In Norton v. Coons (3 Den. 130) the sureties were all living, and the precise question did not arise, but it was again held that, while contribution between sureties was founded on a general principle of equity and justice, yet what had been an equitable had become a legal right, and that in such case the law will, for all the purposes of a remedy, imply a promise of payment.Summary of this case from Johnson v. Harvey
December Term, 1851
N. Hill, Jun., for appellant.
G. Stow, for respondents.
It is not denied, that, as between principal and surety, when the character in which they are obligated does not appear on the face of the instrument, parol evidence is admissible to show which is principal and which surety. Nor is it denied that one who is about to become a surety upon a note already executed by the principal and other sureties, may regulate the terms of his suretiship to suit himself. He may contract to be co-surety with others who have executed the instrument, or to be, as between him and them, surety alone, not co-surety with them, and thus exempt himself from liability to contribute. ( Harris v. Warner, 13 Wend. 400.) The defendant assumes that the proof offered by him, and rejected, would establish an agreement between him and one of the principals, by which he was not to be co-surety with the plaintiffs, but surety for them, and therefore not liable in this action to reimburse to the plaintiffs any portion of the amount paid by them. The note itself affords no evidence of this agreement. The question therefore is, whether it is competent to establish it by parol. The doctrine of contribution was first established and enforced in equity. It rested upon and resulted from the maxim, that "equality is equity." This principle has been so long established that persons becoming bound as sureties for a principal debtor, are regarded as acting under a contract implied from the settled rules which regulate their liability to each other. ( Craythorne v. Swinburne, 14 Vesey, 169.) As between the makers of the note and the payee, their rights and liabilities are regulated by the terms of the contract as expressed; as between the sureties the contract is implied from their signatures to the note, so that the whole contract as expressed and implied is, in short, an agreement by the several obligors to pay the note at maturity, and if upon default of its being paid, either of the sureties pay it, the others shall contribute, each his equal proportion of the amount paid, less the share of the one who has paid the whole. In the one case the parties have defined their liabilities in express terms, in the other the law has defined them, and in terms equally express, and thus settled as between the sureties the legal effect of subscribing their names to the note. They are each chargeable with knowledge of the legal liability incurred as between themselves by the execution of the note, and should therefore be regarded as standing in the same relation to each other, and bound by the same rules they would be if the legal effect of their contract had been fully written above their signatures.
We are referred to the case of Craythorne v. Swinburne, (14 Vesey, 169,) as authority for receiving parol evidence of the terms upon which the defendant signed the note. That was a case in which the instrument then under consideration very clearly regulated the terms of the suretiship, but parol evidence was offered and received. It was, however, evidence of extrinsic facts, and was, as remarked by Lord Eldon in that case, in support and not in contradiction of the written instrument. No doubt is entertained that parol evidence of collateral facts is admissible to rebut the presumption arising from the face of the instrument, that all are principals and equally bound to contribute. ( Harris v. Brooks, 21 Pick. 195.) The defendant's proposition goes further. After proving for whose benefit the note was made, and who received the funds, and thus establishing the relation of principal and surety, he proposes to show that he was not co-surety, not by extrinsic facts, but by a parol agreement varying the operation of his contract as defined by law and subscribed to by him, and thus, in effect, made his written agreement. Within my means of research, I have not been able to find a case going that length, and I apprehend none exists. The law in this case having defined the rights and obligations of the sureties as between themselves, their signatures establish their assent to it, and the contract is thus made as clear and certain as if the whole had been written. It is the highest and best evidence of their agreement, and the reason of the rule that excludes parol evidence from being received to vary the operation of a contract, wholly written by the parties, applies with all its force to this case.
