North v. Albee

• Citation: 155 Fla. 515,20 So.2d 682
• Parties: NORTH et al. v. ALBEE.
• Decision Date: 30 January 1945
• Court: United States State Supreme Court of Florida

20 So.2d 682

155 Fla. 515

NORTH et al. v. ALBEE.

Florida Supreme Court

January 30, 1945

Rehearing Denied Feb. 23, 1945.

Appeal from Circuit Court, Sarasota County; W. T. Harrison judge.

John F Burket, of Sarasota, for appellants.

Williams & Dart, of Sarasota, for appellee.

CHAPMAN, Chief Justice.

Prior to June 1935, John Ringling, F. H. Albee, A. E. Cummer, Jo Gill and Charles E. Schoff owned 592 shares of stock in the Bank of Sarasota. Ringling and Albee had large sums on deposit with said bank. Financial difficulties of the bank necessitated the appointment of a liquidator by the State Comptroller. M. A. Smith was appointed, assumed control, and took the necessary steps to liquidate the bank. John Ringling died in December, 1936, when the appellants were appointed executors of the estate of John Ringling, deceased.

On June 6, 1935, M A. Smith, as liquidator of the Bank of Sarasota, obtained a joint and several decree in Chancery against John Ringling, A. E. Cummer, F. H. Albee and Jo Gill in the sum of $71,526.75. The basis of the aforesaid decree was a double assessment upon the 592 shares of stock of the Bank of Sarasota. It is alleged that Charles E. Schoff was a nonresident of Florida and died prior to the institution of the Chancery suit and service of process was not obtained in the Chancery case upon the executor of the Estate of Charles E. Schoff.

The liquidator, during the progress of liquidation, refused or declined to return or pay to John Ringling, F. H. Albee or A. E. Cummer certain portions of the amount each had on deposit when the bank closed, but stated and represented that he was retaining said sums for the purpose of applying the money to the liquidation of the aforesaid final decree, although various depositors of the bank had been paid certain portions of the amount with the bank at the time of closing.

On December 13, 1935, the liquidator executed and caused to be recorded a document reciting the full payment of the final decree out of funds then on deposit with the bank appearing in the names of John Ringling, A. E. Cummer and F. H. Albee. In paying the final decree the liquidator used the sum of $44,455.02 of the money of John Ringling; the sum of $23,467.92 of the money of A. E. Cummer; and the sum of $3,790.01 of the money of F. H. Albee. The pro rata share of the final decree which should have been paid by each of the three was the sum of $23,904.31. The liquidator in the payment of the decree took from the deposit of John Ringling in excess of the said $23,904.31 the further or additional sum of $20,550.70. The liquidator, arbitrarily and against the consent of John Ringling, used the $20,550.70 of Ringling's money with which to pay the debts of F. H. Albee and A. E. Cummer. Payment was made on December 13, 1935.

On February 16, 1943, more than seven years later, the executors of the John Ringling Estate filed in the Circuit Court of Sarasota County, Florida, a bill of complaint (which was later amended) against F. H. Albee seeking a decree of subrogation to the said final decree in so far as was proper to enforce collection of the money due the John Ringling Estate from the said F. H. Albee for that portion of the said F. H. Albee's pro rate share of the final decree arbitrarily paid by the liquidator out of the funds of John Ringling then on deposit with the Bank of Sarasota. The amended bill also prayed for an accounting. The involved facts are not in dispute, but a conflict of views arises on the application of the law to the admitted facts.

The grounds of appellee's motion to dismiss are, viz: (1) The bill is without equity; (2) appellants' remedy is an action at law; (3) subrogation does not lie because the judgment has been satisfied and extinguished; (4) Ringling only paid his own judgment; (5) subrogation does not lie because Ringling was primarily liable; (6) Ringling's remedy was an action at law for contribution and said suit is now barred by the statute of limitations; (7) the seven year statute of limitations is here applicable; (8) the action did not accrue within three years; (9) the action did not accrue within four years; (10) plaintiffs are guilty of laches; other grounds appear but the recitation thereof is unnecessary. The Chancellor below sustained the motion to dismiss the amended bill, and plaintiffs below appealed.

This controversy can be disposed of by an answer to the following question posed by counsel for appellee, viz: Where a judgment against several codebtors who are each jointly and severally and primarily liable thereon was paid by one codebtor in December, 1935, can said codebtor (or his executors) maintain an action more than seven years thereafter against one of his other codebtors by way of seeking subrogation?

It is settled that subrogation arises by operation of law where one having a liability or a right or a fiduciary relation in the premises pays a debt due by another under such circumstances that he is in equity entitled to the security or obligation held by the creditors whom he paid. The Ringling Estate, having paid as shown by the record, the joint judgment against John Ringling, A. E. Cummer and F. H. Albee, then the executors of the Ringling Estate simply step into the shoes of the judgment creditor and may direct execution based on the judgment against the goods and property legally subject to execution and sale as owned by either R. E. Cummer or F. H. Albee, and in this manner have returned to the estate the amount or amounts paid by it in their behalf on the joint judgment. See Cuesta, Rey & Co. v. Newsom, 102 Fla. 853, 136 So. 551.

Pomeroy's Equity Jurisprudence, Vol. 4, 5th Ed., 1072-74, par. 1419, states the rule thusly:

'Subrogation.--The surety who has paid or satisfied the principal's debt or obligation is entitled to be subrogated to and to have the benefit of all securities which may at any time have been put into the creditor's hands by the principal debtor, or which the creditor may have obtained from the principal debtor. By the fact of payment, the surety becomes an equitable assignee of all such securities, and is entitled to have them assigned and delivered up to him by the creditor in order that he may enforce them for his own reimbursement and exoneration. * * *

'The remedy of subrogation has been granted to sureties much more favorably and extensively by the American equity jurisprudence than by the English. In England, prior to modern legislation, if a surety paid a contract which he executed jointly with his principal debtor, or paid a judgment recovered against him and his principal debtor, or paid a judgment recovered against him and his principal jointly, the contract or judgment was thereby ended and discharged and could not itself be enforced by the surety. The courts of all the American states, with very few exceptions, have extended the remedy of subrogation to such cases; they enable the surety to enforce such bond, or contract or judgment immediately against the principal debtor, although the surety was himself directly liable....