Thompson v. Dekum

52 P. 517, 32 Or. 506, 1898 Ore. LEXIS 61

• Court: Oregon Supreme Court
• Decided: March 14, 1898
• Status: Published

Opinions

Mr. Justice Bean

delivered the opinion.

This suit was instituted by D. P. Thompson, a surety on one of the official bonds of Rufus Ingalls, as executor of the estate of Mrs. Esther Holladay, against C. B. Bellinger, guardian of the minor heirs of the deceased, Mitchell & Tanner, attorneys for the executors, and all the sureties on his several bonds, to compel Bellinger to credit the judgment recovered by him in favor of his wards against the plaintiff and defendants Dekum and Spaulding, with $1,480, alleged to have been overpaid to Mitchell & Tanner, from the funds of the estate, and to have the rights and liabilities of the sureties on the several bonds determined as among themselves, and to compel them to contribute to the payment of the balance dué on such judgment as the justice of the case may require. Ingalls was appointed executor of the estate of Mrs. Holladay in April, 1889, without bonds, and continued so to act until March 27, 1891, when the county court of Multnomah County, on the application of the defendant Bellinger, as guardian, made an order requiring him to ^ive a bond in the sum of $25,000 for the faithful performance of his trust. On April 13, 1891, in obedience to this order, iDgalls filed his bond in due form, with the defendant Loewenberg as surety, and it was duly approved by the county court. At the time this bond was executed, Ingalls was absent from the state, and his attorney, in order to induce Loewenberg to become a surety thereon, agreed to, and did, deposit, of the funds belonging to the estate, the sum of $25,000 in the Merchants’ National Bank, of which Loewenberg was president, under an agreement that it should be drawn out only upon claims against the estate ordered paid by the county court in due course of administration. When Ingalls returned to Oregon, a few days later, and learned what had been done in the matter, he was very much dissatisfied with the arrangement, because the funds were tied up so he could not check against them at his pleasure. He thereupon immediately set about securing another bond; and on the twenty-third of the same month, on his application, the county court made an order allowing him to substitute for the Loewenberg bond one with the plaintiff and Dekum as sureties, and ordered that the former be canceled and the surety discharged. On the next day, the $25,000 was withdrawn from Loewenberg’s bank, and $15,000 thereof deposited in the Commercial National Bank, of which Thompson was president, and the remaining $10,000 in the Portland Savings Bank, of which Dekum was president. Thereafter, on the fourth day of August following, upon Ingalls’ application, the county court made an order allowing him to file a third bond with the defendant Spaulding as surety, as a substitute for the Thompson and Dekum bond, and releasing the sureties on the latter from future liability; and thereupon the balance of the funds of the estate (about $10,133) was withdrawn from the Commercial National and the Portland Savings Bank, and $7,000 thereof loaned to the defendant Spaulding by the executor. The several bonds referred to were in form the same, each conditioned that Ingalls, as executor, “ shall faithfully execute the duties of said trust according to law,” and each recited that it was given in pursuance of the order of the county court of March 27,1891, requiring Ingalls to give bonds, and contained no reference to any other bond.

Upon final accounting, Ingalls was charged with $560, interest on the money loaned to Spaulding; and it was adjudged and decreed that there was a balance in his hands as such executor, including this sum, of $12,557.09, which he was ordered and directed to pay over to the defendant Bellinger, as guardian, in default of which Bellinger sued and recovered judgment for $11,898.59 against the defendants Thompson, Dekum and Spaulding on their bonds: Bellinger v. Thompson, 26 Or. 320 (37 Pac. 714, and 40 Pac. 229). Included in this judgment is the sum of $1,833.33, which was adjudged on final settlement of the estate to be due the defendants Mitchell & Tanner on a claim for legal services rendered Mrs. Holladay, and which the executor was ordered to pay over to the defendant Bellinger in trust for them, and by reason thereof it is sought by this suit to compel Bellinger to credit on the judgment recovered by him the sum of $1,480, alleged to have been overpaid to Mitchell & Tanner by the executor on another claim against the estate, arising as follows: They were employed by Mrs. Holladay in her lifetime to commence and prosecute to final judgment an action against the estate of her deceased husband, upon claims held by her, aggregating a very large amount, under an express agreement for a contingent fee of 10 per cent, of the amount of the judgment so recovered. Among the claims held by her at the time was one in favor of Ingalls for $14,595, which had been transferred to her by an absolute assignment, but in fact for collection only. During the pendency of'the action Mrs. Holladay died, and it was continued in tfie name of her executor, and finally resulted in a judgment for the sum of $100,268. Ingalls paid Mitchell & Tanner the agreed fee of 10 per cent, on the amount thereof from the funds in his hands as executor, and such payment was approved by the county court. Upon the final settlement of his accounts, Ingalls claimed and was allowed a proportionate share of such judgment, on the ground that his •claim against the estate of Ben Holladay had been assigned to Mrs. Holladay for collection only; but it was ordered that, on account thereof, he should be charged with a proportionate share of the attorney’s fee paid by the estate for the recovery of such judgment, amounting to $1,480; and it is this amount which the plaintiff insists should be credited on the .judgment recovered by Bellinger against the bondsmen. The court below held that the plaintiff was not entitled to the credit claimed, and that each of the sureties on Ingalls’ several, bonds was liable for, and should contribute, one fourth of the amount of money necessary to satisfy the judgment in favor of Bellin.ger, and from this decree the appeal is taken.

