Stephens v. McCormack

• Decision Date: 06 February 1928
• Docket Number: 2788.
• Citation: 263 P. 774,50 Nev. 383
• Parties: STEPHENS et al. v. McCORMACK.
• Court: Nevada Supreme Court

263 P. 774

50 Nev. 383

STEPHENS et al. v. McCORMACK.

No. 2788.

Supreme Court of Nevada

February 6, 1928

Appeal from District Court, Washoe County; Clark J. Guild, Judge.

Action by Fred C. Stephens and another against J. M. McCormack. From a judgment of dismissal, plaintiffs appeal. Affirmed.

Sardis Summerfield, of Reno, for appellants.

E. L Williams, of Reno, for respondent.

DUCKER J.

This is an action to enforce contribution between sureties. The complaint sets forth two causes of action, the facts of which, substantially stated, are as follows: One W. E. Pruett was duly appointed as trustee of the bankrupt estate of Oscar J. Smith and Minnie D. Smith, on or about the 2d day of November, 1911. On the 10th day of November, 1911, he filed his bonds as such trustee, with Henry Stephens and respondent, J. M. McCormack, as sureties upon each of said bonds, and continued to act as such trustee until June 16 1921, when he resigned. During the period of his trusteeship said Pruett embezzled from the funds of the Oscar J. Smith bankrupt estate the sum of $5,488.24, and from the funds of the Minnie D. Smith bankrupt estate the sum of $6,434.24. Respondent's cosurety, Henry Stephens, died intestate on November 30, 1917, and, after due course of administration of his estate, it was, on May 8, 1918, distributed in equal parts to his widow, Emily J. Stephens, and to his son, Fred C. Stephens, one of the appellants herein. On or about December 13, 1921, the United States of America brought suits in the District Court of the United States in and for the District of Nevada upon said bonds against said Pruett and the said Emily J. Stephens and Fred C. Stephens, as the heirs of said Henry Stephens, and against respondent, J. M McCormack, to obtain a judgment in its favor against said Pruett for the amount of said defalcation, upon his part, and to obtain a joint and several judgment against him and the said Emily J. Stephens and Fred C. Stephens, as the heirs of said Henry Stephens, deceased, and against respondent, J. M. McCormack, for the amount of their bonded liability, with interest thereon, and costs of suit.

On or about October 20, 1922, all of the parties to said suits personally and by their respective attorneys signed a stipulation and filed the same in the said United States District Court, wherein they stipulated that judgment might be entered in said suits in favor of plaintiff against said Pruett for the sums embezzled and against the other defendants jointly and severally in the amount of their bonded liability and for interest thereon at the rate of 7 per cent. per annum from November 1, 1921, until paid, and for costs of suit.

Pursuant to said stipulation the said United States District Court did on the 8th day of December, 1922, enter joint and several judgments against the said Pruett, Emily J. Stephens, and Fred C. Stephens as the heirs of Henry Stephens, deceased, and the said J. M. McCormack, in the total sum of $4,511.04. Soon after the rendition of said judgment the said Emily J. Stephens and Fred C. Stephens requested the respondent J. M. McCormack to pay his proportionate one-half of the amount of said judgment, which he declined and failed to do, and on or about March 23, 1923, they were compelled to pay, and did pay the entire amount of said judgment. On or about the 11th day of June, 1924, the said Emily J. Stephens died testate, naming appellants as beneficiaries of all her estate, which, after due administration, was on the 14th day of January, 1925, distributed to appellants, each in equal interest. The claim of Emily J. Stephens against respondent's contributive share due on account of the payment of said judgment by her and said Fred C. Stephens, was particularly enumerated in said decree of distribution to appellants.

The complaint alleges that respondent is indebted to appellants as his contributive share of the amount paid by said Emily J. Stephens and Fred C. Stephens, as the heirs at law of Henry Stephens, deceased, the one-half thereof, to wit, $2,255.52, together with interest thereon at the rate of 7 per cent. per annum from the 23d day of March, 1923, until paid, and for their costs of suit. Demand is made for the payment thereof. This action was instituted on the 10th day of June, 1927. Respondent demurred to the complaint upon the ground that the prosecution of said causes of action is barred by the statute of limitations. The demurrer was sustained, and, upon the appellants refusing to amend, judgment was rendered dismissing the action.

The question presented is whether the action is barred by the statute of limitations. The trial court held that the action was barred by application of that part of section 4967 of the Revised Laws which provides that an action upon a contract, obligation, or liability, not founded upon an instrument in writing, can only be commenced within 4 years. The statute of limitations begins to run against a claim for contribution when plaintiff has discharged the common debt. As shown by the facts, Emily J. Stephens and appellant Fred C. Stephens paid the entire amount of the judgment on or about March 23, 1923, and this action to recover from respondent his proportionate share was commenced more than four years later, to wit, on June 10, 1927.

But counsel for appellants claims that the statute fixing a limitation of four years is not applicable, and that another part thereof, which provides that "an action upon a contract, obligation or liability founded upon an instrument in writing," with certain exceptions, shall be commenced within six years, controls. It is urged that the action must be considered as founded upon an instrument in writing; that is, upon the original obligation of suretyship. We do not think the words "founded upon" will bear such construction. The action is based upon a contract which the law implies from the equitable obligation imposed upon cosureties to proportionately share a common loss. The development of the action from equitable origin is thus stated in Chipman v. Morrill, 20 Cal. at page 135:

"But the equitable doctrine, in progress of time, became so well established, that parties were presumed to enter into contracts of suretyship upon its knowledge; and consequently, upon a mutual understanding that if the principal failed, each would be bound to share with the others a proportionate loss. Courts of common law thereupon assumed jurisdiction to enforce contribution between the sureties, proceeding on the principle that from their joint undertaking there was an implied promise on the part

...