Malone v. Stewart
| Decision Date | 19 February 1912 |
| Docket Number | 152 |
| Citation | 83 A. 607,235 Pa. 99 |
| Parties | Malone v. Stewart, Appellant |
| Court | Pennsylvania Supreme Court |
Argued January 9, 1912
Appeal, No. 152, Jan. T., 1911, by defendant Patrick S Smith, from decree of C.P. No. 2, Phila. Co., June T., 1909 No. 903, in equity in case of Edwin B. Malone v. Amelia Stewart and Patrick S. Smith. Affirmed.
Bill in equity for contribution.
SULZBERGER P.J., filed the following opinion in overruling a demurrer to the bill upon which, after hearing, there was a decree in favor of the plaintiff:
The Stewart Contracting Company contracted with the city of Philadelphia to build a schoolhouse, and gave bonds for faithful performance with the Title Guaranty and Surety Company as surety. Before assuming the suretyship, the latter demanded counter-bonds in the sum of $70,000. Edwin B. Malone, the plaintiff, executed one of these for $10,000, and the defendants, Amelia Stewart and Patrick S. Smith each executed one of the said bonds for $30,000.
The Stewart Contracting Company abandoned the work before completion, and the three counter-sureties, to save themselves from loss, jointly agreed to finish the work.
At this point the controversy arises.
The plaintiff contends that the loss by the contractor's default should be finally adjusted by charging each of the counter-sureties his proportion thereof, as fixed by their bonds to the surety.
The defendants, on the other hand, maintain, in support of their demurrer to the bill, that on the face of the bill itself it appears that no contract relation existed between the plaintiff and defendants establishing as between themselves any proportionate liability; that the averments of the bill show that the plaintiff and defendants jointly agreed to complete the work, and that the legal inference from this state of facts is that their interests were equal. They further contend that as the plaintiff paid one-third of the outlay hitherto made and each of the defendants also paid one-third thereof, such payment is in law a mutual ascertainment of their true relations at the time, and a waiver of any contract theretofore made or of any other relation subsisting between them.
As additional grounds of demurrer it was urged that there are pending and undetermined certain contested claims arising out of the building of the schoolhouse, and that no bill can lie until all such shall have been finally determined, and that therefore the bill must be dismissed.
In Deering v. Earl of Winchelsea (2 Bos. & Pul. 270), decided in 1800, it was held that if A, B and C became bound as sureties for D in three separate bonds, and any one of them be compelled to pay the whole debt of the principal, the two others are compellable to contribute in proportion to the penalties of their respective bonds.
Lord Chief Baron Eyre based his conclusion on the view that "The bottom of contribution is a fixed principle of justice, and is not founded in contract." The reasoning and the judgment in that case have not been disturbed or questioned.
Indeed, in Craythorne v. Swinburne, 14 Ves., Jr., 160 (decided in 1807), Lord Eldon (page 169) stated that he argued the former case and had been much dissatisfied with the judgment, but had since been convinced that the decision was upon right principles.
It follows that when the Stewart Contracting Company abandoned its work, the plaintiff and defendants were, as between each other, co-sureties responsible to the surety in the proportions of one-seventh, three-sevenths and three-sevenths.
At this point they jointly agreed to reduce the loss by agreement between themselves to finish the work. This agreement was not in writing and may have included no other specific terms than those set forth in the bill. These were, in substance, that the money required for completing should be raised by procuring from the defaulting contractor its four promissory notes to the order of plaintiff and defendants and having them discounted by a bank for the defendant, Smith. These notes were for the amounts of $1,500, $4,500, $3,500 and $3,000, respectively, and their proceeds were properly applied. The notes were not paid at maturity, because the defendants refused to admit that the plaintiff was liable only for one-seventh, but insisted that he was liable for one-third. To prevent judgment and execution, he, under protest to defendants, paid one-third, or $4,349.20, to the bank, and the defendants each paid the same amount. As the whole amount paid in settlement of the promissory notes was $13,047.60, it would follow on the principle laid down that the plaintiff was liable only for one-seventh thereof, viz., $1,863.94. As he actually paid $4,349.20, he claims that he has thus far exceeded his true share by $2,485.26, which he may rightfully call upon his co-sureties to pay to him.
At the time when the co-sureties undertook to complete the building, they were not partners and did not intend to create a partnership. They were mutually engaged in the one purpose to reduce their loss, and this purpose rested on the fact that they were co-sureties.
It was quite possible at that moment to enter into an agreement whereby the unequal proportions established by the co-suretyship should be altered and the losses should be borne in equal thirds. No such agreement, however, can be inferred from the bill, and if it ever was made, the defendant must set it forth by answer.
In the absence of such an averment, the legal presumption is that the status of the three-co-sureties remained unchanged and that the completion of the work was not a separate business enterprise but a mere mode of protecting themselves in regard to their co-suretyship.
This disposes of the main point of the demurrer.
The contention that the payment of one-third by the plaintiff warrants a legal inference that the old proportions of the co-sureties were changed, seems to be without force. The question is one of fact and not of law.
The final contention that the bill is premature is equally untenable. That the plaintiff has paid more than his one-seventh is clearly averred. The contention of the defendants that the existence of additional claims against the co-sureties which are contested and have not yet been decided exempts them from present contribution is based on the idea that a present decree could only be partial and that equity will not favor a multiplicity of suits. Their inference is unwarranted. The decree can be so moulded that all litigation will end with it, though, of course subsequent motions or orders may have to be made. In any event, the fact that the defendants may be held to further liability hereafter, is no equitable reason why they should subject their co-surety to indefinite delays in reimbursing him for what he has already...
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