While there is considerable authority to support the view of Lord Kenyon,63 the better reasoning, and probably the favored view, is that: the mere request to another to join him as a co-surety, would upon all ordinary rules of construction mean that he was to enter upon the same responsibilities, and become bound on equal terms." 64 A similar result to that expressed by Lord Kenyon is reached by the rule which denies reimbursement to a surety in an action against the principal debtor, where the former did not become liable at the express or implied request of the principal. But this must be distinguished from the rule which gives to the surety who has become bound against the wish of the principal whose debt he has discharged the right to be subrogated to all the rights and remedies of the creditor. Subrogation does not depend upon any contract, express or implied, but arises out of the relations existing between the surety and the creditor.66 § 176. How payment may be made. The money paid for a principal by a surety is recoverable by way of contribution, up to the amount of the debt. But a surety can never recover more than the amount for which he became bound. The surety may pay the creditor in property, if the latter is willing to accept it. But in his action to compel the co-sureties to contribute, the surety will in no case recover more than the actual value of the property given in extinguishment of the debt, nor more than the amount of the debt. If the surety's property is sold on execution at less than its value after judgment obtained by the 68 Brandt (1905, 3d Ed.) Sec. 290 says this is the weight of authority; but Brandt's view as to what is the weight of the authority is not that of the writer of the opinion in Burnett et al. v. Millsaps et al. (1881) 59 Miss. 333, 337. 64 McKee v. Campbell (1873) 27 Mich. 497, 499. Accord: Bagott et al. v. Mullen (1869) 32 Ind. 332, 2 Am. Rep. 351; Burnett et al. v. Millsaps et al. (1881) 59 Miss. 333; See Hendrick V. Whittemore (1870) 105 Mass. 23. 65 Carter v. Black (1839) 4 Devereux & Battle (N. C.) 425. See Sec. 157, supra. 66 Mathews et al. v. Aikin (1848) 1 Com. (N. Y.) 595. See Secs. 136 and 153, supra. creditor, no more than it brought at the sale can be recovered against the co-sureties.67 Payment of the principal's debt in depreciated paper of third persons, while discharging liability to the creditor, entitles the paying surety to recover only the actual value of such paper.68 Likewise, payment in depreciated confederate currency entitled recovery on the basis of the value of such money.69 even Acceptance by the creditor of the promissory note of one of the sureties will, in the absence of fraud, discharge such debt, and the surety who is maker of the note may, prior to the payment of it, recover contribution from his co-sureties," 70 though he becomes insolvent.71 So long as the paying surety gave the note in good faith, it is no defense to a co-surety that the payee-creditor, through motives of friendship, returned it to the maker.72 The creditor is under no obligation to accept such a note, but if he does so, the principal's liability is discharged. But if the principal and one of the sureties join in a new note to replace a prior one, the surety is not entitled to call upon his associates for a share, because he did not pay the original note, but merely changed the contract.78 § 177. When the liability to contribute begins. Whenever any portion of a principal's debt, in excess of his proportionate share, is paid by any surety, he may maintain an action to compel his co-sureties to contribute. If the principal has paid a part, the remainder must be divided among all the sureties 67 Hickman and Pearsons V. McCurdy (1832) 7 J. J. Marsh (Ky.) 555, 558. 68 Crozier's Trustees v. Grayson (1830) 4 J. J. Marsh (Ky.) 514, 517. 69 Edmonds et al. V. Sheahan (1877) 47 Texas 443. 70 Anthony v. Percifull (1848) 8 Ark. 494; Ralston v. Wood (1853) 15 Ill. 160, 171, 58 Am. Dec. 604; White v. Carlton (1876) 52 Ind. 371; Robertson v. Maxcey (1838) 36 Ky. 101; Smith v. Mason (1895) 44 Neb. 610, 63 N. W. 41. equally. Until one of them pays more than his share, computed by dividing the whole number of solvent, resident sureties into the amount owed by the principal, no right accrues against his co-sureties, although the payment of any sum would entitle him to recover indemnity. Even a judgment against one surety does not entitle him, prior to its satisfaction, to bring an action to recover contribution from his co-sureties.7 75 This is for the reason that until payment is made, the relation between co-sureties cannot be called a debt, demand or claim. Between the sureties prior to payment there is said to exist: a mere relation, out of which a claim, debt or demand may arise through the happening of circumstances, and, if the circumstances are of one character, one surety is liable to the other, and, if of another character, then the other is liable to the one. The whole doctrine of contribution after payment is based upon the general equity of equality of burden and benefit. Until there is burden or benefit, there is no claim, legal or equitable." 