Weimer v. Talbot

49 S.E. 372, 56 W. Va. 257, 1904 W. Va. LEXIS 122

• Court: West Virginia Supreme Court
• Decided: November 22, 1904
• Status: Published

Opinion

POEEEiTBARGER, PRESIDENT:

The assignability of a right of subrogation against a 'co-surety, proof of payment of a judgment out of the proceeds of real estate of the assignor judicially sold to satisfy it, and maintenance of the lien of the judgment by issuance of executions thereon are the important subjects' for consideration in disposing of ■.this cause.

On the 1st day of February, 1886, the Farmers’ Bank of Phil-ippi obtained a judgment, in the circuit court of Barbour coun•ty, against J. W. Talbot, principal debtor, and John P. Wood-ford, J. E. Heatherly, Henry A. Call, J. M. Woodford, Jacob W. Robinson and Anthony T. Daniels, sureties, for the sum of $1,-781.80, with interest thereon from January 30, 1886, and $3.75 •costs. Talbot was then insolvent. Execution was immediately issued, went into the hands of the sheriff February 15, 1886, and •was returned unsatisfied by order of plaintiff’s attorney on Feb•ruary 27, 1886. One month later, J. M. Woodford assigned and transferred all his personal property to trustees, by a written contract which may be seen by reference to the case of Heatherly v. Bank, 31 W. Va. 70, 72. On the 10th day of May, 1886, said bank instituted a suit in equity against said J. M. Woodford and numerous other defendants, some of whom are judgment creditors, for the purpose of subjecting Woodford’s real estate to the satisfaction of the liens thereon. On the 10th day of July, 1886, after the commencement of said suit by the bank, Weimer Wright and Watkins recovered a judgment against said Wood-ford for $354.87 and $12.20 costs, and, on the same day, Creer and Laing obtained a judgment against him for $983.64 and ‘$12.20 costs.' On this last judgment $323.62 was paid March 5, 1887.

Sometime in the year 1887, James E. Heatherly, one of the .sureties for the Talbot debt, commenced a suit in equity to restrain the Bank of Philippi from enforcing payment of its-judgment against him and obtained, a decree on the 22d day of July, 1887, adjudicating that the personal property assigned to-said trustees by Woodford should be treated as a payment pro tanio of judgments, debts and liabilities due from Woodford to-said bank, and that the principal debtor and all the sureties except Heatherly should pay the said judgment of $1,781.80, then amounting, with its interest, to $1,981.74, and awarding execution thereon. On'the 30th day of July, 1887, the execution was-issued, and, on the 3rd day of October, 1887, returned unsatisfied in consequence of an appeal from the decree awarding it. The-nature of that decree and the disposition of the appeal from it. will appear by reference to Heatherly v. Bank, 31 W. Va. 70. Pending these proceedings, Greer and Laing commenced a. chancery suit against Woodford to enforce satisfaction of their lien, and, after the decision of this Court, in Heatherly v. Bank, the three causes, Farmers’ Bank of Philippi v. Woodford et als, Heatherly v. Bank and Greer and Laing v. Woodford et als, were-heard together, on the 19th day of July, 1889, when a decree fixing the liens upon Woodford’s property and directing a sale-thereof was entered. Sale was afterwards made and confirmed by a decree entered on the 30th day of October, 1889. From these-decrees an appeal was taken and they were reversed and the causes remanded, as shown in Farmers’ Bank v. Woodford, 34 W. Va. 480. The modifications of the decrees, directed by this-Court, related to the priorities of liens and distribution of proceeds of the sale of the real estate. The sale itself was not disturbed. Upon the mandate of this Court, the circuit court, on the 4th day of June, 1891, made another decree, altering the order of payment and directing a distribution of the proceeds of' sale to the creditors, in the order of preference thereby fixed.

