Harnsberger v. Yancey

• Decision Date: 25 September 1880
• Citation: 74 Va. 527
• Court: Virginia Supreme Court
• Parties: HARNSBERGER & als. v. YANCEY & als.

74 Va. 527

HARNSBERGER & als. v. YANCEY & als.

Supreme Court of Appeals of Virginia.

September 25, 1880

I. A principal for whom another, at his request, undertakes as surety, although such principal's name does not appear in the obligation given by the surety, is as much bound to indemnify such surety, for what he pays on the obligation, as if his name appeared on it as principal; and the surety in such case is entitled by subrogation to enforce for his exoneration or indemnity all the rights, remedies and securities of the creditor against the principal debtor. And this rule is broad enough to include every instance where one pays a debt for which another is primarily answerable, and that should in equity and good conscience have been discharged by him.

II. A decree was rendered against Y, a principal debtor, and M, his surety, on one bond; T, a principal, and W, his surety, on another; and said T, principal, and H, his surety on another bond--all given for deferred payments for purchases of land part by Y and part by T. An appeal was taken by both principals and sureties from said decree, but the supersedeas bonds were only executed by T, one of the principals, and H, one of his sureties. The condition of the bond, as prescribed by the judge awarding the supersedeas, was to pay all " costs and damages according to law, and also any deficiency in the funds arising from the land sales decreed in meeting and discharging the sums decreed against the parties respectively, in case the decree complained of be affirmed or the appeal or supersedeas dismissed." The condition inserted in the bond by the clerk, was to " pay the judgment, " in addition to that prescribed by the judge. On a suit on the appeal bond--HELD:

1. The stipulations in the bond to " pay the judgment," and " also the deficiency" on the resale of the lands, should be regarded as alternative provisions, intended to accomplish but one and the same object, namely, the satisfaction of the decree and the payment of costs and damages according to law.

2. The proceeds of these bonds when collected are applicable to the satisfaction of the decree appealed from, as reduced by the resales of the lands, apportioned amongst all of the parties against whom the decree was rendered, and H, a surety for T a principal, now bankrupt, who joined in the appeal bond, is not only entitled to his proportion of the fund arising from the judgment on the appeal bond, to be credited on the decree against him as such surety, but he and his co-obligors in the bond, who have satisfied the penalty, are entitled to indemnity from Y, one of the principals, for the portion credited to him as derived from the said bond; and are also entitled to contribution from W, as co-security on the original contract to T, for the amount paid by them on said appeal bond.

III. If there are two parties bound as principal and surety for a debt, and a third party afterwards, at the request of the principal, bind himself as surety for the debt, the two sureties, in the absence of any agreement to the contrary, become co-securities of the same principal, and this relation may be established by implication from circumstances, as well as by express agreement. But where there is a judgment against a principal and his surety, and a third party, at the instance of the principal, and for his sole benefit, and without the assent of the surety, enters as surety for the principal in an obligation, the effect of which is to suspend the execution of the judgment, and thus prejudice the rights of the first surety, the equity of the latter (first surety) is superior, and the second would not be entitled to contribution from the first; and, according to some authorities, the first would be entitled to indemnity from the second. This is not the case with Y and W in this case.

This is an appeal from a decree of the circuit court of Rockingham county. The facts necessary for a proper understanding of the case, so far as they are not stated in the opinion of the court, are these: On the 7th August, 1863, Messrs. Logan & Yancey, as commissioners of said court, sold to William B. Yancey about one-half of the real estate of which William B. Yancey, Sr., died seized and possessed, and to B. P. Teel the remainder. A large portion of the purchase money was paid down in Confederate bonds, but two instalments fell due in August, 1865, and August, 1867, respectively, and a contest ensued as to whether these contracts were to be discharged in Confederate or United States currency. William B. Yancey gave his bonds for the deferred instalments, with George W. Mauzy alone as surety. Those given by B. P. Teel were divided into two equal sets; on one set he gave James M. Weaver as surety, and on the other set H. B. Harnsberger.

On the 7th September, 1863, William B. Yancey, by separate and independent contracts, sold the land bought by him to C. M. Price and said B. P. Teel-- Price giving as security to Yancey for the purchase money one W. S. Miller, and Teel giving as surety one W. E. Sipes.

