Bank of Toronto v. Hunter

By the court, Woodruff, Justice. Although at law the defendant is to be regarded as the principal debtor as between him and the plaintiff, yet, as between himself and Tisdale & Co., the drawers of the bills, he stands in the relation of surety for such drawers; and in respect of any securities belonging to the drawers, held by the plaintiff to secure the payment of the bills, his equity is the same as it would be if his suretyship appeared on the face of the bills. If in ignorance that the defendant was a mere accommodation acceptor, the plaintiff has .given any further credit to Tisdale & Co., in reliance on those securities, which should defeat the defendant’s prima facie equitable right of subrogation, it will be for the plaintiff to set it up for that purpose; but taking the facts as they are stated in the answer, to be true, I think the defendant’s right of subrogation to be clear; and as the principal debtors are insolvent, and the plaintiffs are a foreign corporation, coming [298] into our jurisdiction for the purpose of collecting the debt, and whom, if the defendant first pays the bill,-he cannot reach by any process of our courts, he would, in respect of his right of subrogation, be remediless, if he might not by his answer, in the nature of a cross-bill in equity, assert and maintain his claim to affirmative relief, under sections 150 and 214 of the Code. There is no well founded objection to the determination of all the rights of the parties, legal and equitable, in relation to the same subject matter in one suit; and as the right claimed by the defendant, to be subrogated to the position of the plaintiff, upon payment of the debt, for which in equity he is surety only, is, I think, clear, the demurrer of the plaintiff to his answer must be overruled, with costs, but with leave to the plaintiff to withdraw the demurrer and reply, if so advised, upon payment of the costs of the demurrer and proceedings thereon. (Curtis agt. Tyler et al. 9 Paige R., 432; Wilkes agt. Harper, 2 Barb. Ch. R., 338; Mathews agt. Aitkin, 1 Comst. R., 595; Pitts agt. Congdon, 2 Id., 354 ; Eddy agt. Traver, 6 Paige R. 521; Cherry agt. Monro, 2 Barb. Ch. R., 118.) -