76 The statute of limitations, therefore, does not begin to run against the right of contribution until one surety has paid the obligee more than his proportionate share. It is not required that the principal's debt be entirely discharged before a right accrues against co-sureties, or before the statute of limitations begins to run in their favor. As Baron Parke expressed the rule: "But, whenever it appears that one has paid more than his proportion of what the sureties can ever be called upon to pay, then, and not till then, it is also clear that such part ought to be repaid by the others, and the action will lie for it. the right of action having been once established, it seems clear that when a surety has paid more than his share, every such payment ought to be reimbursed by those who have not paid theirs, in order to place him on the same footing." 77 74 Parke said in Davies v. Humphreys (1840) 6 Meeson & Welsby 153, 151 Eng. Rep. Reprint 361, that "there is no rule of law which requires the surety to pay the whole debt before he can call for reimbursement." 75 Backhus v. Coyne (1881) 45 Mich. 584, 586. 76 May v. Vann (1876) 15 Fla. 553, 557. 77 Davies v. Humphreys (1840) 6 Meeson & Welsby 153, 151 Eng. Rep. Reprint 361, 367. Accord: Durbin v. Kuney and Sayers (1890) 19 Oregon 71, 23 Pac. 661. No precedent notice or demand is required to be given by the paying surety,78 unless he pays the creditor in instalments, in which case notice of the payment to the co-surety has been held necessary.79 But certainly no demand could be required by a co-surety who held securities of the principal with which to pay the debt, or in case the obligee has obtained judgment against all the sureties. He should know of the judgment against him, and that the plaintiff surety has paid it.80 While no cause of action for contribution arises until one surety has paid more than his share, it is recognized that the implied agreement between them had its inception when the Brett, L. J., in Ex parte Snowdon (1881) 17 Ch. D. 44, 48, said that the doctrine laid down in Davies v. Humphreys has never been questioned, and it seems to be absolutely in accordance with what Lord Eldon said in Ex parte Gifford [(1802) 6 Ves. 805], upon the authority of which Davies v. Humphreys was decided." In another opinion in the same case, James, L. J., wrote (p. 47): "I believe the proper course when a surety is called upon to pay a part of the whole debt for which he is liable would be to bring an action against his co-sureties to compel them to contribute to pay his debt to the creditor, just as he would be entitled to call on them for contribution if he had been sued by the creditor, asking that he should be indemnified by his co-sureties against paying the whole debt, or whatever risk he ran. But, until the whole debt has been paid by one surety, or so much of it as to make it clear that, as between himself and his co-sureties, he has paid all that he ever can be called upon to pay, there can be no equitable debt from them to him in respect of it. There is noth ing ascertained as a debt which would give him a right to proceed against his co-sureties."' 78 Wood v. Perry (1859) 9 Ia. 479. Stating that notice to the cosureties to contribute is necessary in some cases, an early American opinion said that demand must be made, although the statute of limitations begins to run and the cause of action is complete without it. "If the contingency be one which lies as much in the defendant's knowledge as in that of the plaintiff, he must take notice of it at his peril; but if it lies more properly in the knowledge of the plaintiff than of the defendant, there, if the action be a special action of assumpsit, the declaration ought to aver that the defendant had notice thereof, and if the action be a general indebitatus assumpsit, such notice ought to be shown at the trial." Sherrod v. Woodard (1833) 15 N. C. 360, 364, 25 Am. Dec. 714. 79 Williams' Adm'rs v. Williams' Adm'rs (1832) 5 Ohio 444. Compare Carpenter v. Kelly (1839) 9 Ohio 106. 80 Parham v. Green (1870) 64 N. C. 436. common obligation was assumed.81 From the date when they became bound for their principal, each surety was an existing creditor of his co-sureties, in the sense that he is entitled to protection against a fraudulent conveyance of realty made prior to payment of any part of the principal's debt. And the fraudulent grantee of realty from one of the sureties cannot avail himself of the defense of adverse possession, because until one surety pays more than his share, his right as a creditor against his co-sureties is contingent. The surety is entitled to protection against fraudulent conveyances made by his co-surety, though no right of action against the co-surety accrues until the common obligation is discharged. Therefore, a surety who has paid may have a fraudulent conveyance by his co-surety set aside, although the period prescribed for barring actions to recover land has passed, because the fraudulent grantee is not an adverse possessor.82 v. Bernard et al. (1907) 196 Mass. |