Out of the proceeds of the personal property which went into-the hands of Teter and Gall, trustees, the circuit court, by its first decree, applied $524.02 on the judgment of $1,781.80 as of' the 26th day of September, 1887. This application of the trust fund was one of the errors corrected on the appeal. By the last decree, it was ascertained and determined upon the mandate of' this Court that the Farmers’ Bank of Philippi had the sixth lien upon the real estate of James M. Woodford for the sum of $1,961.95 with interest from September 26, 1887, on account of' said judgment of $1,781.80, subject to a credit of $594.13, as of November 4, 1889, paid by John F. Woodford, instead of the eighth, as determined by the first decree. By said decree, the court ascertained that the judgment of February 1, 1886, with interest, costs, and damages, amounted, on the 19th day of July, 1889, as to James E. Hcatherly, to $2,357.69. Execution for that amount was awarded against him and was issued on the 8th day of July, 1891, and returned September 7, 1891, “no property found.” It was also ascertained that the judgment, as to all the other defendants was of the original amount, subject to the c-redit aforesaid and execution was awarded against them accordingly, and issued on the 8th day of July, 1891, and returned on the 26th day of September, 1891, by order of the attorney for the plaintiff. Prior to its return, the officer made this memorandum on it, “I levied this execution on money in the Tygart’s Yalley Bank sufficient to pay exe. on September 5, 1891.”

Early in these preceedings, to-wit, October 22, 1887, James M. Woodford executed to Greer and Laing and to Weimer, Wright and Watkins a written assignment of “whatever right or ■cause of action” he had or might have “for contribution or subro-gation or otherwise” against his co-sureties or either of them “in the judgment for $1,781.80 with cost,” etc. These assignees brought this suit on the 28th day of March, 1900, less than nine years from the date of the issuance of the last execution on the judgment, to be substituted and subrogated to the rights of James M. Woodford against John F. Woodford for the amount paid on said judgment out of the proceeds of the sale of said .James M. Wbodfords’ real estate in excess of his equitable portion thereof, which the plaintiff’s allege was one-half, less the payment of $594.13 paid by said co-surety, the principal debtor and all the sureties except James M. Woodford and John F. Woodford having been insolvent, by reason of which nothing was collected from any of them on account of said judgment. 'There is some contention of payment made by Heatherly, one of the sureties, and of ability to pay by the estate of Robinson, another one of the sureties, but these questions, for convenience, will be postponed for the present.

That an equitable claim, such as the right of a surety, who has paid the debt of his principal or more than his equitable part thereof, to be subrogated to all the rights and remedies of the creditor against his co-sureties, is an equitable demand for money, which may be assigned in equity, would seem to be too plain to require any citation of authority. Although originally a matter of equitable cognizance, contribution between sureties long ago became a legal right, enforcible by courts of law. Brandt on Sur. & Guar, section 289. The right to recover at law seems to be limited to an aliquot part of the debt, to be determined by a division- according to the whole number of co-sureties, solvent and insolvent. But in equity a surety who pays the debt of his principal is entitled to have, as contribution from his solvent co-sureties, a pro rata amount of the sum paid by him, based upon the number of solvent co-sureties, excluding the insolvent ones. Brandt on Sur. & Guar, section 288; Story’s Eq. PL section 496; Preston v. Preston, 4 Grat. 88; Dent v. Waits Admr., 9 W. Va. 41. Whether the right in this case is legal or equitable is immaterial. As an equitable demand for money an assignment of it is enforcible in a court of equity. HoAvever, authority for the proposition is not wanting. 27 Am. v& Eng. Enc. Law, 271; Pierce v. Garrett, 65 Ill. App. 682; York v. Landis, 65 N. C. 535; Bank v. German, 3 Pa. St. 300; Hare v. Hadley, 54 N. J. Eq. 545.

