Stone v. Hammell
Stone v. Hammell
Opinion of the Court
This action was brought by the plaintiff to recover from the defendant the sum of $1,000 and interest.
One of the reasons urged by the defendant why the judgment cannot stand is, to use his own language, “that the plaintiff could not sue the defendant on his implied promise on the note, because his remedy on the note was merged in a superior remedy, i. e., the mortgage given by defendant to his sureties.” In support of this proposition he argues that the remedy in assumpsit on an implied contract originally vested in the sureties against their principal, became merged on their accepting a mortgage security therefor, and their only remedy was an action for foreclosure. The fact which he relies on to uphold his legal proposition is that the mortgage given to all four of the sureties was never legally satisfied, because Byron Stevens, the payee of the note which the defendant and sureties had executed, was not a party to the satisfaction of the mortgage, and that, as the mortgage was not satisfied, the deed in form, which the court found to be in trust, but not a mortgage, was a mortgage, and was supplementary to the first mortgage, and the remedy of foreclosure of it could only be pursued. But Stevens has been paid from the proceeds of the property deeded to the sureties, so far as it was sold, whether it was a mortgage, or, as the court-found, a deed in trust only for a specific purpose which was carried out, and he is not here complaining of the satisfaction of the mortgage. The person who does complain, and who seeks to have the mortgage declared unsatisfied, was a party to its satisfaction, and is excluded by his action in the premises from disputing its proper and legal satisfaction.
The further contention is made that the finding of the court, that the action is not barred by the statute of limitations, is against law. To support this claim the appellant seems to argue that when Stone executed and delivered his promissory notes, which were agreed to be taken as an absolute payment and reimbursement to Newell of Stone’s share of the money paid out to Stevens by Newell, he (Stone) was under no legal obligation-to do so; that he could have invoked the statute of limitations against Newell for this contribution. This seems to be based upon the proposition that although Stone was absent from the state during most of the time that Newell was making payments to Stevens, who was also a nonresident,
In this connection the appellant claims that the payment by Stone’s notes to Newell of Stone’s pro rata of the money which Newell had paid to Stevens for the defendant was no payment or reimbursement affecting defendant on account of his liability on the Stevens note. But it seems to have been held in this and in most of the other states that the acceptance of a promissory note in satisfaction and payment of a debt due from one individual to another is payment of the first debt: Griffith v. Grogan, 12 Cal. 323, and cases cited. When Newell paid the money for the defendant as his surety in satisfaction of the Stevens note he had the right to be reimbursed by the defendant for what he expended in that
But it is claimed that Newell, at the time Stone executed the notes, had no right of action against Stone for contribution, because he had not exhausted the securities in his hands, had not sold all the land included in the deed in trust, and applied the proceeds to the payment of the Stevens note; that his failure to do this exonerated Stone from any liability to reimburse Newell for what he had paid Stevens. The authorities cited in support of this proposition are not in point. There is no evidence in the record but what Newell realized, as far as he could reasonably do so, all that could fairly be obtained from the sale of the property held in trust, and that, after applying it all to the payment of the Stevens note, he was out of pocket as much money as would have made Stone’s share in contribution amount to what his notes called for.
We perceive nothing of merit in the point made that Newell paid the debt voluntarily to Stevens without any liability to do so. The principal creditor, as it seems to us, could have sued the sureties whenever the note became due and remained unpaid. There was no necessity for him before doing so to have had the land held by the surety, Newell, as trustee, sold and the proceeds applied to the payment of his debt, even if it could have been done under the trust deed, for, as the record shows, this was done in good faith, and without any delay, by Newell, and the proceeds applied to the payment of the Stevens note.