The mischiefs and frauds to be guarded against in the one case are as great as those in the other. Although the facts in this case are not analogous to those in the case of Thompson v. Ketchum, (8 John. 148,) yet the principle which should govern this is stated there by KENT, Ch. J., as a principle of general application, and that is, where the operation of a contract is clearly settled by a general principle of law, it is to be taken to be the true sense of the contracting parties, and it is against the general rule to vary the operation of a writing by parol. ( See Hall v. Newcomb, 7 Hill, 416.)
It will not be denied that the operation of the contract in this case was clearly settled by a principle of law. The defendant by subscribing his assent to it, has so far made it his written contract as to be prohibited from overthrowing it by a parol agreement made at the same time. The judgment of the supreme court should be affirmed.
It appears from the offer of the defendants, that when the negotiation was made with Miss Eldridge, she required that the note which she was to receive for the money loaned by her to Schryver Aikin should be joint and several, and undersigned both by the Nortons and Coons, the defendant, as sureties. That Coons was informed by Schryver Aikin, when he signed the note, that Miss Eldridge required the security of his name.
The preliminary agreement between the lender and the borrowers contemplated the signatures therefore, of both plaintiffs and defendant, as sureties for a common principal. Their signatures on the written instrument is in conformity with this understanding. No agreement whatever was made between the sureties.
The representation of Schryver Aikin to Coons was, that they wanted him to go on the note, that he ran no risk at all, as the Nortons were abundantly responsible. That his name was wanted to satisfy Miss Eldridge that the note was good; and upon these considerations he put his name on, saying it was something he would not do for any body, but as he had dealt a great deal with us, and if he ran no risk he would do it. Schryver Aikin did not pretend to speak for the Nortons, or to possess any authority to bind them by any agreement or understanding whatever. They made no agreement with Coons which the Nortons could ratify. The most that could be inferred by Coons from what was said, was, that in the opinion of Schryver Aikin, he ran no risk at all, because the Nortons were abundantly responsible.
It seems to me that such evidence is very far from rebutting the clear evidence of co-suretiship, established by the other testimony, and that the judgment should be affirmed.
RUGGLES, Ch. J., and JEWETT and McCOUN, Js., concurred.
The legal propositions stated by Ch. J. Bronson, in delivering the opinion of the supreme court, when this case was before it on a motion for a new trial, (3 Denio, 132,) are all, in my opinion, correct, with one exception. That exception is his position that the appellant could not avail himself of his qualified undertaking as a surety, because such qualification did not appear in the form of his undertaking. In other words, because the form of his signature to the note indicated co-suretiship with the respondents, he could not show the real character of his engagement, viz.: that he was surety for those whose names were before his on the note. For this position, the learned Chief Justice cited no authority, while he cited numerous cases to sustain his other positions.
Both reason and authority oblige me to adopt a different conclusion. The form of the undertaking indicates, if it is at all a guide, that the three parties to the note were all principals; and it may as truly and forcibly be said that the form of the undertaking shall prevent the respondents from showing that they were sureties, as that it shall prevent the appellant from showing the true character of his suretiship. But neither the one or the other is sound, for the obvious reason that the form of the undertaking is consistent with both. Hence the surety is always permitted to show by parol that he did not become a party to the paper as principal, but as surety. This is settled by numerous authorities, and is almost daily practiced. Can there be any reason why he should not be permitted also to show the true character of his suretiship? I can discover none. This point however has been settled by authority. ( Craythorne v. Swinburne, 14 Vesey, 160.)
My conclusion, therefore, is that if the appellant became surety only for those whose names were before his on the note, or in other words more applicable to this case, if he signed the note under an agreement with the principals, Schryver Aikin, that he was only to be responsible in case the respondents were unable to pay, then he is not liable in this action to the respondents.
The proof offered and rejected consisted of a series of facts, tending to show the limited character of the appellant's undertaking, and was rejected on the broad ground, that if proved, it constituted no defense.
It follows from what has been already said that this proof was erroneously rejected.
I am therefore of opinion that the judgment should be reversed and a new trial granted.
PAIGE, J. gave no opinion. MULLETT, J. did not hear the argument.