in case the action is against a co-surety before the creditor has been paid 20 as well as where the surety compels the creditor to proceed against the principal:21 That the surety is without remedy at law if he pays the creditor in order to prevent a breach by the principal of his contract,22 or, in the absence of statute, if he requests the creditor to proceed against the principal,23 is well settled. But that equity in this country afforded certain relief to the surety prior to payment, was indicated by this obiter from an early opinion:

before any payment of the debt, any one of several sureties may maintain a bill against his co-sureties and their principal to compel the latter to pay it, if he be able, or the former to contribute to the payment of it, if he should be unable to pay it."' 24

While it is recognized that the term exoneration is applied by many authorities to rights attaching after the principal's debt

This property was in the name of a third person. The defendant was enjoined from disposing of his property. Hayden v. Thrasher (1882) 18 Fla. 795.

A mortgagor, being a surety as to a subsequent grantee of land taken subject to the mortgage, may maintain a bill to compel the discharge of the mortgage and exonerate the complainant. Marsh v. Pike et al. (1844) 10 Paige (N. Y.) 595.

20 Wolmerhausen v. Gullick (1893) 2 Ch. 514.

21 Hayes v. Ward et al. (1819) 4 Johns. Ch. (N. Y.) 123, 8 Am. Dec. 554; Wright v. Simpson (1802) 6 Vesey Jr. 714, 734, 31 Eng. Rep. Reprint 1272.

But see Stein v. Benedict et al. (1892) 83 Wis. 603, 53 N. W. 891, 896: "If, as between him and the plaintiff, the latter was in fact a surety for the debt on which the judgment was founded, and the former a principal debtor, this would

not give the plaintiff any right to restrain the creditor from collecting his debt, as against a surety. This the creditor had a right to do, and the plaintiff had a complete remedy by paying the debt, and maintaining an action at law against a defendant entirely solvent for his reimbursement."

22 Ladd v. Chamber of Commerce (1900) 37 Oregon 49, 60 Pac. 713, 61 Pac. 1127, 62 Pac. 208.

23 See Sec. 123, supra; Ohio Statute, Sec. 12191.

24 Morrison v. Poyntz (1838) 7 Dana (Ky.) 307, 32 Am. Dec. 92, 93. See Story on Equity (1886, 13th Ed.) Sec. 327.

is paid, in this chapter the discussion will be confined to cases where the creditor has not yet been paid.25

§ 126. Basis for exoneration. It is true the surety may never be compelled to pay the obligee, because it may not be required, or the principal may pay, or the statute of limitations may bar the action. But, because he may be forced to pay, the surety's future is uncertain. The purpose is to prevent injury to him, and needless circuity of action.26 One of the earliest recorded judicial expressions regarded it as justice to the surety that he should be able to free himself from possible suits by the creditor:

although the surety is not troubled or molested for the debt, yet at any time after the money becomes payable on the original bond, this court will decree the principal to discharge the debt; it being unreasonable that a man should always have such a cloud over him." 27 (Author's italics.)

25 Mr. Justice Sharswood said in Ardesco Oil Co. v. North American Oil & Mining Co. (1870) 66 Pa. 375, 381: Then it is well settled that as soon as the surety's obligation to pay becomes absolute he is entitled in equity to require the principal debtor to exonerate him, and he may at once file a bill to compel an exoneration, although the creditor has not demanded payment from him.''

Such is also the most recent veiw expressed by courts. ". . . if the debt for which the surety is liable has become due, he may, without paying the debt, file a bill in equity to compel its payment by the principal, and thereby be exonerated from liability thereon. He does not in such bill seek to recover indemnity from the principal, but merely to compel the principal to pay the debt for which he is primarily liable, and thus relieve the surety who is only secondarily liable therefor. In giving effect to this doctrine there need be no risk

either to the principal or to the creditor, for a court of equity will protect the interests of both in the application of the funds." Searcy v. Shows et al. (1920) 204 Ala. 218, 85 So. 444. See Valdosta Bank & Trust Co. v. Pendleton (1916) 145 Ga. 336, 89 S. E. 216.

26The fact of irreparable injury is no element of his (the surety's) right to recover, although it may strengthen the claim for relief and quicken the action of this court. The court will interfere though the principal is perfectly able to respond in damages, and there be no danger of eventual loss. It interferes to compel payment by the principal, rather than the surety, in order to enforce the performance of the obvious duty of the principal to protect the surety from a needless burden, and to prevent circuity of action." Irick v. Block et al. (1864) 17 N. J. Eq. 189, 197.

27 Ranelaugh v. Hayes (1683) 1 Vernon 189, 23 Eng. Rep. Reprint 405.

Exoneration is frequently obtained by means of a bill quia timet, though in England it is said to be "rather unusual in modern times." 28 But its use is approved in this country as one form of securing justice to the guarantor. In the opinion in an early Virginia case, approval was given to the use of the bill quia timet:

when the suit was brought, the appellant had not paid the debt, and probably has not yet paid it. But he is entitled nevertheless, the debt being due, to come into equity by a bill quia timet, against the creditor and the debtor, and compel the latter to make payment of the debt so as to exonerate himself from his responsibility.

He may enforce for his exoneration, any liens of the creditor on the estate of the principal; and if the latter be dead, may bring any suit in equity which the creditor could bring for a settlement of the administration account of the estate of the decedent, and for the administration of the assets, whether legal or equitable. The only difference is that he must bring the creditor into court along with him, in order that he may receive the money when it is recovered.” 29 § 127. Leading cases on exoneration. Without special consideration of two leading cases, one English, the other American, illustrative of the application of the principles permitting ex

28 Gifford, V. C., in Wooldridge v. Norris (1868) L. R. 6 Eq. 410, 37 L. J. Ch. 640, 19 L. T. Rep. N. S. 144, 16 Weekly Rep. 965.