The further point is made that the discharge of Hammell in insolvency discharged him of all indebtedness to Byron Stevens, the holder of the promissory note which the sureties executed with the defendant, and that the finding or decision of the trial court, that the insolvency court had no jurisdiction over Stevens, is against law; and that the discharge of the defendant in insolvency is a bar to the recovery of the plaintiff in this action. In its twelfth finding of fact, which is, we think, warranted by the evidence, the trial court found “that Byron Stevens, the payee of the said note mentioned in the first finding hereof, was not a resident of the state of-California, and was absent therefrom during all the proceedings in the Matter of the Insolvency of James Hammell, and did not in any way submit either himself or said promissory note to the jurisdiction of the court in which such proceedings were had.” This being so, Stevens was not affected in his rights by the discharge in insolvency as pleaded: Rhodes v. Borden, 67 Cal. 7, 6 Pac. 850, and cases cited. This discharge in insolvency left Newell and Stone still responsible to Stevens.
At the time of the insolvency proceeding’s Stone could not have brought suit against Hammell, because then Stone had paid out nothing as surety, and until he satisfied and paid Newell, there was no breach of the implied promise of Hammell to reimburse him: Brandt on Suretyship and Guaranty, sec. 199. If Stone had no debt against Hammell which was provable in insolvency, it cannot be that he is barred of recovery by the proceedings and discharge in insolvency which
We perceive nothing in the point that Newell should have been made a party. He had paid the note and been paid by Stone his contribution. Stone then had the right of action upon an implied contract against the principal, Hammell, for reimbursement. The court found, upon evidence which is not challenged by any specifications of particulars of its sufficiency, that Hamilton, one of the sureties, died insolvent in 1878, and contributed nothing toward the payment of the note in the first instance by Newell, or repayment to him as a co-surety. But the objection is made that a certain record of the probate court proceeding offered and admitted in evidence was not competent, relevant, or material. We think that the evidence tended to show the financial standing and insolvency of Hamilton, and was properly admitted. The evidence was sufficient to support the findings attacked, and, perceiving no prejudicial error, we advise that the judgment and order be affirmed.
We concur: Belcher, C. C.; Gibson, C.
For the reasons given in the foregoing opinion the judgment and order are affirmed.
Reference
- Full Case Name
- STONE v. HAMMELL
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- Published
- Syllabus
- Suretyship—Action Against Principal by Surety.—Where the maker of a note gives his sureties a mortgage to secure its payment, and the property is sold and the proceeds applied on the note, the maker cannot dispute the satisfaction of such mortgage in an action against him by a surety who has paid part of the note. Suretyship—Contribution and Reimbursement from Principal.— Under Civil Code, section 2848, providing that a surety, upon paying the principal’s debt, is entitled to enforce all the creditor’s rights of action against the principal for the amount so expended, and to require his cosureties to contribute thereto, a cosurety, having so contributed by giving his own note to the paying surety, is entitled to reimbursement from the principal precisely as if he had paid the money to the creditor. Suretyship.—Where a Surety on a Note Holds Security for the payment thereof, the creditor is not bound to require the application of such security to the payment before he can sue the sureties. Suretyship-—Contribution.—A Surety Who has Paid a Note and received contribution from a cosurety is not a necessary party to a suit by the latter against the principal for the amount contributed. Suretyship-—Contribution—Limitation of Actions.—Code of Civil Procedure, section 339, provides that an action on a contract not in writing must be brought within two years. Section 351 provides that when the right of action against a party accrues during his absence from the state, the action may be brought within the time limited after his return. Held, that the surety’s right of action for contribution, against a cosurety who was absent from the state when the note was paid accrued on his return, and the cosurety’s right of action against the principal accrued on his giving his note for the amount of such contribution within two years after returning. Insolvency—Effect of Discharge.—The Rights of a Creditor are not Affected by the discharge in insolvency of his debtor, where neither the creditor himself nor his debt were within the jurisdiction of the court in which the proceedings in insolvency were had. Insolvency.—The Discharge in Insolvency of a Debtor does not affect the rights of his surety on a note who subsequently contributes to the payment thereof. Suretyship—Action Against Principal by Surety.—The records of a probate court, showing the insolvency of a deceased surety who had not contributed to the payment of the note, are admissible in evidence in an action by a cosurety against the principal.