Lower v. Buchanan Bank

• Decision Date: 30 April 1883
• Citation: 78 Mo. 67
• Parties: LOWER v. THE BUCHANAN BANK et al., Appellants.
• Court: Missouri Supreme Court

78 Mo. 67

LOWER

v.THE BUCHANAN BANK et al., Appellants.

Supreme Court of Missouri.

April Term, 1883.

Appeal from Buchanan Circuit Court.--HON. JOS. P. GRUBB, Judge.

AFFIRMED.

B. R. Vineyard for appellants.

Woodson & Crosby for respondent.

PHILIPS, C.

This is a bill for injunction. It appears that the Buchanan Bank, in 1870, recovered judgment in the circuit court of Buchanan county, against M. D. Morgan, William Ridenbaugh, George I. Gibson and Isaac Lower, for the sum of $4,575.27, founded on a promissory note executed to said bank by Morgan, as principal, and the other parties thereto as sureties. Morgan having failed in business and gone into bankruptcy, Lower notified and requested the bank to sue on the note, so as to protect him as surety, as soon as possible. Ridenbaugh also became insolvent, leaving Lower and Gibson bound to make good any deficiency not collected from Morgan's estate. There seems to have been in Lower's mind at least some apprehension as to Gibson's solvency. Accordingly, Lower directed Allen H. Vories, attorney for the bank, to have execution issued, and the sheriff directed to levy the same on a lot of cattle discovered by Lower, belonging to Gibson. This was done, and the sheriff levied on cattle of Gibson's, of the admitted value of $1,800. It seems that Vories instructed the sheriff not to levy on exceeding $1,500 worth of property. Gibson gave to the sheriff a delivery bond for the cattle seized. By direction of the bank's attorney, the cattle were released from the levy, on the payment by Gibson of $900, leaving a balance of $4,140.41 unpaid on the judgment. In August, 1871, there was paid thereon by Morgan's estate, $1,288.38. In December, 1871, the plaintiff, Lower, paid thereon $900, leaving a balance yet due of $2,154.11. Afterward, Morgan's estate paid thereon $277.73; so that on the 5th day of May, 1878, there remained unpaid, $3,010.77, when plaintiff paid thereon $1,552.50, being in excess of one-half of said judgment. In December following the sheriff, at the instance of Abbott P. Goff, the assignee of said bank, caused the real estate of Lower to be levied on to satisfy the residue of said judgment, and was proceeding to sell the same, when Lower instituted this action against the bank and Goff, to enjoin the sale.

The defense set up in the answer in justification of the release of Gibson's property from the execution is, that Lower suggested that $900 would be sufficient to pay Gibson's pro rata of said judgment, and that was all he desired then to realize from Gibson. The answer admits that thenceforth Gibson became “hopelessly insolvent.”

On hearing the evidence, the court found the issues for plaintiff, and made the injunction perpetual. Defendant brings the cause here on appeal.

It is apparent from the allegations of the petition and proofs, that if the bank had realized the $1,800 on the cattle levied on, it would have collected from Gibson one-half of the judgment remaining after crediting it with the sums collected from Morgan's estate, and to that extent lessened the burdens of the co-surety.

But the defendant contends that conceding all the petition alleges, no cause of action is shown, because, by section 9, chapter 34, page 270, Wagner's Statutes, it was lawful for him to “compound with any and every one or more of his debtors for such sum as he may see fit, and to release him * * without impairing his right to demand and collect the balance, etc., from the other debtors,” reserving, however, the right to contribution between the co-debtors. There can be no question but that this statute does away with the common law rule that the voluntary release of one co-surety discharges the other. But whether it applies to the circumstances of a case like the one at bar, appealing so strongly to the protecting arm of the chancellor, does not appear clearly to have been passed on by the Supreme Court of this State.

The only case found in which the equity rule in question between the creditor and surety has been invoked since the foregoing provision was first enacted, (§ 14, pp. 873, 874, vol. 1, Stat. 1855,) is the case of the State ex rel. Midgett v. Matson, 44 Mo. 305, decided in 1869. From the reported case it is not apparent when the administrator's bond, which formed the basis of the action, was executed, whether prior or subsequent to the enactment aforesaid. Be this fact as it may, Wagner, J., in delivering the opinion, pages 308, 309, uses this language: “A release of the principal will always discharge the surety; but one surety may be discharged without prejudice to an action against the others to the extent that they would be liable in a suit for contribution between themselves. The discharge of one surety cannot be permitted to increase the liability of the others;” which would indicate that he had in his mind the statutory provision in question, and did not believe it worked the injustice to increase the liability of a surety.

I think this statute means exactly what it says. It is “lawful” for the creditor to compound with one debtor without discharging the co-debtor; but it gives no license to him to release from the operation of his judgment or execution lien, property of a co-surety under circumstances that would operate as a fraud on the other surety and increase his liability. Natural justice demands that one man having become surety with another, shall not have the whole debt thrown on him by the trick, bad faith or gross neglect of the creditor. This he was not permitted by equity to do prior to the statute of 1855; and if he may so do since, of what avail was the proviso of said s...