Clow v. Derby Coal Co.

Chief Justice Sharswood delivered the opinion of the court, [439] This was a joint action against the defendants upon a joint and several bond. The plaintiff might have instituted a several action against each, but as it stands he must recover against all or none. Curtin and Wallace were sureties. It is alleged that the others were stockholders of the Derby Coal Company, and what the equities of the use plaintiff were or would have been against them under the offer of evidence made in the court below it is unnecessary to inquire. The plaintiff claimed to recover against all the defendants. The question then is, had he a right to recover against those of the defendants conceded to bo sureties — whatever may be the case as to the others. Clow, the legal plaintiff in this suit, which is marked to the use of Casanova, had recovered a judgment against the Derby Coal Company in the Circuit Court of the United States of the western district. Upon this judgment a writ of error was taken out of the Supreme Court of the United States, and to procure a supersedeas of execution the bond in suit was executed by the defendants. The writ of error was dismissed and the bond became absolute. Casanova had made a contract with the Derby Coal Company, — and he offers to prove that two of the defendants were parties and assenting thereto, — by which he was to advance a certain amount of money to the company, from which certain bonds secured by a mortgage to Allen Hoy, trustee, were to be extinguished, and a new mortgage given to him. In pursuance of this arrangement satisfaction was actually entered on. the Allen Hoy mortgage, and the new mortgage given. The legal effect of this was that the Clow judgment became the first lien upon the lands of the company. Proceedings were instituted upon the second mortgage, and a sheriff’s sale had, the proceeds of which were appropriated to that mortgage — no claim having been made on the Clow judgment. In point of fact Casanova bad purchased the Clow judgment, and was the owner of the same. An issue was awarded between him and one Finney to try the right of the latter to a part of that judgment, and a verdiet rendered in favor of Finney. It is agreed that Casanova also purchased his right. This was a proceeding collateral to the question of distribution, and could have no legal eonclusiveness except as between the parties to it. The question then is resolved into this — whether Casanova, as owner of the Clow judgment, having had a clear right to payment out of the fund raised by the sheriff’s sale, and having neglected to avail himself of it, is not precluded in equity from recovering against the sureties on the bond in suit. If the creditor has the means of satisfaction from the property of the principal in his power and fails to avail himself of it, the surety is discharged. The plaintiff concedes this, but sets up a countervailing equity which [440] lie contends overcomes it. It is comprised in bis offer of evidence which was rejected by the learned court below, which re? jection forms the subject of complaint in the third assignment of error. In substance be contends that under the circumstancés be is entitled to have the satisfaction of the Hoy mortgage set aside or disregarded, So as to re-establish the priority of the lien of that mortgage — and to appropriate all the proceeds of the sale on the second mortgage towards payment of it. No fraud is alleged' — no mistake of such a character as would justify tlie interference of a court of equity. It is indeed probable that the Hoy mortgage was satisfied upon the mistaken idea that the Clow judgment had lost its lien by’the writ of error to the supreme court. It would have been wiser if' Casanova had been advised to take an assignment of the Hoy mortgage, instead of having it satisfied of record. This is not such a mistake, however, as a court of equity would interpose to rectify as against sureties who have at least an equal equity. "W hen satisfaction was entered on the Hoy mortgage, it was the intention of Casa^ nova to extinguish it. It is true he alleges and offered-to prove, that Anderson and Soteldo, two of tlio obligors, were stockholders of the Derby Coal Company, and agreed and accepted tlie proposition in writing from him, to give him the fullest protection possible for the payment of the second mortgage, and that Clow was also a stockholder, and had notice of that mortgage. But no offer was made to show that Curtin and Wallace had made any such agreement, or even had knowledge of it. No countervailing equity, therefore, was shown as against them. We think that the learned court below were perfectly right in rejecting the evidence offered, and directing a verdict for the defendants. Judgment affirmed.