Keyes v. Dyer

• Decision Date: 23 April 1952
• Docket Number: No. 34607,34607
• Citation: 206 Okla. 325,243 P.2d 710
• Parties: , 1952 OK 166 KEYES v. DYER.
• Court: Oklahoma Supreme Court

Page 710

243 P.2d 710

206 Okla. 325, 1952 OK 166

KEYES v. DYER.

No. 34607.

Supreme Court of Oklahoma.

April 23, 1952.

Syllabus by the Court.

1. An action brought by a surety against his principal, joint makers of a promissory note, for reimbursement of money which the surety was compelled to pay in satisfaction of a judgment recovered upon the note by the payee against the makers thereof, is founded upon the statutory obligation of the principal to reimburse his surety and is therefore governed by the 3-year statute of limitations. 15 O.S. 1951 § 381; 12 O.S. 1951 § 95, par. 2.

2. One who appears to be a principal, whether by the terms of a written instrument, or otherwise, may show that he is in fact a surety, except as against persons who have acted on the faith of his apparent character of principal. 15 O.S. 1951 § 372.

3. Notwithstanding the recovery of judgment by a creditor against a surety, the latter still occupies the relation of surety. 15 O.S. 1951 § 375.

4. Cause of action of surety upon his principal's statutory obligation to reimburse what surety has disbursed in satisfaction of the principal obligation accrued when surety made payment.

5. The journal entry as to an order or judgment of the trial court is the only evidence that may be considered in this court as to the contents of such order or judgment of the trial court.

6. The remedies of the surety under 15 O.S. 1951 § 382, and 12 O.S. 1951 § 831, are cumulative and a surety who fails to proceed under either statute is not thereby precluded from pursuing his remedy for reimbursement under 15 O.S. 1951 § 381.

R. L. Christian, of Frederick, for plaintiff in error.

Chamberlin & Slagle, of Frederick, for defendant in error.

PER CURIAM.

This is an action by a surety against his principal, makers of a promissory note, for reimbursement of money paid by the surety in satisfaction of a judgment recovered upon said note by the payee thereof against said makers. Reference will hereinafter be made to the respective parties as plaintiff and defendant, according to their designation in the court below.

On November 28, 1933, the defendant M. W. Keyes, the plaintiff R. W. Dyer, and one C. B. Keyes joined as makers in executing a promissory note payable to one J. D. Laney on December 1, 1934. On February 27, 1937, the payee, J. D. Laney, recovered a joint and several judgment upon said note against the said makers thereof. The judgment was kept alive by successive executions. On January 19, 1946, the plaintiff was compelled to pay said judgment and a release thereof was filed in the cause in which said judgment was entered. On November 5, 1948, the plaintiff brought this action and in his petition alleged the foregoing admitted facts, and attached and made a part of his petition copies of said note, judgment, and release of judgment. Plaintiff further alleged, and defendant admits, that said note was executed by the defendant as principal and by the plaintiff and one C. B. Keyes as sureties. The plaintiff alleged that he was entitled to reimbursement from the defendant and the prayer was for judgment against defendant for the amount paid by plaintiff in satisfaction of said judgment, together with interest and costs. The existence of the principal and surety relationship between the makers of said note is not disclosed by either said note or judgment.

The trial below without the intervention of a jury resulted in a judgment for plaintiff conforming to the prayer of his petition. Defendant appeals.

The first question for our determination is whether the action is barred by the statute of limitations.

'Civil actions, other than for the recovery of real property, can only be brought within the following periods after the cause of action shall have accrued, and not afterwards:

'First. Within five years: An action upon any contract, agreement or promise in writing.

'Second. Within three years: An action upon a contract express or implied not in writing; an action upon a liability created by statute other than a forfeiture or penalty. * * *' 12 O.S. 1951 § 95.

Defendant contends that if plaintiff's action is on the original note or judgment rendered thereon, the statute, supra, had barred the action.

According to the prevailing view, the remedy at law of the surety who has paid a note or satisfied a judgment for his principal is an action on the obligation, implied by law, of the principal to reimburse his surety. 72 C.J.S., Principal and Surety, § 323, page 786, 50 Am.Jur. p. 1047, secs. 219, 220.