The contention for the plaintiff is — first, that the Spaulding bond, being the last in point of time, is, as between the several bonds, the primary security, and that he should, therefore, be compelled to pay the entire judgment; and, second, that, if this is not so, the judgment should be apportioned among the sureties according to the number of bonds, and not pro rata, in the ratio of the aggregate number of sureties; •and, third, that the judgment should be credited with $1,480 on account of the sum alleged to have been overpaid Mitchell & Tanner. The defendant Loewenberg joins in the first and third contentions, but disagrees with the second, and claims that, if he is liable •at all, it is for his pro rata share of the judgment; while the defendant Spaulding contends that the decree should be affirmed, except that it should be credited with the amount paid Mitchell & Tanner as •claimed by the plaintiff.

1. In support of tire contention that the Spauldin y bond is primarily liable for Ingalls’ default, we are cited to the following authorities: 1 Woerner’s Administration, § 255; Field v. Pelot, 1 McMul. Eq. 369; People v. Lott, 27 Ill. 215; Bobo v. Vaiden, 20 S. C. 271; Morris v. Morris, 9 Heisk. 814; Lingle v. Cook’s Administrators, 32 Grat. 262; Hooper v. Hooper, 29 W. Va. 276 (1 S. E. 280). But in the cases referred to the second bonds were given at the request of the sureties on the first, and the decisions are controlled by the statutes under which the proceedings were had, which provide, in substance, that if the sureties on the first bonds conceive themselves in danger, they can petition the court for relief, and that the second bond, given in pursuance of such a petition, either operates to discharge the sureties' on the first, or render them only secondarily liable, and the text in Woerner is based on these cases. But they are not in point here, because, as said in Bellinger v. Thomfson, 26 Or. 320 (37 Pac. 714, and 40 Pac. 229), in which substantially the same contention was made, we have no statute of that character in this state. Nor were the subsequent bonds of Thompson and Dekum and Spaulding given in pursuance of the terms of any statute, or an order made on a petition of' the surety on the first bond; but in each instance the order of substitution was made solely on the application of the executor himself. It was determined in the Bellinger case that under such circumstances all the orders of the county court substituting one bond for another, or attempting to release the sureties thereon, or to limit their liabilities, were null and void, and that the several bonds were cumulative security for the faithful performance by Ingalls of his duties as executor; and a failure by him to account for and pay over the amount found due the estate on final settlement, as ordered and directed by the county court, was a breach of the condition of each of the bonds. This being so, all the-bonds at the time of the final settlement were in full force, and the rights of the sureties thereon as between themselves are the same as if they had all signed one instrument.

2. The duty of contribution among sureties results from equitable principles, and not from contract, and hence it exists whether they are bound jointly or severally, by the same or different instruments, and although one did not know the other was bound with him; nor is the order in which they become bound material, or the relative number of sureties on the several different obligations or instruments of any consequence. The only question as to such duty is whether-they are in fact sureties for a common principal in relation to one and the same obligation. There is-some disagreement in the authorities whether sureties bound by several distinct bonds, with different penalties, must contribute equally to the payment of the common obligation in the ratio’of the aggregate number of the sureties, or in proportion to the penalties of.’ their respective bonds. This question is very ably discussed, in the light of the authorities, in 10 Cen. Law Jour. 264; but it does not arise here, because-the penalties of the several bonds in suit are the same, and in such case the authorities are quite agreed that the obligation of the sureties, as between themselves^, is as if they were all bound by the same instrument. These principles will be sufficiently illustrated by reference to the following authorities: 1 Brandt on Guaranty and Suretyship, §§ 256, 258; 1 Story’s Equity Jurisprudence, 493-495; Deering v. Earl of Winchelsea, 2 Bos. & P. 270 (1 Cox Ch. 318); Odom v. Owen, 2 Baxt. 446; Pickens v. Miller, 83 N. C. 543; Cherry v. Wilson, 78 N. C. 164; Harris v. Ferguson, 2 Bailey, 397. Cobb v. Haynes, 8 B. Mon. 137; Ketler v. Thompson, 13 Bush (Ky.), 287; Norton v. Coons, 3 Denio, 132; Armitage v. Pulver, 37 N. Y. 494; Loring v. Bacon, 3 Cush. 465; Bentley v. Harris, Administrator, 2 Grat. 357; Bosley v. Taylor, 5 Dana, 157 (30 Am. Dec. 677); Stevens v. Tucker, 87 Ind. 109; Brooks v. Whitmore, 142 Mass. 399 (8 N. E. 117).

