Hall v. Thayer

Dewey, J. 1. The first question I propose to consider is, whether the claim of the plaintiffs is barred by the statute of. limitations. In the case of a mere promise of indemnity, the statute of limitations begins to run from the time the promisee actually pays the money, and not from the time he becomes liable for the payment of it. Angelí on Lim. (2d ed.) 116. Colvin v Buckle, 8 Mees. & Welsb. 680. Jones v. Trimble, 3 Rawle, 381. The latter case is very analogous to the case at bar. The contract in the present case was, to “ indemnify and save harmlesswhich latter stipulation might authorize a recovery, if the party was actually damnified, although no money had been paid; as if the party were taken in execution and committed to jail, and there confined till he should take the poor debtors’ oath. In such case, he might recover, to the extent of the actual injury sustained; but that principle is not applicable to this case, upon the facts found here. If this had been a promise to provide money for the pay merit of the notes that were given for borrowed money, such promise would have been broken by neglect to make the proper provision for their payment at maturity; and the party holding the indemnity might recover thereon, though the amount of damages, perhaps, would be nominal. But upon a bond of indemnity merely, the party would not be entitled to recover without proof of actual damage. Chace v. Hinman, 8 Wend. 452. Matter of Negus, 7 Wend. 499. As a general rule, the right of a surety to maintain an action against the principal, or against a co-surety for contribution, does not arise until an actual payment of money. The plaintiffs, by the terms of the written contract, were authorized to [136] borrow $5000, to complete the building; and in consideration that the committee (the plaintiffs) would give then* notes for the said money, as they could procure the same, the defendants promised and agreed to indemnify and save harmless the said committee, in proportion to the number of shares for which they had respectively subscribed. Upon this contract, no cause of action arose against the defendant, at least until an action was instituted and a judgment rendered thereon against the committee; and no substantial cause of action, that is, no right to recover the amount of such notes, would exist, until those notes were actually paid. Such payment of the notes having been made within the period of six years, the court are of opinion that the demand of the plaintiffs was not barred by the statute of limitations. The case of Wood v. Leland, 1 Met. 387, bears strongly upon this point. In that case, it was held, that the right of action in favor of a surety against a co-surety or his representatives, on a probate •bond, arises when the surety pays the money, and not before. 2. We perceive no sufficient objection to this form of action. The plaintiffs and defendant were not copartners in the erection of the building, but merely share-holders in certain defined proportions. The defendant made a promise, which was several in its nature, and not joint, and the exact proportionate share assumed by him is distinctly defined in the contract. There can be no necessity of resorting to a bill in equity, with a view of making the other subscribers parties, as such proceeding would not affect the amount of the defend ant’s liability; nor has he any right of contribution. It was competent, we think, for the defendant to make such express contract with the individuals composing the committee, although they might also be share-holders; and such contract may be t nforced at law. 3. The next objection taken is, that no liability ever attached to the defendant, inasmuch as the subscription paper was never filled up with the requisite number of shares. ' This fact might, under other circumstances, have been material, and the objection a fatal one to the maintenance of the action. If the [137] successful accomplishment of the undertaking in which these parties engaged had been dependent upon the actual filling up of the shares to the number of one'hundred, or if the liability of the defendant would have been increased in amount by the omission to fill up the whole number proposed, it might have been strongly urged, that the subscription was never so perfected as to charge the defendant. But the peculiar provisions of this instrument and ' the articles of association avoid this objection. By recurring to them, it will be seen that the defendant could not be called upon for any payment until the great and leading object of the association was effected, viz. the building of the meeting-house. This, by the very terms of the agreement, must necessarily be accomplished before the liability of the defendant would attach. Nor was the extent of the defendant’s liability to be enlarged or diminished in consequence of a smaller or larger number of shares being subscribed and taken by others. His liability, as to its extent, was exactly defined. It was to be in the proportion of the number of shares which he held to one hundred shares. Under these circumstances, we think it was not competent for the defendant to avail himself, by way of defence to this action, of the objection, that the full number of one hundred shares was not in fact subscribed. There was no express condition in the instrument to that effect, and the other provisions, already referred to, seem to furnish all the requisite security to the share-holders. 4. It is then further contended that the stipulations and engagements, entered into by the defendant, had reference to the erection of a meeting-house, which would require for its construction an expenditure not exceeding $5000. This, as it seems to us, was a provision entering into the original contract made by the defendant, and his liability was limited to the payment of his proportionate share of such deficiency as might exist in the expenditure, above the receipts, in the erection of a house, the cost of which did not exceed that sum. If, therefore, the committee have not substantially complied with this condition, and have materially and substantially [138] exceeded that amount, the defendant may well insist upon this fact as a good defence, if he is not, by his own acts and conduct, estopped from availing himself of such defence. If he, knowing such expenditures were to exceed the sum of $5000, actively cooperated in erecting the building, and encouraged such expenditures, or if, having full knowledge thereof, he subsequently assented to the same, and adopted and ratified the acts of the plaintiffs, he maybe estopped from setting up this defence. If such defence is relied upon, it will present a question of fact to be settled by the jury. Some question was suggested as to the sufficiency of the declaration. This we have not particularly considered ; and it is unnecessary to do so, as the plaintiff may have leave to amend his declaration, if a new trial is had. New trial granted.