Lumpkin v. Mills

• Decision Date: 31 March 1848
• Docket Number: No. 38.,38.
• Parties: John H. Lumpkin, administrator of Thomas Mills, deceased, plaintiff in error. vs. Ambrose Mills,defendant.
• Court: Georgia Supreme Court

4 Ga. 343

John H. Lumpkin, administrator of Thomas Mills, deceased, plaintiff in error. vs. Ambrose Mills, defendant.

No. 38.

Supreme Court of the State of Georgia

MARCH TERM, 1848.

In Equity, in Floyd Superior Court, before Judge Wright. October Term, 1847.

The facts of the case are embodied in the opinion of the Court.

Shackelford & Hooper, for plaintiff in error, contended:

I. A surety paying off the debt of the principal, for which he is bound, has no right that can be enforced in Equity, to have the debt assigned to him; but has only the right to have independent collateral securities, so assigned. 1 Story's Eq. Jur. 513, 14.— Copis vs. Middleton, 1 Turner & Russ, 224, 229. Jones vs. David, 3 Cond. Eng. Ch. 665. Theobald, Prin'l and Surety, 173, 4.

II. The assignment of a debt which has been paid, would be a mere nullity in Equity as well as at Law. Story Eq. 515, n 1.

III. A surety paying off a bond debt, will be treated in marshalling assets, as a mere simple contract creditor. 1 Story's Eq. 516, 7, n. 2 and 3. Civil Law otherwise. Ib. 520, 1.

IV. In cases of Bankruptcy, the practice in England is governed by express Statute. 6 Geo. IV. ch. 16. Theob. 174.

V. The remedy of the surety is by action for money paid, &c. Tousant vs. Martinant, 2 T. 104. Theo. P. and S. 169, 70.— Com. on Cont. 398, 9. 1 Story's Eq. 517, 18, note.

VI. The doctrine or rule of substitution should be equally applicable to all cases that may arise. In reference to the Statute of Limitations it would work injustice. Com. on Con. 70, 73.— Theob. P. & S. 169, 70.

VII. The state of Judicial decisions in England at the date of our "adopting Statute, " does not affect this question, if those decisions were not founded on Law.

Wm. H. Underwood & Trippe, for defendant.

Judge Lumpkin, being a relative to the plaintiff in error, did not preside in this cause.

By the Court. —Nisbet, J., delivering the opinion.

This was a Bill filed by the plaintiff in error, as Administrator, to marshal the assets of his intestate. The defendant in his answer set forth that as surity for the plaintiff's intestate upon a note of hand under seal, he had paid the debt of his principal, and therefore claimed in equity, to be subrogated to the lights of the creditor, and to come in, in the marshalling of the assets, as a bond creditor. The plaintiff in error claims that he is only an open account creditor. The question, therefore, and the only question made upon this record, is this: Can a surety, in Equity, upon the settlement of an insolvent estate, who has paid a debt of his principal due upon an instrument under seal, be subrogated to the rights, and substituted to the position of the creditor, so as to come in as a creditor under that instrument, or is he entitled only as a creditor by open account?

It is conceded in the outset, that the authorities upon this subject do not run a uniform course. The early English cases are with the defendant, and recognise the right of subrogation. Cases of the very highest authority in Great Britain, decided since our revolution, settle the rule differently, and deny his right to be paid, otherwise, than as a creditor by open account. The American authorities are also in conflict, but we think their preponderance is in favor of the early British rule. The Civil Law also sustains that rule, and so do the authorities in those countries where the Civil Law is recognized. We think, upon principle, the rule of the British Courts, anterior to our revolution, right. If it was not, it is obligatory upon us as law. The Civil Law is the parent of that rule—as it is, in truth, of many, very many of the principles of Equity, which obtain in the English Chancery Courts. That code is not of binding authority upon us, but I recognise in it, in inference to many titles of the law, and among them that of principal and surety, the very best system extant. Its broader, and more reasonable, and less fettered equity, isgradually being transferred into the American Jurisprudence. And where authorities are in conflict, and principles doubtful, a Court does well to allow the Roman Law to quiet the conflict and dispel the doubt. We have no difficulty, either upon authority or principle, in settling, as the rule of this Court, that a surety, who has paid the debt of his principal, is, in a Court of Equity, entitled, in all respects, to occupy, in the distribution of his estate, the place of the creditor.

