72 in favor of the principal, the surety may prevent its execution."1 The same results if the principal's contract is discharged by statute, or if he was under duress.78 If there is no consideration for the principal's contract, the surety is not liable on his undertaking.74 If judgment be obtained by the obligee against the principal the effect of it in a subsequent action against the surety, is viewed differently by various courts. There may be said to be three rules, each of which has a respectable number of adherents. First, some cases have held that a judgment against the principal cannot be received in evidence against the surety, because (a) he did not agree to be responsible for any judgment which might be rendered against the principal by mistake, accident, or negligence; and (b) the surety was not 71 Ames v. McClay et al. (1862) 14 Ia. 281. The rule was formulated in this language by the Alabama Supreme Court in The State V. Parker (1882) 72 Ala. 181: 'if the principal is discharged, because of matters inherent in the transaction, even after judgment against the surety, the latter will be exonerated thereby'; . . . By matters inherent in the transaction, we understand defenses that go to the whole consideration, assailing the original validity of the contract, or showing its subsequent discharge by performance, release, or otherwise.'' Norris v. Pollard (1885) 75 Ga. 358; Crum v. Wilson, Adm'r et al. (1883) 61 Miss. 233; State to the Use of Hemstead v. Coste et al. (1865) 36 Mo. 437; Everding & Farrell v. Toft et al. (1916) 82 Oregon 1, 160 Pac. 1160. See Moore and Barney v. Paine (1834) 12 Wend. 123, where the rule does not apply if the sureties have been indemnified. 72 Lockwood, Vorhies and Co. v. Penn. et al. (1870) 22 La. Ann. 29. 73 Griffith et al. v. Sitgreaves (1879) 90 Pa. St. 161. See Sec. 30, supra. 74 A very recent case presented an interesting situation. The State of Oklahoma garnisheed plaintiff's money and filed a bond with the defendant company as surety. The money was released as exempt. The defendant was surety on the supersedeas bond for the state on appeal. It was held that the state was not required to give a bond under a general statute providing for such bonds, unless it was mentioned specifically, or if it was not by necessary implication included. The State of Oklahoma, being entitled to court process without bond, there was no consideration therefor. The opinion concludes that: "There being no consideration to support the bond sued on in the instant case, it follows, under the rule announced in the cases cited above, that no cause of action existed against the prin cipal therein, and hence none could exist against the surety." Brown et al. v. American Surety Co. of New York (1925) Okla. 237 Pac. 594, 596. a party to the suit.75 Second, by the majority of courts, a judgment against the principal is prima facie evidence against the surety, even though he was not a party to the action against the principal. It is admissible against him when sued by the creditor, and may shift the burden of proceeding on to him, though he may explain it. Such is the view of the United States Supreme Court.76 In states adopting this view, however, a distinction must be observed between the liability of a surety on an attachment bond and the ordinary suretyship undertaking. A judgment against a principal on an attachment or replevin bond is conclusive on the surety unless impeached for fraud or collusion. This is because the undertaking of the surety on an attachment bond is different from such undertakings generally. As one opinion reasoned: "It is given to enable him to regain and retain full use of his property attached or to be attached; and the undertaking takes the place, for all the purposes of the case, of that property, as well as of the attachment itself. Having 75 Pico v. Webster (1859) 14 Cal. 203; Rodini v. Lytle et al. (1896) 17 Mont. 448, 43 Pac. 501. The obligee sued the principal and the surety, the plaintiff here, who is now seeking to recover contribution from his co-surety. In the action by the obligee, it was found that the defendant here was not liable on the bond. Held, the judgment by the obligee, releasing the defendant here, is not res juancata, because it concluded only parties to the issues. In the opinion, the court said: "It is not enough that an issue may have been joined between the obligee and the defendant, as to the liability of the latter on the bond. Whatever that issue may have been, it was not an issue between himself and his co-defendant, the plaintiff in this action, and could not therefore conclude the latter. Though parties to the suit, they were not such in an adversary character, being simply co-defendants to the suit on the bond. The plaintiff in this suit could not, in the former suit, as a matter of right, have insisted on the admission or rejection of evidence on the trial of the issue; had no right to move for a new trial, nor prosecute error if aggrieved by the rulings of the Court; and hence he cannot be held bound by the judgment in any subsequent litigation to which he may be a party." Koelsch v. Mixer, Adm'r (1894) 52 Oh. St. 207, 39 N. E. 417. 