The history of the statute of limitations, supra, 12 O.S. 1951 § 95, may be traced to a similar statute of the State of Kansas, and we are favorably impressed with the logic of the Supreme Court of Kansas in the case of Guild v. McDaniels, 1890, 43 Kan. 548, 23 P. 607, wherein the majority rule was followed and the court held:

'Where a joint maker of a promissory note, or his representative, pays the note, and then brings an action against the other maker, upon the ground that he is in fact only a surety, his action, although brought upon the note, must be mainly proved by parol evidence; because he must show by such evidence the amount he paid upon the note, the date of payment, that his joint maker is the principal, and that he is a surety only. Therefore, the action is founded on an unwritten and implied agreement of his principal, and must be brought within three years.'

Defendant points out that Oklahoma has consistently followed McClure v. Johnson, 1898, 10 Okl. 663, 65 P. 103, wherein the Supreme Court of the Territory of Oklahoma held:

'In this territory, under the statute, as well as at common law, the right of action of the surety who has discharged the promissory note of his principal is against the principal, upon the note, and not upon an implied promise to pay. A surety who pays is subrogated to all the rights of the holder of the note, one of which is the possession of the promissory note, and the right of action upon it against the principal; and he may pursue his remedy upon the note which he has paid, as against the principal, who is primarily liable, to the extent of reimbursing what he has expended.'

McClure v. Johnson, supra, was followed by this court in Pendergraft v. Phillips, 1916, 57 Okl. 105, 156 P. 1189. It should, however, be observed that in McClure v. Johnson, supra, the note was endorsed without recourse by the payee thereof. In Pendergraft v. Phillips, supra, the note was assigned by the payee, and the surety, a joint maker of the note in each case, upon satisfying the obligation, pursued his rights under the statute, 15 O.S. 1951 § 382, infra, to enforce the remedy which the payee of the note then had against the principal. Furthermore, by force of a statute enacted in Oklahoma after the decision in McClure v. Johnson, supra, a promissory note is not discharged upon payment thereof by a party secondarily liable thereon. 48 O.S. 1951 § 263. Whitten v. Kroeger, 183 Okl. 327, 82 P.2d 668.

In Fox v. Kroeger, 119 Tex. 511, 35 S.W.2d 679, 77 A.L.R. 663, the Texas Supreme Court construed a statute identical with 48 O.S. 1951 §§ 261 and 263, and the decision there supports the Oklahoma view above set forth. In that case we again observe that the surety, a joint maker of a promissory note, was compelled to pay the note and on so doing took an assignment thereof and brought the action on the note itself.

It is recognized in Guild v. McDaniels, supra, that written evidence of the relationship of the parties, and assignments and transfers in writing of the creditor's security to the party secondarily liable thereon, are important factors in determining the nature of the latter's action.

The rule in McClure v. Johnson, supra, is not controlling in the determination of the nature of this action, in view of the distinguishing factors present here and the cumulative rights and remedies of a surety under the statutes of Oklahoma cited herein.

The note here was merged in a judgment in favor of the payee against the markers thereof. The plaintiff, one of the makers of said note and bearing the relationship of a surety thereon, was compelled to pay said judgment and said judgment was thereupon released by the judgment creditor.

In addition to the remedies in the nature of subrogation conferred by 15 O.S. 1951 § 382, infra, the statute construed in the case of McClure v. Johnson, supra, we observe that the obligation of a principal to reimburse his surety, implied in law, finds express recognition in a companion statute.

'If a surety satisfies the principal obligation, or any part thereof, whether with or without legal proceedings, the principal is bound to reimburse what he has disbursed, including necessary costs and expenses; * * *.' 15 O.S.1951 § 381.

Plaintiff's petition not only alleged the note and the judgment thereon, but also pleaded payment of the judgment and the release and satisfaction thereof. It is apparent that defendant's statutory obligation to reimburse plaintiff is the foundation of plaintiff's cause of action. Therefore, plaintiff's cause of action is governed by the three-year statute of limitations, supra. 12 O.S. 1951 § 95, par. 2.

While the original note and the judgment thereon did not disclose the relationship of principal and surety between the makers of said note, the establishment of that relationship in this action was proper under the statute and decisions of this state. 15 O.S. 1951 § 372; Stovall v. Adair, 9 Okl. 620, 60 P. 282; Wills v. Fuller, 47 Okl. 720, 150 P. 693. The relationship of principal and surety was not destroyed by the judgment upon the original note. 15 O.S. 1951 § 375; Whitten v. Kroeger, supra.

The statute of limitations, supra, permits the bringing of the action within the applicable period of limitations 'after the cause of action shall have accrued'. Defendant urges that if the judgment herein was based upon the note, plaintiff's cause of action accrued upon the...