It is a well settled doctrine of the Common Law, that a surety upon payment of the debt of his principal, is entitled to an assignment of all the independent securities in the hands of the creditor, with all the remedies which he had to enforce them against the principal. The Roman Law goes farther. By that law, not only is he entitled to these securities, but he is also entitled to be substituted as to the very debt itself, to the creditor, by way of cession or assignment. The debt in favor of the surety is treated, not as a paid, extinguished debt, but as sold to him—all its original obligatory force, continuing against the principal. The surety is viewed in the light of a purchaser. The statement and reasoning of the Civil Law is as follows: "Fidejussoribus succurri solet, ut stipulator compellatur el, qui, solidum solvere paratus est, ventdere caeterorum nomina. Cum is, qui et reum et fidejussores habens, ab uno ex fidejussoribus accepta pecunia proestot actiones; poterit quidem dici, nullas jam esse; cum suum perceperit, et preceptione omnes liberati sunt. Sed non ita est; non enim in solutum accepit, sed quodammodo nomen debitoris venedidit. Et ideo habet actiones. quia, tenetur ad id ipsvm, ut proestt actiones." Of the reasoning upon which the Civil Law goes. Mr. Story says: "it may seem a little artificial, but it has a deep foundation in natural justice." Pothier on Oblig. by Evans, n. 275, 280, 281. 428, 429, 430, 519, 520, 521, 522. Dig. Lib. 46, tit. 1, 1, 17, 1, 36. Pothier Pand. Lib. 46, tit. 1, n. 46. I Domat. B. 3 tit. 1, Sect. 3. Art. 6, 7.

This rule, I stated, is adopted in countries which recognise the Civil Law. Nap. Code, Art. 1251, 1252. Bell's Dict. Art. Beneflcium cedendarum actionum. Civil Code of Louisiana, Art. 2157, 2158. Voet, ad Pand. Lib. 46, tit. 1 Sect. 27, 29, 30. Huber Praelect. Inst. Lib. 3 tit. 21, n. 8. Ersk. Inst. B. 3, tit. 3, Art. 68. 1 Kaime's Eq. 122, 124. The Courts of Great Britain, in some of the earlier cases, enlarged the rule that I stated was settled— to-wit: that a surety is entitled to the independent collateral se-curities, with all the creditor\'s remedies to enforce them against the principal; and held that the surety should be also entitled to an assignment of the very debt itself; thus going the full length of the Civil Law, and subrogating him fully to the rights of the creditor The rule thus enlarged, we recognise as the Common Law rule, at the time we adopted it. In ex parte Crisp, Lord Hardwick said, that where a surety paid off a debt, he was entitled to have from the creditor, an assignment of the security, to enable him to obtain satisfaction for what he had paid beyond his proportion. 1 Atkins, 133. In Morgan vs. Seymour, the Court decreed that the creditor should assign over his bond to the two sureties, to enable them to help themselves against the principal debtor. 1 Ch. It. 64. The principle was applied in a very strong case in Vernon. The principal had given bail in an action, and judgment was recovered against the bail. Afterwards, the surety to the original debt was called upon and paid it, and it was held that he was entitled to an assignment of the judgment against the bail. So that, although the bail was but a surety, as between him and the principal debtor, yet coming in the room of the principal, as to the creditor, it was held that he likewise came in the room of the principal debtor, as to the surety. This case establishes that the surety has precisely the same rights that the creditor had, and shall stand in his place—a case of entire subrogation. Parsons vs. Briddock, 2 Vernon, 608. These three cases are anterior to the era of the revolution, and demonstrate how the law stood at that time; and considering that we are not at liberty to depart from the common law, as it then stood, and that up to that time the rule was not seriously questioned, we might stop the review here. It may, however, be more satisfactory to press the discussion through the course of this question, down to the present moment, and to look into the reasonableness of the modern English rule. Other cases since that era, recognize the doctrine as held in the three cases referred to. It received an express recognition by the Chancellor, in Wright vs. Morley, 11 Vesey, 12, 21, 22; in which case, the case of Parsons vs. Briddock, in Vernon, is commented on and sustained. See also Dowblggin vs. Bourne, 1 Younge, 111. S. C. 2 Younge & Coll. 404. Butcher vs. Churchill, 14 Vesey, 567, 575, 576. Ex parte Rushworth, 10 Vesey, 409, 414. Robinson VS. Wilson, 2 Mndd. 464. Craythorn vs. Swynborne, 14 Vesey, 160, 162. Hotham VS. Stone, 1 Turner & Russ. 226, note.

It is nevertheless true, as Mr. Story states, that the rule is now different in England. Without following the authorities minutely through, it may be stated that the late rule, which denies the right of the surety to a cession of the debt itself, and to a perfect substitution for the creditor, rests chiefly upon two comparatively recent cases, determined by two of the ablest Chancellors of England. I allude to the case of Copis vs. Middleton, 1 Turner & Russ. 224, determined by Lord Eldon, and Hodgson vs. Shaw, 3 Mylne & Keeue, 183, determined by Lord Brougham. These are names of preeminent authority, and their weight settles all controversy about the matter at this moment in England. It is not a little remarkable, that names of authority equally conclusive, on this side of the water, are arrayed against these potent chiefs of the English Chancery,...