Cramer v. Redman

68 P. 1003, 10 Wyo. 328, 1902 Wyo. LEXIS 14

• Court: Wyoming Supreme Court
• Decided: May 15, 1902
• Status: Published

Opinion

Potter, Chiee Justice.

The parties to this suit, upon the failure of the principal debtor to pay a promissory note which they had signed as co-sureties, paid the amount thereof in equal proportions, each of them paying the sum of $1,071.50. The note had been given January 15, 1889, and-was-paid by said sureties September 14, 1889. In 1899, probably in September of that year,, the plaintiff in error received $2,210.91 from the net proceeds of a certain contract which the principal debtor-,, in 1898, had assigned to him. The sum so received is claimed by plaintiff in error to be the amount; including interest then due to him, from the principal debtor on account of the money advanced by him toward the payment of the note aforesaid. This suit' was instituted by -defendant in error for an accounting and to recover one-half of the sum so received by the plaintiff in error. It is alleged in the petition that the principal debtor was 'and is insolvent, and that upon the payment of the note the parties — plaintiff and defendant — agreed orally,-in consideration of-, the .payment of an equal amount by each, and of their mutual promises, and in consideration of the exercise of care, vigilance and energy of each to collect the amounts paid for their joint benefit, and the giving to each of an interest in the debt owing him by the principal debtor, that the debt should be held by said parties as one owing to them jointly, and that they would exercise their best care and endeavor to collect the same for their joint benefit, and would divide and share equally the sums collected by each,.until the said debt'should be discharged with interest. The plaintiff in error, defendant below, by his answer, admitted that the parties had been co-sureties and as such had each paid an equal proportion of the amount due on the note, but alleged that thereupon they became several and not joint creditors of the principal maker, and denied the making of the agreement set out in the petition. He further alleged that the contract out of which he had collected the money in controversy had been assigned to him to secure the amount paid by him upon the note with interest.

The cause was tried tó the court without a jury, and the plaintiff, defendant in error here, was awarded judgment for $1,105.45 and costs. Motion for a new trial filed by the defendant was overruled, and the case comes to this court on error.

The right of the plaintiff below to recover must depend upon the agreement, if any, made between the defendant and. himself at the time they paid the note. He may not rely upon the ordinary equities applicable between co-sureties, for the reason that, upon the payment of the note by the sureties in equal proportions, the equities no longer existed. It is true that, as a general rule, any securities in the hands of a surety, as well as any indemnity received by him, will inure to the benefit of all the sureties, (i Story’s Eq. Juris., Sec. 499; Harris on Subrogation, Secs. 186, 200, 207,.379.) The ground of relief in such cases does not stand upon contract express or implied, but arises from principles of equity independent of contract. Where, however, the debt is paid by several sureties in .equal proportions,' the equities between them as co-sureties cease, and each becomes an independent creditor of the principal for the amount he may have paid; so that if one of them subsequently receives indemnity from the principal for his own debt, the others are not entitled to participate therein, such indemnity not proceeding from securities held by the surety or creditor previous to payment of the debt. (Harris on Subrogation, Sec. 379; Urbahn v. Martin (Tex. Civ. App.), 46 S. W., 291; Hall v. Cushman, 16 N. H., 462; Harrison v. Phillips, 46 Mo., 520.)

But there can be no doubt that the sureties, upon so paying the debt, may contract between themselves for an equal division of whatever may afterward be collected by either one upon the debt from the principal, each agreeing that any amount collected by him shall be collected for the joint benefit of all, and that the others shall be entitled to share equally therein until the obligation of the principal debtor to them shall be satisfied. (Smith v. Hicks, 5 Wend., 48.) And in such case the mutual promises constitute a good and sufficient consideration. (Philpot v. Gruninger, 14 Wall., 577; Morrow v. Jones, 41 Neb., 867; Taylor v. Smith, 116 N. C., 531; Phillips v. Preston, 5 How. (U. S.), 278; Briggs v. Tillotson, 8 Johns., 304; Clark on Contracts, 165; 1 Parsons on Contracts (5th Ed.), 448.)’ In the case of Smith v. Hicks, supra, it was held that where two persons agree equally to bear and pay the losses and damages which may be sustained in consequence of one of them becoming special bail for a third person, and after they have equally contributed to the payment of the debt, one of them is refunded the amount paid by him, he is answerable to the other for a moiety of the money received by him.

