French v. Young

• Decision Date: 15 March 1940
• Docket Number: No. 49.,49.
• Citation: French v. Young, 292 Mich. 443, 290 N.W. 861 (Mich. 1940)
• Parties: FRENCH et al. v. YOUNG.
• Court: Michigan Supreme Court

292 Mich. 443

290 N.W. 861

FRENCH et al.

v.YOUNG.

No. 49.

Supreme Court of Michigan.

March 15, 1940.

Action by John H. French, trustee for Paul H. Deming and others, against Leonard A. Young to recover contribution.From an adverse judgment, defendant appeals.

Reversed, without a new trial.

Appeal from Circuit Court, Wayne County; Allan Campbell, judge.

Argued before the Entire Bench.

Cook, Smith, Jacobs & Beake, of Detroit (Joseph H. Clark, of Detroit, of counsel), for appellant.

Beaumont, Smith & Harris, of Detroit, for appellee.

WIEST, Justice.

This suit involves right to contribution between indemnitors and turns upon whetherthey were co-sureties, obligated to meet a common burden.

Employees of the Union Trust Company, the National Bank of Commerce, and the Union Title and Guaranty Company had purchased stock of the Union Commerce Corporation, and had borrowed the money for the purchases from various banks and financial institutions in and around Detroit, including the Union Trust Company and the National Bank of Commerce, pledging their stockholdings in the Union Commerce Corporation as collateral security to the loans.The notes amounted to about $1,200,000.To avoid a possible crash by calling, of the notes it was arranged that the Union Company of Detroit should render to such employees financial assistance and: ‘If said Union Company of Detroit shall receive upon demand full payment of all sums advanced and obligations incurred by it in connection with such financial assistance to the employees of Union Commerce Corporation and/or its subsidiary or affiliated companies, which financial assistance shall be recommended by said Committee, and the arrangements for such assistance which has been effected by it with said Union Company of Detroit and not otherwise, then and in that case this obligation shall be void and of no effect; otherwise to remain in full force.’

Thirty-five men, in order to indemnify the Union Company of Detroit from loss, signed an undertaking to such effect, pledging specific liability of each to the amount of the sum set opposite their signatures, and which amounted to $1,095,000.Defendant, opposite his signature, placed his liability at the sum of $100,000.

We quote from the undertaking the provisions bearing upon the issue here involved:

‘Know all men by these presents, that the undersigned are severally held and firmly bound unto the Union Company of Detroit, a Michigan corporation, in the sums set opposite their respective signatures hereto, to be paid to said Union Company of Detroit, its successors or assigns, to which payment well and truly to be made, we do by these presents severally bind ourselves in and for the several amounts set opposite our respective signatures hereto.

‘Sealed with our seals, and dated this 15th day of November, A.D. 1929.’

Then followed the mentioned condition of the undertaking, ending with: ‘In witness whereof, the undersigned individuals have executed this instrument in several counterpart originals, provided that their several liability hereunder shall not exceed the several amounts set opposite their respective signatures hereto and their liability hereunder shall be determined ratably, except that on the death of any of the subscribers hereto the liability of the deceased subscriber shall be pro rated among the surviving subscribers, and the estate of the deceased subscriber shall be relieved from all liability hereunder.’

The principal in the undertaking could not meet the payments and a receiver was appointed.A compromise between the receiver and 16 of the indemnitors was accomplished under which the 16 indemnitors, but not including defendant, satisfied the liability of all the indemnitors by payment of $325,000.Thereupon the receiver assigned right of action, if any, to the plaintiff herein, as trustee for the benefit of those who had settled the liability of the indemnitors, and the action at bar followed.

In the circuit court judgment was rendered in favor of plaintiff in the sum of $60,838.29.Defendant appeals.

The action is not on the bond but one for contribution between claimed co-sureties.

Defendant contends that the indemnitors were not co-sureties but indemnitors under special and individual obligation, without the relation of co-suretyship.

The liability was to the obligee in the bond and, by express terms, it was special and unrelated to that of the other indemnitors.The recital that ‘their several liability hereunder...