It is not upon non-assignability of the right, however, that the defense is based. One contention is that payment of the judgment out of the proceeds of the sale of James M. AYooclfords’ real estate is not proved. The decrees- hereinbefore referred to are exhibited with the bill and relied upon as pToof of payment. They show that the property was sold for $7,510. The debt in question was made by the last decree sixth in order of pajunent and these six liens amounted, in the aggregate, to only $2,834.66. There were judgments amounting to. $4,186.72 which had preference of payment out of the fund arising from the sale of the personal property, but that fund amounted to $4,200.52 which was probably sufficient to cover all of these judgments with the interest thereon. Whether it was or not, the decree gave preference over the bank judgment to only one of these judgments, that of A. Block & Co. for $325.00 which was one of the first six liens and included in the total of $2,834.66. Hence, there can be no doubt as to the sufficiency of the proceeds of the sale of the real estate to pay the judgment in question. But it is urged that the decrees do not show that it was paid. This contention is based upon certain recitals in the decrees. One is in the decree of July 19, 1889, and is as follows: “But no part of the proceeds of the sale of said lands shall be applied to the satisfaction of said debt of $1,757.79 until execution thereon has been issued and returned.” This is the same judgment reduced by an erroneous application thereto of part of the proceeds of the personal property which was corrected on the appeal as above stated. Other recitals relied upon are in the decree of October 30, 1889. They are as follows: “But nothing herein contained shall be construed to release the said, proceeds arising from the sale of said lands of James M. Woodford from the lien existing thereon in favor of the Farmers’ Bank of Philippi for his equitable share of its demand against him and others for said sum of $1,-757.79, when the same shall be ascertained after allowing him credit of $542.02, 'with interest thereon from the 26th day of March, 1886, paid by him upon the original judgment of $1,-781.80, mentioned in said decree of sale. * * * * It is further ordered that whatever sum may be paid on said debt shall be applied as a credit on the said debt 8th in order of priority aforesaid, as of the date of payment thereof, notking herein contained shall be so construed as to prevent said Special Beeeiver fron issuing other executions for the said debt or any balance thereof, and the amount so paid by said J. F. Woodford shall be a credit on said execution but shall be no release to him of the balance thereof.” Another is in the last decree, carrying out the final decree of this Court and reads as follows: “In case execution shall issue upon the said debt of $2,359.89, against said I-Teatherly, subject to the credit of $594.13, as of November 4th, 1889, paid by J. F. Woodford, or in case execution shall issue against the other defendants therein for the sum of $1,781.80, and $3.75 costs with interest from February first, 1886, subject to the credit aforesaid, and the said debt shall be paid by any <of the said defendants therein except by the principal J. W. Talbott, then in that event it is further adjudged,' ordered and decreed that the proceeds of J. M. Woodford’s lands in or which may come into the hands of said Commissioners applicable to the payment of said debt of $1,961.95, decreed to the Bank of Philippi, shall be liable to such co-surety for his equitable proportion of said debt for which he is liable, but all questions touching the amount thereof are reserved for such order of the court as may be necessary and propper to protect the rights -■of aJI the sureties in said judgment.” From what has been said it must be apparent that the recitals in the first two decrees are now without effect, for they were reversed and held for naught in so far as they fixed the order of- distribution of the money. The recital in the last decree does .not stay the distribution of the fund, but only reserves to the court the power to enforce contribution among the sureties. This contention, however, is set at rest and shown to have no foundation by another part of the last •decree which orders payment of the proceeds upon th§ debts in the order fixed by that decree. It reads as follows: <(It is further adjudged, ordered and decreed that the said Commissioners, J. Hop Woods and Chas. F. Teter, shall withdraw the fund deposited in Bank by a foriher order herein and with it and the proceeds of the uncollected notes for the purchase money of the lands of the said James M. Woodford pay the debts so far as said funds will avail in the order herein mentioned; after payment of costs and expenses as herein provided.” The stay in the decree of July 19, 1889, if not released by the action of this Court on the appeal is undoubtedly released by the decree of June 4, 1891. Ik shows conclusively that the money in the hands of the special commissioners was appropriated to and directed to be paid on this debt and it would be a most violent presumption to say that these commissioners, special officers of the court, had not paid over the money.

Laches and the statute of limitations are relied upon as other defenses. The answer to this is that the assignment made by ¡Woodford to the plaintiffs carries the benefit of the judgment lien upon the property of John F. Woodford held by the Farmers’ Bank of Philippi. On satisfaction of the judgment, James M. Woodford became entitled to all the rights and securities for that debt held by said bank. By his assignment to the plaintiffs, he invested them with the same rights, including the benefit of the lien of the judgment upon the lands of John F. Wood-ford. That lien was not allowed to lapse. As already shown, executions were issued upon it within two jnars, and before the expiration of ten years from the date of the first of the executions, another one was issued on the 8th day of July, 1891, by reason of which the lien would continue for .another period of ten years. Before tbe expiration of that time, this suit was brought to enforce the lien. Hence, neither the statute of limitations nor the principle of laches applies. Code, chapter 139, •section 10. The lien of a judgment ceases to exist when the right to sue'out execution or to bring a scire facias or action thereon is barred by the statute of limitations and not before. Shipley v. Pew, 23 W. Va. 487. “Where execution issues within two years as aforesaid, other executions may be issued on such judgment without notice, within ten years from the return day •of the last execution issued thereon, on which there is no return by an officer, or which has been returned unsatisfied.” Code, chapter 139, section 10. Since the lien exists as long as execution may issue on the judgment or scire facias or action thereon may be had, neither the statute nor laches can bar it, for the lien .gives a clear right to satisfaction of the judgment, and equity will enforce it. Its existence precludes the possibility of any waiver, abandonment, lack of diligence or any other element of .laches. ,

