Sanders & Walker v. Herndon

• Decision Date: 17 March 1908
• Citation: 108 S.W. 908,128 Ky. 437
• Parties: SANDERS & WALKER v. HERNDON et al.
• Court: Kentucky Court of Appeals

108 S.W. 908

128 Ky. 437

SANDERS & WALKER v. HERNDON et al.

Court of Appeals of Kentucky.

March 17, 1908

Appeal from Circuit Court, Garrard County.

"To be officially reported."

Action by Sanders & Walker against William Herndon and others. From a judgment of dismissal, plaintiffs appeal. Reversed, with directions.

Lewis L. Walker and J. W. Alcorn, for appellants.

M. C Saufley, R. H. Tomlinson, J. M. Rothwell, C. B. Swinebroad and William Herndon, for appellees.

BARKER J.

This is the second appeal of this case to this court. The first opinion is to be found in 29 Ky. Law Rep. 322, 93 S.W. 14, 5 L. R. A. (N. S.) 1072. The former appeal was from a judgment of the trial court sustaining a general demurrer to the petition and dismissing it, upon the plaintiffs (appellants) declining to amend. This judgment was reversed, the opinion holding that the petition stated a good cause of action; and the case was sent back to the circuit court, with directions to overrule the demurrer, and for proceedings consistent with the opinion. It is hardly necessary to say that whatever principles of law were settled on the former appeal are now the law of this case, and not open to reargument. The appellants, Sanders and Walker, were, with seven other persons (among whom was the appellee William Herndon) sureties for the Lancaster Oil Company upon a note for $5,000, executed to the National Bank of Lancaster, Ky. When the note fell due it was not paid, and the bank brought suit on it against the principal and all the sureties, and obtained judgment against them for the sum of $5,000, with accrued interest and costs. In order to prevent an execution which issued on this judgment from being levied on their property the appellants paid it off in full to the bank, and took an assignment of it to themselves, and then had an execution issued against all of the other sureties, which was returned "no property found" by the sheriff into whose hands it came for execution. Thereupon the appellants obtained a copy of the execution and return of the sheriff and instituted this equitable action under the provisions of section 439 of the Civil Code of Practice against the appellee Herndon alone, and caused attachments to be issued against certain money, which was either his, or in which he had an interest. The petition, after setting forth in detail the transaction out of which the litigation springs, alleged that, while as to the bank the plaintiffs were sureties for the Lancaster Oil Company, as to the appellee Herndon the appellants were his sureties and he was their principal, and therefore bound to them for the full amount of the debt which they had been forced to pay for him. Upon the return of the case to the circuit court the appellee filed an answer denying that appellants were his sureties, and alleging that all the parties to the note were co-sureties for the principal, the Lancaster Oil Company. The question whether or not appellants were the sureties of William Herndon in reality, or whether they were only his co-sureties on the note of the oil company, was the main question left for determination after the case returned to the circuit court. Much testimony was taken upon this issue, and upon the final trial the court evidently held that the appellants failed to establish the fact that they were the sureties for appellee Herndon and therefore dismissed the petition, and of this judgment the appellants are here on appeal for the second time.

We are inclined to think the appellants failed to establish, by a preponderance of the evidence, that they were the sureties of Herndon, and that the court correctly so adjudged; but it does not follow that the petition should have been dismissed because, on the facts stated in the pleadings and not disputed by either party, the appellants were, at least, the co-sureties of the appellee Herndon, and they having paid off the judgment in full, certainly he was indebted to them for his proportionate part of the whole debt which they had paid for the benefit of all the sureties, and for this much, at least, the court should have given judgment in order to do complete justice between the parties under the general prayer of the petition for all proper and equitable relief. The failure of the court to do this will require a reversal of the judgment, and for a proceeding hereafter along the lines which we shall now proceed to set forth. The evidence in this case, without contradiction, shows the following facts as a part of the history which led up to the indebtedness which is the basis of this action: William Herndon and nine others, to wit, G. M. Patterson, J. B. Conn, J. I. White, R. G. Ward, J. J. Barton, J. B. Kinnaird, J. B. Sanders, Alex Walker, and William H. Kinnaird, apparently had caught the oil fever, and were anxious to acquire property in the oil region of Knox county, which at that time was experiencing what is commonly called a "boom." On the 7th day of March, 1902, Herndon and his co-promoters executed articles of incorporation under the provisions of the Kentucky statutes by which they, in form, organized the Lancaster Oil Company with a capital stock of $100, which was represented by 30 shares of $3.33 each; each of the incorporators subscribing for three shares of stock. On the 24th day of March, 1902, the articles of incorporation were amended by increasing the capital stock to $30,000, divided into 3,000 shares of $10 each. On the 5th day of April, 1902, the articles of incorporation were again amended, increasing the capital stock to...