Smith v. . McLeod

38 N.C. 390
CourtSupreme Court of North Carolina
DecidedDecember 5, 1844
StatusPublished
Cited by2 cases

This text of 38 N.C. 390 (Smith v. . McLeod) is published on Counsel Stack Legal Research, covering Supreme Court of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smith v. . McLeod, 38 N.C. 390 (N.C. 1844).

Opinion

Ruffin, C. J.

The question, on which the merits of this case depend, has been fully settled by previous decisions of this Court. The judgment of the court of law was perfectly correct, that none of the money in the Sheriff’s hands was applicable to the debt in the name of the Rix Hospital; for the question there was between the plaintiffs in the several executions, and, as this execution had been withdrawn before the sale, the Sheriff could not apply any of the money to it, but was bound to apply it to the executions under which he made the sale. But, still, the question remained, what effect the conduct of the creditor, in withdrawing the execution under the circumstances then existing, ought to have on his right in equity to raise the debt out of the surety. We think it clear, that, as far as he would have got satisfaction out of the property of the principal debtor, if he had let the execution have its course on the levy, to that extent the surety is discharged. The cases of Cooper and Arrington v. Wilcox, 2 Dev. & Bat. Eq. 90, and Nelson v. Williams, Ibid. 118, are directly in point. The principle is, that, whenever a collateral security on the property of the principal is given or obtained, it amounts to a specific appropriation of those effects to the debt ; and, therefore, the surety is entitled to the benefit of it as well’ as the creditor, and the creditor is under a duty to the surety not wilfully to impair the security or omit to enforce satisfaction on it. It was urged on us at the bar, that there was a distinction between the case of Nelson v. Williams, and the present in this; that in the former, the security on the property of the principal by the fieri facias was, at the instance of the surety, and by an agreement between him and the credit- or, and was expressly for the purpose of obtaining an indemnity to the surety. It might be replied, if necessary, that in *397 point of fact,- this is substantially the same ease. Rut it is not necessary to compare the cases in that respect; for the truth is, that the circumstances alluded to, though noticed in the opinion of the Court, because existing in that case, had no influence upon the decision. Care was taken to let that be seen by saying, that “the surety is entitled to every collateral security which the creditor gets into his hands, and that, as soon as it is created,- and by whatever means the surety’s interest in it attaches, and the creditor cannot impair it.” Several instances of the application of the principle, are then noticed,in which the supposed securities were not obtained at the instance of the surety. The wrong done to the surety by the creditor, is not defeating an effort by the surety to obtain an indemnity •, but it consists in this, that the creditor has a security for his debt on the principal debtor’s own property, and has destroyed or departed with the same to the prejudice of the surety. Therefore,- it was said in Nelson v. Williams, that it was immaterial by what means the security was created, and,- in so saying, the Court adopted the language of Loam Eldon. In Mayhem v. Crickett 2 Swans. 191, he said “the circumstance, that the plaintiffs (the sureties) did not know that the defendants (the creditors) held a warrant of Attorney, was of no consequence ; because sureties are entitled to the benefit of every security which the creditor had against the principal debtor; and whether the surety knows of the existence, of those securities or not is immaterial.” Upon that ground, he held in that case,- that where the creditor had taken a separate judgment against the principal debtor, and took his goods in execution, and then withdrew the execution — all, without the knowledge of the surety — it was a discharge of the surety. In the present case, the sureties knew of the security created by the levy on the principal’s effects, and it was the only means of saving themselves from loss, and they urged the creditor to proceed on it; but he withdrew the execution for the express purpose of throwing the loss of this debt upon the sureties, because, thereby, he hoped to save another debt *398 of his own, the execution for which was posterior to that of Hospital.

It was said at the bar, that the Sheriff might have arranged ^ executions so as to raise the largest possible amount of the execution debts, by satisfying the Superior Court executions out of the property of Busbee and Smith, and applying White’s property and Busbee’s negroes, that were not conveyed, to the County Court executions; and that, if the Sheriff had done so, those sureties could have had no redress against him.— And it was thence inferred, that the defendant is not to blame for bringing about a state of things, for which the Sheriff, if effected by him, would not have been responsible. But the consequence does not follow. The Sheriff proceeds in obedience to his writs, and therefore their mandates justify him, and he is not bound to enter into any equities between any of the parties. But, if the creditor attempts to have a use made of the writ, which, however legal, is inequitable, a Court of equity will reslrain him. Therefore, the legal irresponsibility of the Sheriff, for discharging the property of the principal debt- or and seizing that of the surety, Eason v. Petway, 1 Dev. & Bat. 44, does not establish the liberty of the creditor to bring about the same state of things. It may be true, also, that the Sheriff and the creditor might arrange the executions, or, if the expression may be allowed, marshall the debtor’s property, so as to raise the largest sum for the creditors. But that can only be allowed in equity, if at all( in respect of a defendant, who is liable for all the debts, and whose property is in such a state, that only a portion of it can be reached by one of the executions, while another execution may cover the whole. Such, for example, may be the case of Busbee ; against whom all of the judgments both in the Superior Court and County Court, were rendered. To him, therefore, it was immaterial, as White’s property was insufficient to pay them all, whether this or that one had the benefit of that property. For that reason it may also be, that the creditor might properly obtain satisfaction of the itix Hospital execution out of the property conveyed by Busbee in the deed of trust. But, with *399 those questions we now have no concern. They arise between persons not before us. Smith was liable only for the judgments in the Superior Court and was not a party to those in the County Court. The only question which arises upon this appeal from an interlocutory decree is, whether the injunction should be continued for any and what part of the debt, so as to restrain the creditor from raising it from the present plaintiff. Now, as between Smith and the creditor, the latter is bound, as we have seen, not to have given up the securities he had for the debt. Even if he could, as against Busbee, levy the whole of the debt out of his property, yet he could not rightiully do so in respect to Smith’s responsibility; because as soon as Busbee’s property had paid the debt, an action would arise to him against Smith for contribution, whereas White’s property, as far as it went, would, if applied, have been an absolute discharge to all concerned.

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Cite This Page — Counsel Stack

Bluebook (online)
38 N.C. 390, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-mcleod-nc-1844.