Strong & Buck v. Mitchell

'The opinion of the court was delivered by Bennett, J. The thirty-fifth section of the trustee act provides, “ that the trustee shall be allowed to deduct out of the credits in his hands all his demands, founded on contract, express, or implied, .against the principal defendant; and he shall be adjudged trustee only for the balance.” This section does not require the indebtedness absolutely to exist at the time, when the trustee suit was commenced. If, before final disclosure, the principal defendant becomes indebted to the trustee, in consequence of his being compelled to pay a sum of money for the use of the principal debtor, by reason of any liabilities assumed prior to the service of the trustee process, it would seem to be consistent with the object and views of the legislature, and the general tenor of the statute, to allow the [647] trustee to offset such demand and be chargeable only for the balance, if any. In this case the trustee had, as co-surety with the principal debtor, become absolutely holden to Cheever before he was summoned as trustee, and had no means, by which he could discharge himself, without payment. When the trustee had paid the notes, his right of action was complete, against his co-surety, for one moiety of the sum so paid. In Ward v. Leland et al., 1 Metc. 387, Chief Justice Shaw says, “The right of action, as between co-sureties, for contribution, grows out of the original implied agreement, that, if one shall be compelled to pay the whole, or a disproportionate part, of the debt, the other will pay such a sum, as will make the common burden equal — though the right of action accrues only from the time of payment. See also Stothoff v. Dunham’s, Ex’rs, 4 Harr, 182. So a surety has a right of action against the principal, upon an implied contract in law, whenever he has been compelled to pay money on account of his assumed liability ,• yet the right of action in this case is also from the time of such payment. See Davies v. Humphrey, 6 Mees. & Wels. 167. I have no doubt, the foundation of contribution is a fixed principle of equality, and that the right to contribution arises, in a certain sense, out of principles of equity, independant of contract. This is pre-eminently true in the case of Peter v. Rich, 1 Chanc. Rep. 35; in which it was held, that two out of three sureties were bound to pay in moieties, the third being insolvent. This is said to be the principle, which prevails in such a case, only in chancery. If, however, the surety, who pays the whole debt, goes against any other one of the sureties, for his aliquot proportion, only, of the money paid, he may have redress at law. In such a case, I conceive, as is said by/ Ch. J. Shaw, in Wood v. Leland et al., the right may well- be'said to grow out of an original implied agreement between the' sureties, when they became such. The plaintiff ought not to stand in a better condition than the principal debtor, and be enabled to call out of the hands of the trustee money which the principal debtor-' could not do. Though the trustee had no right of offset against the principal1 debtor, at the time when the suit was commenced, yet it was complete when the disclosure was filed ; and if the principal debtor had [648] sited the trustee before the payment of the Cheever notes, the trustee might have brought his cross action; and the court, if justice required it, would keep the causes together, so that the judgments might be offset. In regard to the Pinney note, we think the trustee should not be allowed to retain any thing on that account. His undertaking to pay the note, not being in writing, was within the statute of frauds and not binding; and if he had paid it after the service of the trustee process, it might well be regarded as a voluntary payment. Hazeltine v. Page, 4 Vt. 49. In the present case, however, no payment has in fact been made. The result, then, is, that the judgment of the county court is reversed, and judgment rendered, that the trustee is chargeable for the sums of money and the manganese, as found by the county court, — adding to the amount deducted by that court one half of the sum paid to take up the Cheever notes, and the interest on the same: — The clerk will make the computation accordingly.