Gieseke v. Johnson

• Decision Date: 22 June 1888
• Parties: Gieseke v. Johnson.
• Court: Indiana Supreme Court

115 Ind. 308

17 N.E. 573

Gieseke

v.Johnson.

Supreme Court of Indiana.

June 22, 1888.

Appeal from circuit court, Knox county; George A. Bicknell, Judge.

Henry S. Canthorne and John M. Boyle, for appellant. Cobb & Cobb, for appellee.

Zollars, J.

J. H. Gieseke and appellee executed a promissory note to the First National Bank of Vincennes, in which was a stipulation for the payment of attorney's fees for collection. Although not shown upon the face of the note, appellee was surety for Geiseke. Before the maturity of the note, Gieseke died, and appellant was appointed administrator of his estate. After the maturity of the note, appellee paid it, but paid no attorney's fees. Subsequently, he filed his claim against the estate of Gieseke, stating therein the amount thus paid, setting out a copy of the note, and claiming attorney's fees for its collection. The court below allowed the claim, and included in its judgment $15 as such attorney's fees.

Is appellee entitled to recover such attorney's fees? That is the only question for decision here. We are satisfied that he is not. One sufficient reason why he is not is that he is entitled to recover the amount paid to the bank, with interest, and no more. His right of action is for indemnity only, and rests upon an implied promise on the part of the principal. Hence it is that a surety cannot maintain an action against his principal until he has paid something, and then only for the amount paid, with interest. In this state the rate of such interest is regulated by statute. Rev. St. 1881, § 1219; Brandt, Sur. §§ 176-178; Bonney v. Seely, 2 Wend. 482;Eaton v. Lambert, 1 Neb. 339;Blake v. Downey, 51 Mo. 437;Succession of Dinkgrave, 31 La. Ann. 703;Kendrick v. Forney, 22 Grat. 753; 1 White & T. Lead. Cas. 225, and cases there cited, and 156, and cases there cited. To say that upon, and by reason of, the payment of the note by the surety, equity subrogated him to the rights of the creditors, and to go further, and say that, by reason of such subrogation, he might maintain an action upon the note against the principal, would not aid the appellee in this case; for the action would still be for indemnity, and the amount of his recovery, the amount which he paid to the bank, with interest. Sheld. Sub. § 105, and cases there cited. It is there said: “The subrogation of a surety will not be carried further than is necessary for his indemnity. If he buys up the security at a discount, or makes his payment in a depreciated currency, he can enforce it only for what it cost him.” In the case of Kendrick v. Forney, supra, in speaking of the rights of a surety to be subrogated to the rights and securities of the creditor, it was said: “He has no equity to be subrogated to the rights and securities of the creditor against the debtor for what he has not paid for him, but only for what he has paid for him. So that, upon the principal of subrogation, as upon the implied contract of indemnity, the surety is not entitled to recover from the principal a greater amount than he has paid for him. He has an equity to be subrogated only for his indemnity in cases where the doctrine of subrogation will apply.”

There was no subrogation or equitable assignment in the case before us, for the one sufficient reason, without attempting to give others, that there is no equity...