Sanders & Walker v. Herndon, &C.
| Decision Date | 04 May 1906 |
| Citation | 122 Ky. 760 |
| Parties | Sanders & Walker v. Herndon, &c. |
| Court | Kentucky Court of Appeals |
Appeal from Garrard Circuit Court.
Judgment for defendants. Plaintiffs appeal. Reversed.
J. W. ALCORN and LEWIS L. WALKER for appellants.
C. B. SWINEBROAD, J. M. ROTHWELL, R. H. TOMLINSON & M. C. SAUFLEY, attorneys for appellees.
Appellants, together with G. M. Patterson, J. B. Conn, R. G. Ward, J. J. Barton, J. B. Kinnaird, William H. Kinnaird, and William Herndon, were jointly bound as sureties for the Lancaster Oil Company upon a note for $5,000, executed to the National Bank of Lancaster, Ky. The bank sued all the makers of the note and recovered judgment against them. Appellants paid off the judgment and took an assignment of it to themselves. Thereafter appellants caused an execution to be issued upon the judgment in behalf of the bank, indorsed for their benefit, against all of the obligors in the note excepting themselves and William H. Kinnaird, for the sum of $5,000. This execution was placed in the hands of the sheriff of Garrard county, and returned "No property found." Whereupon appellants filed a petition in equity against appellee William Herndon and the National Bank of Lancaster as a garnishee defendant, and against William Herndon, administrator of M. W. Johnson, deceased, proceeded against also as a garnishee defendant, attaching whatever might be owing to William Herndon by the garnishees to the extent necessary to satisfy Herndon's liabilities on account of the discharge of the debt made by him. The bank answered that it owed the defendant Herndon $502.81, and that Herndon, as administrator of M. W. Johnson, had on deposit in the bank as administrator aforesaid the sum of $12,750.13. It is charged in the petition that Herndon, who is sued by appellants as principal debtor, was then the administrator of the estate of M. W. Johnson, deceased; that there had passed through his hands as such administrator about $35,000 of assets, collected and disbursed; that he had not been paid anything for his services, but that his claim for compensation was then pending and undetermined in a suit in the Garrard circuit court to settle the estate of Johnson. Attachment was served upon the clerk of the court, properly indorsed, so as to create a lien upon the fund in the hands of the administrator owing to himself from the estate of his intestate, if such fund should be deemed a fund in court, and to subject it to the payment of the plaintiff's debt sued on. A demurrer was sustained to the petition, and it was dismissed.
Two questions are argued in briefs as being presented by this ruling of the court: One, whether the execution upon which the return of no property was made, and which was the basis of this equitable action, instituted under section 439, Civ. Code Prac was void; it being asserted by appellees, and evidently held by the circuit court, that it was void. The second is whether a defendant may be made garnishee, when summoned as such in a different capacity, in a personal action against him for debt. The petition in this case alleges that appellant signed the note sued upon at the instance of appellee William Herndon as his surety; that he undertook to indemnify them wholly against loss on account of their suretyship. The petition shows that the principal in the debt was the oil company, and that the other obligors were sureties to the bank, but that as between appellants and appellee Herndon, Herndon was principal to appellants. By section 4665, Ky. Stat., 1903, if a surety pays the whole or any part of a debt or liability for which he is bound as such, he may recover the amount, with interest from time of payment, from the principal, by an action at law. He may also sue a co-surety, separately or as a joint defendant with the principal, in such proceeding, and in like manner recover judgment against him, separately or jointly, at the same time, for his proper part of the debt or liability so paid, as if the sureties were the sole obligors. Section 4666 of Kentucky Statutes of 1903 applies to sureties who have paid a judgment rendered upon a debt to which they were parties. It allows such judgment to be assigned for the benefit of the surety or sureties so paying it, and it gives to them control of the judgment for their benefit against the other defendants, so far as to obtain satisfaction from the principal for the whole amount so paid by the sureties with interest, or from any co-surety his proper part of such payment according to the principles stated in section 4665. These sections of the statute were not intended to restrict, but to enlarge, the equitable doctrine of substitution and the common-law doctrine of contribution. Kellar v. Williams, 10 Bush., 216.