76 Moses v. United States (1897) 166 U. S. 571, 600. Accord: State of Ohio for Use of Story v. Jennings (1862) 14 Oh. St. 73; Connor v. Corson et al. (1900) 13 S. Dak. 550, 83 N. W. 588. thus placed himself in the attitude of a substitute for the attachment and for the property, it would seem to follow that the surety is affected by whatever would have affected the property, and liable to respond upon his undertaking, under the same circumstances and within the limit of his undertaking, to the same extent that the property could have been subjected, or the liability of the garnishee enforced." 1977 Third, a few jurisdictions hold that a judgment against the principal in an action to which the surety was not a party, is conclusive against the latter in a subsequent suit.78 If judgment is obtained against the surety by separate action, it is the measure of his damages against the principal, in the absence of fraud or collusion between the surety and obligee. He can recover reimbursement for any sum paid by him for the principal on a judgment obtained by the creditor.79 But it has been held if the creditor secures a judgment against the principal for a less sum than the surety contracted to pay originally, after paying it, the surety may foreclose a mortgage given him for indemnity which exceeds the judgment obtained against the principal. 77 Jaynes, Executrix V. Platt (1890) 47 Oh. St. 262, 24 N. E. 262, 264, 21 A. S. R. 810. That the judgment against the principal on a replevin bond is conclusive on the surety see Shaver v. Kappellas et al. (1925) Ind. Ct. App. 146 N. E. 858. 78 McMicken et al. v. The Commonwealth (1868) 58 Pa. St. 213. It was said in Chamberlin v. Godfrey et al. (1863) 36 Vt. 380, 383: it appears to be a well settled principle that where the sureties, by the express terms of their agreement, or by reasonable implication from the very nature and intent of their obligation, have stipulated to pay the damages and costs which may be recovered against their principal, or otherwise to abide the decree or judgment of a court against the principal, there they are bound by the judgment though they have no notice of the suit. This results from their agreement." 79 Hare v. Grant (1877) 77 N. C. 203. While this opinion stated "the record of recovery against the surety is conclusive evidence" against the principal, in Miller v. Pitts (1910) 152 N. C. 629, 68 S. E. 171, 172, it was said that "a judgment recovered against a surety is, at least, prima facie evidence, or presumptive evidence, of the debt in an action afterwards brought by him against his principal To the same effect, see Dunbar et al. v. Cazort-McGehee Co. et al. (1910) 96 Ark. 308, 131 S. W. 698. See "Conclusiveness of Judgment Against a Surety in a Suit Between Principal and Surety" in (1909) 57 U. of Pa. Law Review p. 320. CHAPTER IX. RIGHTS AND REMEDIES OF CO-SURETIES AND § 165. Contribution generally. ""Contribution' is defined as a payment made by each, or by any, of several having a common interest of liability of his share in the loss suffered, or in the money necessarily paid by one of the parties in behalf of the others. If one pays more than he should, he may compel his co-debtor to contribute his share of the money paid. But it is well settled that for the purposes of an action to recover the proportion of the debt, whether at law or in equity, the right of one is regarded as maturing when he has paid more than his share of the debt, and until that time there is neither equitable obligation nor implied contract to make contribution. The mere fact of his own liability is not sufficient to enable a party to enforce contribution. There must be a payment, or such assumption of the demand as imposes upon the claimant more than his share, and a corresponding release against those from whom he claims." 1 § 166. Origin of contribution. It seems to have been early recognized that one who paid a debt for which another was bound jointly with him was entitled to recover from his coobligor the proportion he should have paid. This right at first depended upon "custom in such cities," or, "by the custom of the city of London," as another briefly reported case suggested. Chancery was the first forum in which contribution was enforced. Its jurisdiction was exclusive. The doctrine underlying the requirement that one whose debt is partially or wholly paid by another who is jointly liable, should ease the one paying, is equitable. At first, contribution could not be ordered by a court of law. But the principle of equity that sureties were presumed to agree that all would contribute equally to a common loss caused by the principal's failure to perform, had its influence upon law courts. Courts of law finally assumed concurrent jurisdiction with equity to enforce the payment of this common loss upon the theory that there was a 83 1 Canosia Township v. Grand Lake Township (1900) 80 Minn. 357, N. W. 346. Contribution was defined in an article on "The Law of Contribution" (1869) 8 Am. Law Register ele(N. S.) 449, containing an mentary discussion of the subject, in this language: "The doctrine of contribution may be defined as the rule by which one person, when compelled to discharge more than his share of any joint liability, can recover from those liable with him their aliquot proportion of the common burden.'' 2 Offley V. Johnson (1584) 2 Leonard 166, pl. 202, 74 Eng. Rep. Reprint 448. 8 Layer v. Nelson (1687) 1 Vern. 456, 23 Eng. Rep. Reprint 582. 4 Sherrod v. Woodard (1833) 15 N. C. 360, 25 Am. Dec. 714. |