Burnside v. Fetzner

• Decision Date: 31 May 1876
• Citation: 63 Mo. 107
• Parties: JOHN BURNSIDE, Appellant, v. BENJAMIN FETZNER, et al., Respondents.
• Court: Missouri Supreme Court

63 Mo. 107

JOHN BURNSIDE, Appellant,

v.BENJAMIN FETZNER, et al., Respondents.

Supreme Court of Missouri.

May Term, 1876.

Appeal from Buchanan Circuit Court.

W. H. Campbell, with B. F. Loan, for Appellant.

I. Burnside is subrogated to all the rights of Bell in the premises. Bell, in a court of equity, after this debt had become due, could compel Fetzner and his sureties to exonerate him from his liability by paying the debt, and could do so even though he, Bell, had paid no part of it. (1 Sto. Eq. §§ 327, 499; Wooldridge vs. Norris, Law Report, 6 Eq. 410; Champion vs. Brown, 6 John. Ch. 398 [161], 406; Marsh vs. Pike, 10 Paige, 595.)

Where a collateral security, pledge or bond, is given for the better security or protection of a debt, a court of equity will make it effectual for that purpose, to the parties who are entitled to the debt as well as to the immediate parties to the bond. (Haven vs. Foley & Papin, 18 Mo. 136, and cases cited; New Bedford Institution for Savings vs. Fairhaven Bank, 9 Allen [[[Mass.], 175; Homer vs. Savings Bank of New Haven, 7 Conn. 478; New London Bank vs. Lee, 11 Conn. 112; King vs. Baldwin, 2 John. Ch. 554; Belcher vs. Hartford Bank, 15 Conn. 380.)

II. In equity, after the assumption of the joint or partnership debts by one of the debtors, the other becomes merely a surety for the payment of such debts. Therefore, a bond executed by one debtor to a co-debtor, to indemnify him against the payment of their joint or partnership debts, upon the dissolution of their partnership firm, will be treated in a court of equity as a collateral security for the better protection and payment of such debts; and as a trust for the benefit of their creditors. (Goodall vs. Wentworth, 20 Me. 322; Crafts vs. Mott, 4 N. Y. [4 Comst.] 604; New London Bank vs. Lee, 11 Conn. 112; Haven vs. Foley & Papin, 18 Mo. 136, and cases cited; Lewis vs. DeForest, 20 Conn. 427; Opinion of the court, pp. 442, 443; Haven vs. Foley & Papin, 19 Mo. 632; Jones vs. Quinnipiack Bank, 29 Conn. 25; 1 Sto. Eq. § 499, p. 503 [10 Ed.]; Phillips vs. Thompson, 2 John. Ch. 418; Moses vs. Murgartroyd, 1 John. Ch. 119; 49.)

J. D. Strong, for Respondent Smith.

I. No judgment can be rendered against Smith as an individual. He is an entire stranger.

II. The plaintiff cannot thus establish a demand against Bell's estate, and the trust fund thereof in Smith's hands, as assignee. The statute provides how plaintiff is to prove his claim, (Wagn. Stat. 153, 154, §§ 20, 21), and there is nothing in the record to show that Smith, as such assignee, rejected, or had an opportunity to reject, the claim. If he had done so, still the plaintiff's remedy would be by appeal. (Wagn. Stat. 154, § 24.)

III. Plaintiff cannot maintain this action against any of the defendants. This is not a promise by Demond and Krug to pay plaintiff for the benefit of Fetzner or Bell. It is their guaranty that Fetzner shall pay a debt which he already owes, both severally and jointly with Bell. Bell's debt or liability to Burnsides was not extinguished nor affected in any manner whatsoever. Nor was the condition of Burnsides, respecting either Bell or Fetzner, changed in degree or kind. He parted with nothing, and Demond and Krug received nothing, There is, therefore, no privity between plaintiff and Demond or Krug, and certainly none between him and Smith, as to their liability on said bond. (Manny vs. Frasier's Adm'r, 27 Mo., 419, and cases cited.) This case does not fall within the rule of Bank of Mo. vs. Benoist (10 Mo. 519), and Roberts vs. Ayers (10 Mo. 538), unless the court should hold that Burnsides could maintain action in Bell's name, or in the name of Smith, assignee of Bell, to his own use--in order to do which the court would first have to find that there was privity such as is expressly excluded by the statements of the petition. If Bell gave Demond and Krug nothing to sign the bond, and has paid Burnsides nothing on the debt, how can he recover for his own use, or for any one else, on the bond, as against them?

IV. If the points above stated be well taken, then there is misjoinder of parties defendant. The judgment should be affirmed in so far as it affects defendant Smith.

Allen H. Vories, for Krug & Demond.

As between Krug and Demond and plaintiff there was no privity. The bond which they executed to Bell, in behalf of Fetzner, could only be declared upon in a court of law, upon breaches assigned upon the part of Bell. There could be no subrogation of Bell's right by plaintiff, and no privities between the parties defendants.

SHERWOOD, Judge, delivered the opinion of the court.

Fetzner 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 Fetzner. 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...