It is settled that sureties may be bound as among themselces in different measures of liability. Daniel v. Ballard, 2 Dana, 296. All are bound, of course, for the whole debt to the obligee, yet as between principal and sureties the principal alone is bound for the whole of it. Generally as among sureties they are equally bound, excepting that, if some are insolvent or non-residents, those who are solvent are equally bound, without respect to those who are insolvent or beyond the court's jurisdiction. The sureties may nevertheless contract among themselves for a different proportion of liability, which will be respected and enforced by the courts. The statutes above cited were aimed to provide a speedy and simple method of enforcing such liability as among the sureties. If one surety pays more than his just part of the liability, the others who were bound to the obligee, and whose obligation to the obligee was thereby extinguished ought to make whole the one who had discharged their liability, and this according to the terms of the contract as between themselves. The statute, which gives to a surety who paid off a judgment the right to have the judgment assigned to him and to control subsequent issues of the execution upon it, is an enlargement upon the common-law remedy — is a summary action. It is more or less open to initial abuse; that is, a surety may claim that another who merely appears as a joint debtor is in fact his principal, and liable to him for the whole of the debt, may cause an execution to be issued and to be indorsed in favor of the surety who has paid the judgment, and direct it to be made entirely out of the property of the other obligor, whom he may designate as principal. For it is a matter of common experience that such obligations generally do not show who are principals and who are sureties. Consequently judgments rendered upon them would also fail to show the character of the obligors. Notwithstanding all this, the person proceeded against by the surety paying off the judgment is not without remedy. He may have such execution quashed by the court out of which it issued, if it is issued wrongfully, or if more is being attempted to be collected upon it than is justly owing by the complainant. But when he stands by, and allows the execution to issue against him for the whole amount, he will not be heard to say that the execution is void. It is not. It is expressly allowed by the statute. The remedy of such complainant is by direct attack upon it, or by any equitable defense made in the proceeding based upon a return of "no property found" under the execution.
The execution is said to be void for another reason. Subsection 2 of section 1652, Ky. Stat., 1903 (tit. "Executions"), requires that an execution on a joint judgment against several must be joint. This section relates to an execution issued upon a judgment rendered in favor of the person in whose name the execution is issued. It would be in conflict with section 4666 otherwise; for that section expressly allows a surety who had paid a judgment to have it assigned, and have an execution issued upon it against the principal for the whole of it, or against any of the co-sureties for their share of it. From the nature of the case, such an execution could not be joint. Section 4666 must be construed as an exception to the requirements of subsection 2 of section 1652.
The other question raised in the argument is made more difficult by the conflict of authorities elsewhere and the absence of precedent in this State. The estate of M. W. Johnson, an intestate, had been committed by a court of competent jurisdiction to the defendant Herndon for administration. There came to his hands personal assets to be administered, for which the estate owed him a reasonable money consideration, within the statutory maximum of $1,750 or less, as might be determined by the court wherein his final settlement should be made. This compensation was due him in money for services rendered to the estate, and was wholly unpaid. It was not exempt per se from liability for his debts. On the contrary, it ought to be liable therefor precisely as any other chose in action which may have belonged to him. He is, by the admission of the demurrer, not only in default to his creditor, but entitled to receive a considerable sum from Johnson's estate, owing to him personally and then due, which, could the court's process lay hold upon it, ought, in law as in morals, to be applied to the payment of his debt. The defense is an issue of law presented, which is that the law's process is ineffectual to reach this debt or fund. The reasoning is that, as the defendant owes himself the debt, the presumption is that it has been discharged; or, if that presumption be not indulged, that the judgment to be rendered against him as garnishee would be for so much money, which would be fully covered by the judgment against him as debtor. If the object of the law was to aid the debtor in avoiding the payment of his debts, the reasoning...
To continue reading
Request your trial