That the right of subrogation may be lost by lack of diligence in its assertion against third parties is not overlooked, but here the rights of no such persons have intervened. Such lack of diligence is termed laches in Gring’s Appeal, 89 Pa. St. 336, but it is more like an estoppel in pais than laches. Laches pre•supposes a right of action founded upon contract or cause of -equitable relief between parties to a contract or a transaction out of which an equity arises. It is a failure to prosecute in time that cause Of action, or until after such changes in consideration as render the enforcement of the right inequitable. 18 Am. & Eng. Ency. 97. Estoppel in pais extends beyond the ■parties to the cause and operates in favor of third parties. Herman Est. & Res Jed. section 7, clauses 3 and 4; Bates v. Swiger, 40 W. Va. 420. However the principle may be classed, there rare no facts calling for its application.

Whether in the absence of a lien, the enforcement of which .•gives equity jurisdiction as long as it exists, the right to contribution in equity, where the plaintiff seeks more than an aliquot ■part of the debt determined by a division by the whole number of the sureties, because of the insolvency of some of them, is barred by the five years statute of limitations, does not arise here. Part ¡of such claim would be a legal demand as to which there is concurrent jurisdiction in equity. As a whole, i-t would be a demand cognizable only in equity, unless the statute has wrought a change in that respect. Section 3 of chapter 101 of the Code-gives to a surety having right of action for the amount paid by him a smnmary remedy. • It says he may “by motion in the circuit court of the county, obtain judgment or decree against any person against whom such right of action exists for the amount so paid, with interest from the time of payment, and five per centum damages on said amount.” Section 5 of said chapter-says that if the principal debtor be insolvent, the surety against, whom a judgment or decree has been rendered, may obtain á. judgment or decree by motion in the circuit court, against any co-surety or his personal representative for his share, in law or-equity, of the amount for which the first mentioned judgment or decree may have been rendered; and if the same has been paid,, for such share of the amount so paid, with interest thereon from the time of such payment. The objects of these two sections-seems to be, not to do away with any distinction there may be between law and equity jurisdiction, but only to provide more-simple and speedy remedies for the surety in .both forums. Under the third section, he may have either a judgment or a decree by motion. Under the fifth section, he may have,, by motion, either a judgment or decree, if a judgment or decree has been rendered against him on the contract for which he was surety. Construction of these provisions is not proper-here, however. Nothing in the ease calls for it.

The answer relies upon payment by Heatherly of his portion of the judgment, ancl an attempt is made to sustain this affirmative allegation by the evidence of a witness who says that the release deed book in the clerk’s office of the county court shows-that Heatherly’s share has been paid. Neither the release itself nor a copy thereof is produced and the witness does not undertake to say by whom the. payment was made. His testimony is-only secondary evidence and, therefore, could not be considered, had proper objection to it been made, and, if it were competent,, it fails to show that Heatherly paid any portion of the judgment. It only shows a release of the judgment, without indicating; who paid it. Payment out of the proceeds of Woodford’s real estate would justify the execution of the release and may account for its existence. This evidence is wholly insufficient to-sustain the allegation of pa3ment by Heatherly.

