Smith v. Mason

• Decision Date: 05 April 1895
• Citation: 44 Neb. 610,63 N.W. 41
• Parties: SMITH v. MASON.
• Court: Nebraska Supreme Court

44 Neb. 610

63 N.W. 41

SMITH

v.MASON.

Supreme Court of Nebraska.

April 5, 1895.

Syllabus by the Court.

1. Where one of two or more sureties discharges the debt of the principal debtor, by giving his individual note for part of the sum due, and money for the residue, which is received by the creditor as payment, and the evidence of the original debt surrendered, such surety is entitled to demand contribution from the other joint sureties, although the new note has not been paid.

2. In an action by a surety against one of several cosureties for contribution, the share to be recovered is controlled by the number of solvent cosureties; in other words, the insolvent ones are to be excluded, and the burden must be distributed equally between the sureties who remain solvent.

3. In order to recover contribution it is not necessary to aver and prove the insolvency of the principal debtor.

4. The mere refusal of a surety to accept property from the principal as indemnity will not defeat his right to contribution where he has paid the original debt.

5. In an action by one surety against cosureties for contribution, the plaintiff is entitled to the legal rate of interest on the amount paid by him from the date of such payment.

6. An agreement between a creditor and the principal debtor for an extension of the time of payment will not operate to release the surety, where there is no consideration for the agreement.

7. The mere voluntary forbearance on the part of the creditor, enlarging the time of payment, without consideration, or the mere failure to institute an action against the principal when the debt becomes due, will not alone discharge the surety.

8. In order to obtain a review of the rulings of the trial court on the admission or exclusion of evidence, the particular rulings relied upon for a reversal must be specifically assigned in the petition in error.

9. The statutes of another state must be pleaded and proved, to be of any avail. In the absence of evidence to the contrary, the laws of the sister state will be presumed to be the same as our own.

Error to district court, Clay county; Hastings, Judge.

Action by Richard J. Mason against A. B. Smith. Plaintiff had judgment, and defendant brings error. Affirmed.Thos. Ryan and J. L. Epperson & Sons, for plaintiff in error.

Thomas H. Matters and C. J. Dilworth, for defendant in error.

NORVAL, C. J.

On the 21st day of August, 1888, the plaintiff and defendant, together with S. M. Lewis and J. E. Hopper, executed a promissory note as sureties for one William Mason, calling for the sum of $1,000, drawing interest at 7 per cent. from date, payable to the order of Robert Frost's Sons, and maturing in two years. The principal debtor being insolvent, and having failed to pay the note at maturity, the plaintiff below, Richard J. Mason, paid the same, and on September 9, 1892, brought this action for contribution against his cosurety A. B. Smith. The petition alleges the execution and delivery of the note; that Lewis, Hopper, and the plaintiff and defendant signed the same as sureties merely; that the principal on said note, William Mason, had become insolvent at the maturity thereof, and the plaintiff was compelled to and did pay said note on the 21st day of August, 1891, and said Lewis and Hopper were insolvent when the note became due, and have been ever since said time; that the plaintiff requested the defendant, on September 5, 1892, to pay the sum of $647.35, as his contributive share of said note, which he refused to do, and that no part of said amount has been paid. The defendant, for answer, admits the execution and delivery of the note as alleged by the plaintiff, denies all other averments of the petition, and alleges that an extension of the time of payment of the note was granted the said William Mason and the plaintiff without the consent of the defendant. For further answer it is alleged that about the time the note became due the principal signer, William Mason, offered to turn over to the plaintiff property of sufficient value to pay the amount due thereon, to indemnify and save the plaintiff harmless from any loss on account of his having signed said note; but the plaintiff refused to receive or accept the indemnity so offered him, and failed to inform the defendant of the fact until after this suit was brought. The plaintiff replied, denying all new matter in the answer. There was a verdict for the plaintiff below in the sum of $714.40. The defendant presented a motion for a new trial, which was overruled by the court, and, the plaintiff having entered a remittitur in the sum of $42.35, judgment was rendered upon the verdict against the defendant in the sum of $672.05, to review which he has removed the cause to this court by proceedings in error.