For Roman law view see Hayes v. Ward et al. (1819) 4 Johns. Ch. (N. Y.) 123, 8 Am. Dec. 554.

29 Stephenson v. Taverners (1852) 9 Gratt. (Va.) 398, 404. Accord: Neal et al. V. Buffington et al. (1896) 42 W. Va. 327, 26 S. E. 172.

Quoting with approval from Lord Redesdale, the opinion in Wooldridge v. Norris (1868) L. R. 6 Eq. 410, 413, 37 L. J. Ch. 640, 19 L. T. Rep. N. S. 144, 16 Weekly Rep. 965, says: "A Court of Equity will also prevent injury in some cases by interposing before any actual injury has been suffered; by

a bill which has been sometimes called a bill quia timet, in analogy to proceedings at the common law, where in some cases a writ may be maintained before any molestation, distress, or impleading. Thus, a surety may file a bill to compel the debtor on a bond in which he has joined to pay the debt when due, whether the surety has been actually sued for it or not; and upon a covenant to save harmless a bill may be filed to relieve the covenantee under similar circumstances.'' See Ascherson v. Tredegar Dry Dock and Wharf Co., Ltd. (1909) L. R. 2 Ch. 401, 78 L. J. R. Ch. 697. Also see Josephian v. Lion et al. (1924) 66 Cal. App. 650, 227 Pac. 204, 207.

oneration by courts of equity, this chapter would be incomplete. Both cases are often cited.

The first is Wolmerhausen v. Gullick.30 The complainant was executrix of the estate of one of four sureties for £4,500. Prior to payment, she filed a bill against the co-sureties for contribution. Without the creditor being a party, the court could not order the defendant-co-sureties to pay him, or prevent him from suing the plaintiff; nor could the defendants be required to pay the plaintiff, because she could not give a discharge as against the creditor. But the court did decree that when plaintiff paid her own share, the defendants should indemnify her against further payment, and must exonerate plaintiff from liability beyond her own share. The court used this illustration to emphasize its reasoning:

"Obviously if a man were surety with nine others for £10,000, it might be a ruinous hardship if he were com pelled to raise the whole £10,000 at once and perhaps tc pay interest on the £9,000 until he could recover the £9,000 by actions or debtor summonses against his cosureties."

In the second case, Hayes v. Ward et al.,81 the opinion was by Chancellor Kent. The plaintiff, an accommodation indorser of a promissory note, stood as a surety in relation to Beach, one of the defendants, who was the principal debtor. Ward, the holder-creditor, also a defendant, took the note with notice that the original consideration failed. He also took from the princi pal, a bond and mortgage, which were alleged to be void because of usury. The parties all resided in New Jersey, but while temporarily in New York, Ward there sued the plaintiff at law The defendant was enjoined by the New York court to permit him to "experiment with his remedy upon the mortgage" ir New Jersey. This in effect compelled the creditor to exhaust his remedies against the principal. The case was based upor the reasoning that the mortgage was probably infected with usury, and if so, would be void in the hands of the surety. If it is void, and plaintiff first pays the debt, his right of subroga tion to a void security would not benefit him.32

80 (1893) L. R. 2 Ch. 514.

81 (1819) 4 Johns. Ch. 123,

Am. Dec. 554.

8

32 Referring to Hayes v. Ward e al., supra, it was said in Abercrom bie v. Knox et al. (1842) 3 Ala

§ 128. Marshaling securities. Mr. Justice Trumbull, in an early Illinois case, expressed the rule as to marshaling assets in this language:

"It is a familiar principle that where there are two creditors of one debtor, the first having two funds to which he may resort for the satisfaction of his debt, and the second only being able to reach one of the funds, the first shall resort for satisfaction of his debt to that fund which he alone can reach, and thus leave to the junior creditor the only means he has for obtaining payment of his demand. This course is equitable as to all parties, and does injustice to none. But this principle has never been extended to a case where one of the two creditors has a lien for his debt upon two funds belonging to two separate debtors, and the other has a lien only upon the fund belonging to one, so as to compel the first to make his debt wholly out of that debtor whom the other creditor cannot reach, unless the relation between the debtors be such as to make it equitable that the debtor having but the one creditor should pay the whole demand against him and his codebtor, and thus leave the property of his co-debtor free to be taken in satisfaction of the claim against him alone."' 33

728, 732, 37 Am. Dec. 721: "The facts of that case were peculiar, and it is very clear from the reasoning of the Chancellor, that he felt he was treading on doubtful ground, as he distinctly admits that there was no such general rule as is here contended for, and puts the case explicitly on the fact, that the conduct of the creditor, was such as to justify the belief, that the contract he was seeking to enforce against the surety, was invalid from usury, and that if the surety was compelled to pay, he could not recover from his principal. The amount of the decision then is, that cases may possibly exist, in which a Court of Chancery will interfere, and compel a creditor to proceed against the principa debtor before he resorts to the surety. No such fact exists in this

case, and there is therefore no warrant for the interference of a Court of Chancery."

83 Wise et al. v. Shepherd (1851) 13 Ill. 41, 47. Accord: Page Trust Co. et al. v. Godwin (1925) 190 N: C. 512, 130 S. E. 323, 325.

The same view requires the mortgagee holding a first mortgage on two pieces of land, on one of which there is a second mortgage, to satisfy his claim on the tract on which there is no second mortgage. "Suppose A mortgages a tract to B, then gives a second mortgage on part of it to C, which mortgage also covers other tracts, and then gives a mortgage on another part to Di On a foreclosure of B's mortgage, the ordinary rule, based merely on the rder of alienation, would be to sell D's part first. But suppose D

could show that the other tracts