Kendrick v. Forney

• Decision Date: 28 October 1872
• Citation: 63 Va. 748
• Court: Virginia Supreme Court
• Parties: KENDRICK & al. v. FORNEY.

63 Va. 748

KENDRICK & al. v. FORNEY.

Supreme Court of Appeals of Virginia.

October 28, 1872

In March 1862 K sold personal property at auction, on nine months' credit, amounting to about $2,000. F purchased some of it, and gave his bond for $501.57, with R as his surety. On the tenth of April 1863 K sold all the bonds to R including that of F, for Confederate money. After the bond of F fell due, he tendered payment in this money. HELD: R can only recover of F the value of the Confederate money he paid K for the bond, with interest from the date of the purchase.

This was a suit in equity in the Circuit court of Warren county by James W. Kendrick and James R. Richards against Abraham Forney, as an absent defendant, to attach the land of Forney lying in that county, for the payment of a bond for $501.57 dated March 10th, 1862, payable, with interest, at nine months from its date, executed by said Forney as principal and James R. Richards as his surety. Forney answered the bill, and insisted that the bond was to be paid in Confederate treasury notes; that Richards had paid off the bond to Kendrick in April 1863, in that currency, and that respondent had tendered the money to both Kendrick and Richards, and they had refused to receive it. The facts seem to be as follows:

Kendrick, who had boarded with his family at Richards', in the county of Warren, wishing to leave that county, sold his personal property at auction, on a credit of nine months, and Forney made purchases at the sale to the amount of $501.57, for which he executed the bond in question, with Richards as his surety. The whole amount of the sale seems to have been about $2,000, for which bonds were taken. Kendrick, whose deposition was taken, says the sale was not for Confederate money, and that the property sold for less than the prices before the war or since. In April 1863, Kendrick sold all these bonds, including Forney's, to Richards, receiving Confederate money therefor at par, except that what he owed Richards for the board of himself and family was taken in part for the price of the bonds. This account was for three months board, at the rate of $375 a year, his family consisting of himself, his wife, two children and a nurse.

As to the tender, both Kendrick and Richards denied that Forney had tendered them the money. A witness, Hite, deposed that Forney placed in his hands near $600, with directions to pay it to Richards and get the bond, and that he did offer it to Richards, who refused to receive it.

The cause came on to be heard on the 26th of August 1868, when the court held that Richards, who was the surety of Forney in the bond to Kendrick, was only entitled to recover of Forney the value of the Confederate treasury notes paid by him to Kendrick for the bond, with interest thereon. And it appearing that the amount of Confederate States treasury notes so paid by Richards was $534.17, which at the gold value at the date of payment, viz: April 10th, 1863, was $97.12, it was decreed that Richards should recover of Forney the said sum of $97.12, with interest from the 10th of April 1863, until paid. And unless, & c. From this decree Kendrick and Richards applied to this court for an appeal, which was allowed.

Conrad, for the appellants.

Cook, for the appellee.

OPINION

ANDERSON, J.

A surety who pays the debt of his principal, upon the plainest principles of natural reason and justice, has a right to be reimbursed by him. And this principle is recognized by both courts of law and equity. There is an implied contract of indemnity between the principal and his surety, which obliges the former to reimburse the latter who has paid his debt; and the courts of equity will substitute him to the remedies and securities of the creditor for his indemnity; and this not upon the ground of contract, but upon a principle of natural equity and justice. In a court of law the surety in a joint bond with his principal, who has paid the debt of the principal to the creditor, can proceed against the principal upon the implied contract of indemnity, to be reimbursed the amount he has paid. He can proceed against him only upon the implied contract, and not as assignee of the bond; for by the payment of the bond to the creditor it is extinguished. And in Copis v. Middleton, 1 Tur. and Russ. R. 224, Lord Eldon held that in such a case, the doctrine of courts of equity, that a surety who has paid the debt of the principal may be subrogated to the remedies and securities of the creditor against the principal does not apply. He says the rule must be qualified by considering it to apply to such securities as are not extinguished, but which continue to exist, and do not go back upon payment, to the person of the principal debtor. As where there was a mortgage in addition to the bond, the surety paying the bond, which is thereby extinguished, would have an equity to be subrogated to the benefit of the mortgage which is still a subsisting security.

This decision is not in accord with the decisions of our courts as to payments made by the surety, after the death of the principal debtor. It has been repeatedly held by this court, that where the bond has been paid by the...