Another defense is that there is in the hands of G. F. Teter,.. special receiver in the chancery cause of P. G. Robinson v. J. W. Robinson, one of the sureties for the bank debt, a sum of money-amounting to one thousand or fifteen hundred dollars, belonging to the estate of said Robinson, and derived from rents of' his real estate under a decree in said chancery cause of Robinson v. Robinson. The object of that suit seems to have been to enforce the lien of a judgment against Robinson's land, and the-real estate was evidently placed in the hands ©f a special receiver and rented for a time before it was' sold. The claim is-that these rents were never applied to the pajment of any judgments, and still remain in the hands of a special receiver. The-only evidence of this is the testimony of John F. Woodford and L. D. Robinson, a son of the said J. W. Robinson, who died before the institution of this suit. The record of the chancery suit of Robinson v. Robinson which would show what became of these funds and the proceeds of his lands is not-produced. It is said' to have been lost. But the order book would undoubtedly show something concerning the disposition of his estate. Hone of the decrees in that case are produced in the effort to-substantiate this contention, and this testimony is open to the objection interposed to the evidence offered concerning the alleged Heatherly payment. It proves nothing. John F. Wood-ford testifies that it is his understanding that Robinson’s real estate sold for more than enough to satisfy all the liens upon it and that, but for the failure of the Farmers’ Bank to present in that suit its judgment against Robinson, that surety would have-paid out of the proceeds of his real estate his portion of the debt. This, again, is only secondary evidence offered without any foundation for it having been laid and it falls far short of proving the affirmative matter of defense alleged. The witness does-not state what the judgments against Robinson amounted to,, the amount realized from the sale of his real estate, the costs-of the suit, or any of the. facts upon which the issue made depends. He does not even say of his own knowledge that there was a surplus, but only that it is his understanding. Whether,, if proved, the matter relied .upon would be a good defense, it is unnecessary to inquire.

The defendant also relied upon the alleged levy of the execution of July 8,1891, upon money in the Tygarts’ Yalley Bank, to ■which reference has been made. The officer who made the memorandum on the execution testifies that there was in fact no levy made. He saw no money, had none in his hands nor any dominion oyer it, but made the memorandum upon the assurance of the cashier that the money would be forthcoming at any time he might want it. Moreover, he amended this return, if such it may be considered, before delivering up the execution. The memorandum was made on September 5, 1891. On September 26, 1891, .the attorney for the plaintiff endorsed upon the execution an order directing it to be returned unexecuted. On the execution, the officer wrote “returned unexecuted by order of Att’y for plaintiff.” Reading all these endorsements together, it is manifest that the return was made on or after September 26, 1891, and it negatives effectually the inference of any satisfaction of it, or liability for the amount of it by the officer, arising from the memorandum made on September 5, 1891.

It follows from these conclusions that the circuit court erred in dismissing plaintiffs’ bill. They are clearly entitled to enforce the lien of the judgment against the real estate of John 1?. Woodford fox one-half of the judgment of February 1, 1886, with interest thereon from said date and $3.75 costs, less the sum of $594.13 paid by said John F. Woodford, ifovember 4, 1889.

By the decree satisfied out of the proceeds of the lands, the principal sum in the judgment and interest thereon to September 26, 1887, were aggregated, the amount ascertained to be $1,961.95, and interest allowed on the aggregate from said date, and the proceeds of the land sold were held liable to contribution in favor of any of Woodford’s co-sureties who might satisfy the decree, on the basis of said aggregate sum, subject to the credit aforesaid. Under section 18, chapter 131, of the Code, a decree for the principal with interest added to the date of the decree, June 4, 1891, could have been made, allowing interest on the aggregate from that date. Hence, the law authorized a decree for interest upon interest after decree, in that way and to that extent, in favor of the creditor against all the sureties, and upon his satisfjdng the decree with such interest, the same right passed to J. M. Woodford against his co-sureties, together with the right to interest on the whole amount paid by him for his co-snreties from the date of payment. Though it is the lien of the original judgment his assignees are now enforcing, a decree based npon the same lien, has rightfully augmented the principal sum by the addition thereto of accumulated interest as aforesaid. This sum was further increased by the interest thereon until the date of payment, subject to deduction of the amount paid by John F. Woodford, as of the date of that payment, and one-half of the judgment, with interest thereon as-aforesaid until paid, and costs, and interest on the aggregate from the date of payment, subject, however, as to said one-half, to a deduction, as of November 4, 1889, of the sum of $594.13, paid by John F. Woodford, is the measure of liability of said John F. Woodford by way of contribution. “The amount of the payment made, with legal interest, is the measure of recovery.” Faires v. Cockerell, 88 Tex. 428; 27 Am. & Eng. Ency. Law, 207., Out of that sum, if sufficient, the plaintiffs are entitled to have satisfaction of their judgments, and, if insufficient to pay them in full, it is to be applied on them pro rata. But the amount for ydiich decrees are to be entered can be more conveniently ascertained, under these principles, in the circuit court than here.

For the reasons above stated, the decree complained of will be reversed and the cause remanded with directions to enter a decree for plaintiffs in accordance with the principles and directions herein stated, and for such further proceedings as the rules and principles governing courts of equity may require.

Reversed.