It is insisted that the verdict is not sustained by sufficient evidence, for the following reasons: (1) Because the plaintiff has never paid the note; (2) the evidence fails to show the insolvency of the cosureties Lewis and Hopper; (3) that there was an extension of the time of payment, without the defendant's consent, which released him from all liability. We will notice these objections in the order stated. On the question of payment the uncontradicted evidence discloses that on August 21, 1891, the defendant in error paid the payees named in the note above the sum of $200 in cash, and for the remainder of the debt he executed and delivered to them his individual promissory note. At the same time the original note was surrendered to the defendant in error with this indorsement made thereon by the holders thereof: “One thousand two hundred & ten dollars paid August 21, 1891, by R. J. Mason in full satisfaction of this note. R. Frost & Sons.” The evidence fails to disclose whether the note executed on August 21st has been paid by the maker or not. It is insisted that upon the facts above stated contribution cannot be enforced by the defendant in error against his cosureties, or either of them, since it has not been shown that the second note has been paid. It is well settled that before a surety is entitled to call upon a cosurety for contribution he must have actually paid the debt. Bisp. Eq. § 330, and cases cited. But this doctrine does not require that the indebtedness should have been paid in money by the surety. If there has been delivered to the holder of the obligation property which is received in full satisfaction of the demand, it is equivalent to a payment in cash, and will authorize the surety to call upon his cosureties for reimbursement on the basis of the value of the property so turned over, not exceeding the debt thereby discharged. So, too, the taking of the individual note of the surety for the debt is as much a payment, and authorizes an action against the cosurety, as though the payment had been made in money. We entertain no doubt that the mere taking of a new note will not be regarded as a payment, in the absence of an agreement or understanding that it shall have that effect. The controlling question is whether the note of the defendant in error was taken as an extinguishment of the original debt. The proofs show that it was so received and accepted by R. Frost & Sons. Therefore, it was entirely immaterial whether the individual note given by the defendant in error has been paid out or not. As between cosureties, a discharge of their obligation by the acceptance in lieu thereof by the creditor of the note of one of the sureties for part of the debt and money for the residue is deemed in law such a payment as will entitle such surety to demand contribution from the other joint sureties, even though the substituted note has not been paid. The rule applicable to the case under consideration is correctly stated in 1 Brandt, Sur. § 285, thus: “If two cosureties are bound for a debt, and one of them pays it by giving his note for it, which is accepted by the creditor as payment, the surety thus paying may at once, and before paying the note so given as payment, sue his cosurety for contribution, the same as if he had paid the debt in money. In holding this it has been said: ‘Where one person is obligated to pay money for the use of another, a payment made in any mode, either property or negotiable paper or sureties, if such payment is received as full satisfaction of the demand, is equivalent to, and will be treated as, a payment in cash. * * * Where payment is received as a complete satisfaction, and the debt or obligation is extinguished, it is a matter of no moment to the person to whose use the payment is made whether it is made in money, property, or obligations. The benefit to him is the same, and the obligation to refund should be the same.’ ” The doctrine of the text is abundantly sustained by numerous decisions, among which are the following: Witherby v. Mann, 11 Johns. 518;Stone v. Porter, 4 Dana, 207;Robertson v. Macey, 6 Dana, 101;Cornwall v. Gould, 4 Pick. 444;Stubbins v. Mitchell, 82 Ky. 536;Atkinson v. Stewart, 2 B. Mon. 348;Ralston v. Wood, 15 Ill. 159;Brisendine v. Martin, 1 Ired. 286; Pinkston v. Taliaferro, 9 Ala. 547; Anthony v. Perciful, 8 Ark. 494; White v. Carlton, 52 Ind. 371;Keller v. Boatman, 49 Ind. 104. The case of Bell v. Boyd, 76 Tex. 133, 13 S. W. 232, cited in the brief of plaintiff in error, does not conflict with the rule above stated. In that case a principal and one of several sureties executed their note, which was accepted by the creditor, in payment of the former note. While it was held in that case that the surety upon the new note was not entitled to contribution from the sureties upon the original note, the court recognize the doctrine that, where one of several sureties discharges the original obligation by his individual note, he is in a position to recover contribution from his cosureties. We find no fault with the decision referred to. There was no payment of the original indebtedness, but merely a change in the form of the...