To establish the contract alleged in the petition, the defendant in error testified in his own behalf, and produced as witnesses Mr. Munkers, the agent for the original payee of the note, and to whom the note was paid, and Mr. Holland, the principal debtor. The defendant in error, plaintiff below, testified that they (plaintiff in error and himself) paid the note to Mr. Munkers, who delivered the note to them; and that they took the note atid went out to find Mr. Holland; that in the evening of the same day they returned to Mr. Munkers and handed the -note to him to hold for them, having agreed that they would keep the note together, get what they could on it and divide the proceeds equally between them, each of them agreeing that they would endeavor to collect from Holland.

Mr. Munkers testified that he was acting as agent for Webber, the payee, and on the 14th day of September, 1889, the parties to this suit, Mr. Redman and Mr. Cramer, appeared, and each one paid one-half of the note, and he endorsed the payments on the note, went out and found Webber and had him sign his name on the back of the note, brought it back and turned it over to Mr. Cramer and Mr. Redman. He was then asked to state how the note again came into his possession, and he testified as follows: “It was paid about four o’clock in the afternoon, and that evening in the treasurer’s office they brought it back to me after supper. Cramer and Redman both, in person, brought it back.”

Question. What was said to you by either of the parties in the presence of the other?

Answer. Both were present and delivered it to me as their agent and requested me to assist them all I could in getting something out of Mr. Holland, for the purpose of paying Cramer and Redman.-

Q. And what, if anything, else was said about what they would do ?•

A. When I first delivered the note to them they took it and went out of the office. It was just about banking time, for Mr. Cramer gave me a check for his part of the note. After their paying the note I turned it over to them. After supper they came .back and said that they had concluded to hold the note together and leave it with me in escrow, and wanted me to assist them in collecting it, and each one of them were to rustle and get what they could to apply on the note.

He also testified that it was understood that each was to have half of .what was collected. At the time the note was left with the witness, some other papers were also deposited with him, and among them a chattel mortgage previously given to the sureties by Holland, and they expected to secure some money from that. It appears that a small sum was realized from that source and divided between the parties. On cross-examination, Mr. Munkers stated that the parties told him, at the time of turning the note over to him, that whatever moneys he collected were to be applied one-half to each party; and that Cramer and Redman told him when they returned in the evening that they had concluded not to divide the note, but to hold it together and each one was to rustle Mr. Holland for all money they could, and wanted the witness to do the same.

Mr. Holland testified that after Cramer and Redman paid the note, he had several conversations with them, and that they always claimed to him that they held the note together; and that on several occasions they came to him together and requested him to pay them the balance due.

Mr. Cramer, testifying in his own behalf, denied the making of any agreement between Redman and himself looking to a joint holding of the note or debt, or for a division of subsequent collections from Holland.

The trial court found for the plaintiff; Redman, and must have done so upon the theory that the contract had been established whereby the parties had agreed to hold the note or debt jointly and to share equally in whatever should thereafter.be collected from Holland by either of them; and it is not perceived how any different conclusion could have been reached. There was a direct conflict in the evidence, it is true, but the strohg preponderance was in favor of the plaintiff.