In the suits for the enforcement of the original contracts of Yancey and Teel, the circuit court, by decree rendered December 1st, 1868, held that they were to be discharged in United States currency, and decreed that Yancey and Mauzy, his surety, should pay to the commissioners of the court $17,545.41, with interest from 7th August, 1864; that B. P. Teel and James M. Weaver, his surety, should pay $8,814.87, and that said Teel and H. B. Harnsberger, his surety, should pay a like sum of $8,814.87--both of these sums bearing interest from 7th August, 1864; and in default of payment, Charles A. Yancey was directed, as commissioner of the court, to proceed to resell the said lands.

From this decree, William B. Yancey, B. P. Teel, H. B. Harnsberger, J. M. Weaver, George W. Mauzy and Charles M. Price applied for and obtained a writ of supersedeas to the district court then held at Winchester, and Teel, Price and Harnsberger, three of the appellants, gave the supersedeas bond, required in the penalty of $10,000, with J. M. C. Harnsberger, A. J. Johnson, Charles H. Sowers and R. S. Harnsberger as sureties, with condition to pay the judgment superseded, and " all such costs and damages as shall be awarded in case the said judgment be affirmed, and also any deficiency in the funds arising from the sales decreed." The district court affirmed the decree of the circuit court, and the appellants took an appeal to the supreme court, which affirmed the decree of the district court. The supersedeas bond in the supreme court was executed by B. P. Teel, Solomon Stover, Elizabeth Trundle and H. B., Robert S. and J. M. C. Harnsberger, in the penalty of $10,000, and with like condition with that executed in the district court. (The condition required by the judge awarding the supersedeas is copied in the opinion of the court, and need not be repeated here). Before the appeal to the district court was perfected, Charles A. Yancey, the commissioner, advertised, and was about to resell the land; but it being represented to him that the appeal had been applied for, and on a written application signed by Teel, Price, Sipes, Weaver and Miller, that the interest of the defendants would be promoted thereby, the sale was postponed. The appeals, on being perfected, were prosecuted in the names of all the appellants named in the petitions therefor. And after the final affirmance, and a resale by Charles A. Yancey of the real estate, the deficiency was decreed against each of the parties on their several obligations. H. B. Harnsberger paid the amount decreed against him as surety for Teel, who had become bankrupt (the amounts paid by other parties are fully stated in the opinion), when the commissioners, failing to realize the amounts decreed against some of the other parties, instituted suits at law on the two supersedeas bonds, and recovered judgments for the amounts of their penalties, viz., twenty thousand dollars. On proceedings to enforce those judgments, the circuit court held, as stated in the opinion of Judge Burks, that " the legal effect of the supersedeas bonds, was to substitute the obligors to the liabilities of the original debtors--of Yancey, the principal debtor, as well as of Weaver, the surety--and not only to preclude these obligors from all right to indemnity from the principal and contribution from the surety for whatever the obligors might be compelled to pay on the bonds, but also to require them to exonerate the principal and surety from all liability from any balance against them on the decree of December, 1868, after applying thereto the proceeds arising from a resale of the lands under that decree." From this decree, H. B. Harnsberger, Robert S. Harnsberger and Joseph M. C. Harnsberger obtained an appeal. The effect produced by the decree of December, 1868, against H. B. Harnsberger as original surety for B. P. Teel, and that against the obligors in the appeal bonds, by the decree now appealed from, is stated in detail in the opinion of Judge Burks, and is not, therefore, repeated here.

Sheffey & Bumgardner, for the appellants.

Charles A. Yancey, Richard Parker, C. T. O'Ferrell, J. S. Harnsberger, George E. Sipe and W. B. Compton, for the appellees.

BURKS J.

Under the decree of December 1, 1868, rendered in the consolidated causes of Yancey, receiver, v. Yancey & others, the same v. Teel & others, and Conrad's gdn. v Conrad & others, the appellees, William B. Yancey and Bernard P. Teel, were the principal debtors; George W. Mauzy was the surety of the said William B. Yancey, and James M. Weaver and the appellant, H. B. Harnsberger, were the separate sureties of said Teel for equal amounts, and the lands ordered to be resold stood as a...