But it is contended that the liabilities of the sureties in the case in hand ought not to be determined by the rule suggested because Thompson and Dekum agreed with Loewenberg, at the time their bond was giyen, to assume the whole responsibility for Ingalls’ acts as executor and to hold him harmless, and that Spaulding made a similar agreement with them at the time his bond was giyen; but upon this point the ■court below found “that there was no agreement or understanding of any nature between said W. W. .Spaulding and plaintiff herein, and said Dekum or said Loewenberg, or any of them, that their respective liabilities on said bonds, or their contribution to or for each other, shall be other than as fixed by such bonds”; and this finding is abundantly supported by the testimony. Indeed, while there is an allegation ¿o that effect in the complaint, there is no evidence whatever in the record to sustain it, and there is no pretense that the parties ever had any understanding or agreement or conversation whatever in reference to the matter.

3 Nor do we find any equities in the case entitling one surety to any advantage over the other, except that i'he amount of Ingalls’ defalcation and the consequent liability of his sureties was increased $560 by the charge made against him for interest on the money of the estate loaned to the defendant Spaulding; and it would be manifestly inequitable to compel the other sureties to contribute to the payment of this sum, and, under the doctrine of contribution in equity, they ought not to be required to do so: Crisfield v. Murdock, 127 N. Y. 315 (27 N. E. 1046); Eshleman v. Bolenius, 144 Pa. St. 269 (22 Alt. 758).

The remainder of the judgment is largely, if not entirely, on account of waste and misapplication of the assets of the estate, before any of the bonds in question were executed, and the sureties therefore all stand upon an equal footing in relation thereto. Neither has any superior claim in equity over the other, nor would the custody and control of the funds belonging to the estate at the time the bonds were executed have afforded the holder any protection against such liability; and therefore the transfer of such funds from one set of bondsmen to another is of no consequence in determining their liability.

4. Nor, in our opinion, is there any merit in the contention that the judgment debtors ought to be credited with $1,480 upon the judgment on account of money paid Mitchell & Tanner, heretofore referred to; for, while it was decreed on final settlement that a part of the judgment recovered against the estate of Ben Holladay belonged to Ingalls, yet it clearly appears that the agreement for the attorney’s fee was made with Mrs. Holladay in her lifetime, the services rendered to her and her estate, and not to Ingalls personally, and the claim therefor was allowed by the county court in its decree of final settlement, and this decision is conclusive upon Ingalls and his bondsmen: Bellinger v. Thompson, 26 Or. 320 (37 Pac. 714, and 40 Pac. 229). Upon the final settlement of Ingalls’ accounts as executor, the court was required to pass upon and determine the credits to which he was entitled by reason of money already paid out, and the validity of certain unpaid claims against the estate, among which was the claim of Mitchell & Tanner for $1,833.33 for legal services rendered Mrs. Holladay; and, having these matters under consideration, the court decreed that Ingalls was entitled to a credit on his account as executor for all the money paid by him as attorney’s fees in the action against the Ben Holladay estate, and, in addition thereto, that Mitchell & Tanner had a valid unpaid claim for $1,833.33; and these adjudications, as already suggested, are binding upon Ingalls and the parties to this suit, and are not open to consideration here.

5. Objection is made to the complaint because it does not aver that plaintiff had paid the judgment recovered by Bellinger against himself, Dekum and Spaulding, to the payment of which he is seeking to compel his co-sureties to contribute. The issues were made up, the evidence taken and decree rendered in the court below without this question having been raised or suggested; and, in our opinion, the parties ought not to be permitted to urge it here. It is true, the remedy for contribution between co-sureties is usually sought after the debt has been paid by one of them; but Mr. Brandt says that a surety may, before he has paid the debt, file a bill against his co-surety to compel him to contribute to its payment: 1 Brandt on Suretyship, § 275. But whether this rule is applicable to a case of this sort is immaterial, for the reasons already suggested. It follows that the decree of the court below should be affirmed, except that Spaulding be required to pay on the judgment recovered by Bellinger against himself, Thompson and Dekum $560 and interest thereon from the date of such judgment, and that Loewenberg, Thompson, Dekum and himself pay one fourth of the remainder.

Modified.