by agreement into the hands of Talbott, it was put to a hazard to which the co-security had never subjected it, and might have been entirely unwilling to have subjected it. To be sure, McPherson would not have objected to the uses to which Reynolds chose to apply the sum borrowed, after he had obtained it; that he may be presumed to have been willing to trust to his prudence and discretion; but it is the previous agreement, to allow the security to participate in the loan, without the disclosure of that fact, which in our judgment forms-the objectionable feature in the transaction. The most entire fairness on the part of secureties, each would have a right to exact; their situation should be equal, and this may be demanded in all cases where contributions for losses are sought, by one security from another.
DECREE REVERSED WITH COSTS, AND BILL DISMISSED.-
Chambers, J., dissented.