Clay v. Freeman

• Decision Date: 23 November 1896
• Citation: 74 Miss. 816,20 So. 871
• Court: Mississippi Supreme Court
• Parties: BRUTUS J. CLAY ET AL. v. LUCY C. FREEMAN ET AL

20 So. 871

74 Miss. 816

BRUTUS J. CLAY ET AL. v. LUCY C. FREEMAN ET AL

Supreme Court of Mississippi

November 23, 1896

March 1897

FROM the chancery court of Bolivar county HON. A. H. LONGINO Chancellor.

The appellants obtained a money decree, in equity, in the circuit court of the United States for the northern district of Mississippi, at Oxford, against appellee, Lucy C. Freeman. From this decree said appellee prosecuted an appeal to the United States circuit court of appeals at New Orleans, the appellees, Charles Scott and F. M. Scott, becoming sureties upon the appeal bond. At the time of the execution of the bond, the principal therein and one D. J. Field executed and delivered to the sureties a writing obligatory, which was in form a conveyance of certain lands to one Woods, as a trustee, and which, after reciting the decree, appeal, the execution of the appeal bond and an agreement to hold the sureties on the bond harmless, provided, the term "we" meaning the grantors or makers of the writing "Now, therefore, if said Lucy C. Freeman prosecutes said appeal with effect, and if she shall answer all costs and damages if she fail to make good her appeal, and if we promptly pay any judgment or decree that may be rendered against said Charles Scott and said F. M. Scott, sureties on said bond, and if we promptly pay indemnity to them and hold them harmless as such sureties, then this conveyance shall be void."

The decree was affirmed by the circuit court of appeals, and appellants obtained judgment upon the appeal bond, upon which an execution was issued with return nulla bona. This suit was then instituted by appellants to subject the lands conveyed to Woods, trustee, in the writing obligatory executed by Lucy C. Freeman and Field to the sureties, Charles Scott and F. M Scott, to the payment of the original decree. The court below decreed for defendants, and the complainants appealed.

Decree affirmed.

Nugent & Mc Willie, for appellants.

Looking to the face of the trust deed, it will be seen that it is not the character of instrument contended for by appellees. After stating that the Scotts had, at request, signed as sureties the bond for $ 5, 400, and the agreement to hold them harmless, the deed recites the following: "Now, therefore, if said Lucy C. Freeman prosecutes said appeal with effect, and if she shall answer all costs and damages if she shall fail to make good her appeal, and if we promptly pay any judgment or decree that may be entered against said Charles Scott and said F. M. Scott, sureties on said bond, and if we promptly pay indemnity to them and hold them harmless as such sureties, then this conveyance shall be void." The appellants recovered judgment on the appeal bond against the Scotts, who are insolvent, and the very condition in which liability attaches by the terms of the deed has arisen. The trust deed in the case does not differ materially from that in the Hemingway case. State v. Hemingway, 69 Miss. 505. The grantors provided the conveyance as a means of paying the judgment recovered on the supersedeas bond, which bond served the purpose intended. It is manifest, in this case, that the trust deed was intended to be availed of by the creditor in case the appellant secured judgment against the Scotts, and this is a full answer to the objections of counsel.

Sillers & Owens and Brame & Alexander, for appellee.

The law is well settled, and with perfect unanimity, that a creditor is never subrogated to the security which a stranger has given to indemnify the sureties of the debtor. It is not necessary to cite the cases in detail. The rule is clearly announced in Brandt on Suretyship, sec. 326. On this ground alone the chancery court rightly dismissed the bill. It is a settled rule in the matter of suretyship that a security given by a principal to his surety, in order to avail a creditor, must be conditioned to secure the debt. If it is merely to indemnify the surety, it cannot be enforced until the latter has sustained loss. Where the security is not for the payment of the debt, but as a personal indemnity, the creditor cannot be substituted to it and enforce it, at least until the surety has suffered the loss. The surety must have the right to enforce it before the creditor can. A reference to the text-book above cited will show that this court has gone further in recognizing this distinction than the courts of most states. Poole v. Doster, 59 Miss. 258; Bush v. Stamps, 26 Miss. 463; McLean v. Ragsdale, 31 Ib., 701.

The rule that substitution to a personal indemnity will not be allowed is recognized as the law in Brandt on Suretyship sec. 326. We refer the court, also, to Hampton v. Phipps, 108 U.S. 260; Leggett v. McClelland, 38 Ohio St., 624; Taylor v. Bank, 87 Ky. 398; Macklin v. Bank, 83 Ib., 314.

Chas....