■ Mr. Munker-s, a disinterested party, was very clear in his testimony, and he certainly understood from what the parties told him in the presence of each other, that they had agreed to continue jointly "interested in the debt and divide between them any money which might be received upon that account by either'one of them. Each was thereby to derive benefit from the diligence of the other; and the promise of each that, such division should occur was the consideration for the like promise of the other. It • was unnecessar)'- for the plaintiff below to prove any performance on his part as a condition- precedent to a right of recovery ; that is to say, he- was not required to show that he had in fact collected something by his individual endeavor, and paid half of it to the defendant, as seems to be supposed by counsel for the latter. It was the promise that constituted the consideration.

It is contended that the court erred in permitting the plaintiff to testify that he and the defendant went to Holland and requested him to pay the money due them. We do not think error occurred in admitting the testimony. The contract alleged in the petition was denied, and the testimony was material, although its effect may have been slight, as tending to show that Cramer had recognized the joint interest of the parties in the debt due them from Holland. Moreover, the same fact was brought out in the testimony of Mr. Holland without objection.

It is urged also that it was error to admit testimony -on the part of the plaintiff concerning certain mortgages ex-eeuted by Holland to Cramer and Redman prior to the payment of the note by them. It appears that $39 had been received by Redman from proceeds of certain property covered by a chattel mortgage so executed, which sum was divided between the parties. It is contended that the evidence could only have been admitted on the theory that the collection of the above named sum of money and its division with defendant tended to show partial performance of the alleged contract on Redman’s part. But it is clear that Cramer was in no wise prejudiced by the testimony, as Redman was not bound to-show' that he had collected money from Holland and shared it with Cramer. But much of the testimony about that matter went in without objection, and' we are unable to see that any reversible error was committed in admitting such as was objected to.

It is further contended that the contract shown by the plaintiff did not entitle him to recover the money received by defendant under the contract assigned to him. The objection that the contract did not provide for nor contemplate a division of profits that might be realized out of a contract made between Holland and other parties and assigned to defendant is exceedingly technical. Such a contract, of course, was not thought’ of when the parties paid the note. But the agreement did clearly contemplate that any money received by either party on account of the debt created by payment of the note should be shared equally between them. And it is clear that the money in question was received by defendant on that account.

The contract assigned to plaintiff in error was one wherein Holland had engaged to care for certain cattle owned by others for a share in the profits, and under the assignment Cramer was to advance to Holland certain money to pay the expense of carrying out the contract. After the repayment of those advances, and certain other preferred claims, Cramer was to receive out of the share of the profits coming to Holland the amount due from the latter to him; it being stated in the assignment that the principal of the amount due arose by reason of the payment by said Cramer and one M. T. Redman.of a certain note given by Holland to J. T. Webber. There does not seem to be anything in the nature of the contract and its assignment which can have the effect to take the amount received by Cramer upon the debt aforesaid out of the operation of the agreement between Redman and himself.

There is no merit in the point that, as the contract assigned to Cramer had not been fully performed, the action was prematurely brought. It appeared that a small number of cattle remained on the range, and that they would have to be gathered and shipped. But Cramer had already received and applied the money in question; and it was not made to appear that the proceeds of the cattle subsequently to be gathered would not be sufficient to cover the expense of gathering and shipping them. Having received certain money which ought to be divided with Redman,, we see no reason why the latter may not recover the amount coming to him without waiting for Cramer to make additional collections.

Any question of the privilege of Holland to have defended against a suit brought against him by Redman, by pleading the statute of limitations, is not materiál to this controversy. Not only was Holland aware, as he testified, that the parties had agreed to hold the debt due from him to them for their joint benefit, but with that knowledge he made a payment to Cramer upon the debt; and it might be claimed with some show of reason, we think, that the payment operated to remove the bar of the statute. But a complete answer to the point suggested is that the. question here relates solely to the liability of Cramer, upon the contract made between Redman and himself, to share with the former the money received by him from their common, if not joint, debtor; and it is not a question of the right of Redman to recover any part of the debt from Holland. The judgment must be affirmed. Affirmed.

Corn, J., and Knight, J., concur.