Bolln v. Metcalf

Conaway, Justice. This is an action brought in the district court by defendant in error on two promissory notes, the execution of which in his favor by plaintiff in error is admitted. The notes were executed under the following circumstances: One Charles Rastaetter was treasurer of school district number six in Converse County, and defendant in error and John Schlichter were sureties on his bond. Rastaetter was, or had been, partner of plaintiff in error in a mercantile business. Shortly prior to April 7, 1890, Rastaetter absconded, and was defaulter in the funds of the school district to the amount of $542.82. The notes are of that date and for that amount — one for $300.00 at sixty days and the other for $242.82 at four months, both with interest at twelve per cent per annum from maturity. At the time of the execution of the notes, defendant in error and Charles Schlichter, sureties of Rastaetter, were attempting to have an attachment served upon the interest or supposed interest of Rastaetter in the property of the partnership consisting of Rastaetter and plaintiff in error. Upon the execution of the notes these proceedings were discontinued. It is claimed that this suit in attachment, if commenced at all, was not in proper form, and that the notes were given without consideration and under duress ; but it is immaterial whether the action was in proper form, or whether it was commenced at all, or not. The parties had a right to prosecute an action by attachment against Rastaetter to obtain indemnity as his sureties, and the alleged mistake in the form of action is immaterial. The settlement of an action, either begun or threatened, unless [8] it be founded on a fraudulent or fictitious claim, is a valid consideration for promises by a third party to pay the claim, and the service or threatened service of an attachment in such action is not duress of goods. So the defense of no consideration and of duress fails. Defendant in error testifies that pending attachment proceedings he told Bolin, who wished to avoid the service of the attachment of the interest or supposed interest of the absconding partner, that in order to discontinue the attachment suit he (plaintiff in error) must have security. He further testifies that the notes sued on were given to indemnify him ; that he thereupon stopped the attachment proceedings and the suit against Rastaetter, and “this closed up the entire transaction.” This portion of the testimony is not contradicted, and is relied upon by both parties. At the time of the execution of the notes, the following written agreement was signed by defendant in error: “Whereas George Bolin has this 7th day of April, A. D. 1890, made two notes for the amount and sum of five' hundred and forty-two dollars, being the amount claimed to be short by Charles Rastaetter as treasurer of school district number six. It being hereby agreed by the payee of said notes that if the said amount found to be due said district is less than aforesaid amount it shall be allowed and credited on said notes.” The defalcation was for the exact amount of the notes, and the sureties, defendant in error and Charles Schlichter, afterward paid a judgment for that amount against them and in favor of the school district. The security or indemnity, which defendant in error had obtained, was these notes of plaintiff in error for the exact amount of the defalcation of Rastaetter. And this security or indemnity was for the benefit of his co-surety, Charles Schlichter, equally with himself. Even if defendant in error intended this indemnity for his own benefit to the exclusion of his co-surety, the law will apply it for the benefit of both. (24 Am. & Eng. Ency. of Law, p. 815, subdiv. 7, note 3, [9] and authorities cited.) Brandt on Suretyship, Sec. 268; Harris on Subrogation, Sec. 207. This legal proposition is nowhere questioned or doubted by any authority, so far as we are advised, and it is not necessary to discuss the question, as there are no conflicting authorities to weigh. It is immaterial in what proportion the two sureties paid the defalcation. Equity will make the burden of payment and the benefit of the indem-. nity equal between them by contribution. And defendant in error could be fully indemnified by nothing less than the payment of the amount of the defalcation. In our opinion the judgment of the trial court should have been rendered in favor of defendant in error for the entire amount of the notes. It was for a less amount, but he has not appealed. The other party can not complain that the amount of the judgment against him is too small. Judgment affirmed. Justice Potter, having announced his disqualification to sit in the hearing of this cause, the other justices called in Judge Hayford of the second judicial district. Hayford, Dist. J., concurs. Groesbeck, O. J., dissents.