German American Savings Bank v. Fritz

Cassoday, J. We have carefully examined the numerous cases cited by the respective counsel, and many others. The contrariety in the opinions of different courts may, to some extent, be reconciled by a strict regard to the particular facts inducing each particular expression of opinion, and whether such utterance had reference to the respective rights of the parties or only to the proper remedy for the determination and enforcement of such rights. These distinctions may be fairly illustrated by the case at bar. Ser-vatius was the maker of both notes, and primarily liable thereon. Fritz and Blankenburg were co-payees and co-accommodation indorsers. Servatius negotiated the notes, and had the avails thereof. Upon the making, indorsement, and negotiation of the notes at the bank, the three defendants became jointly and severally bound by their express contract to pay to the bank the amount of the principal and interest mentioned in the notes, or any judgment which might be recovered thereon. Though not fully expressed in words, yet in making the contract the relations of the defendants to each other were such that there arose therefrom, as between themselves, by implication of law, two conditional contracts or obligations,— one to the effect that if said co-indorsers or either of them paid said indebtedness or any judgment thereon or any part thereof, then Servatius would repay to him or them the amount so paid, with interest; the other, to the effect that, if either of such co-indorsers paid thereon more than the other, then such other would reimburse him to the extent of one half of such excess, and interest thereon. But such implied contracts or obligations were, necessarity, to remain conditional until such payment or payments should be made — then to become absolutely binding. Such were the legal — 395 — rights and liabilities of the defendants as between themselves. Upon the rendition and docketing of the judgment the same became a lien upon the rekl estate of Fritz in question, but probably without the knowledge of the bank or Blcmkenburg. Servatius was insolvent. Blankenburg was •compelled to pay to the bank the whole amount of the judgment, which was then satisfied as to him, and he thereupon took from the bank an assignment in writing of the judgment, and then filed the same with the records of the ■case, and the fact was then noted in the docket "of the judgment as stated. It is now claimed that such judgment thereby became fully paid and completely extinguished as to each and all of said defendants, and hence ceased to be any longer a lien upon said réal estate. Of course, when the bank received from Blcmkenburg the full amount due on the judgment, its interest therein was thereby necessarily terminated and extinguished. By such payment the expressed provisions of said contracts, by which all the defendants became bound to the bank and. upon which said judgment was based, became satisfied, so far as the bank was concerned. Numerous cases are cited by the learned counsel for the appellant, holding that at law such payment ■operated as a satisfaction and discharge of the judgment, notwithstanding such assignment. Others might be cited to the same effect. This rule is, to some extent, modified by the statute declaring, in effect, that the release of a joint debtor “ shall operate as a satisfaction or discharge of such joint debt only to the amount of the proportion which the person so released ought in equity, as between himself and the other joint debtor or debtors, to pay: . . . provided , . . that, if the person released is only a surety, his release shall operate as a payment of such "joint debt to the extent of the money actually paid by him to procure his release, and no further.” Sec. 4204, R. S. But such pay — 396 — ment by no means operated as a satisfaction or discharge of either of such implied contracts or obligations. On the contrary, it was the very condition which was to make, and did make, each of them absolutely binding. Besides, it did not operate to satisfy or discharge the express promise of Servatins to pay the amount of the notes to the other defendants as co-payees. Upon the payment by Blanlcenburg, that express promise became binding to him. The only difficulty is in the method of enforcement. The question recurs, ITow are such absolute rights or obligations, thus secured to Blanlcenburg by virtue of such implied contract and payment, to be enforced against Fritz and the land in question? Did Blanlcenburg succeed to the judgment lien upon the land held by the bank, by virtue of the assignment, or by way of subrogation, or not at all? The difficulties in the way of enforcing the same at law by execution issued directly upon the original judgment have already been pointed out and are apparent. By paying the amount of the judgment and taking the assignment, Blanlc-enburg did not and could not, as against Fritz, acquire the same right to the full amount of the judgment as had been possessed by the bank, although he may have acquired such right as against Servatius. Sec. 4206, R. S. The amount which Blanlcenburg had the right to recover, as against Fritz, could not be ascertained from the judgment itself. Such right was not determined by the judgment, for it only accrued and became absolute by the payment made more than four years after the rendition of the judgment. The facts which secured to Blanlcenburg such right as against Fritz, existed largely dehors the judgment. These things show the necessity of an authoritative determination of the respective rights and liabilities of such co-accommodation indorsers as between themselves, before any process should issue to enforce them. This could only be done, independent of statute, by a hearing of the respective parties in — 397 — court and an adjudication of their respective rights and liabilities therein. It has been determined by this court that the right of a surety or such co-accommodation indorser to be subrogated to the remedies of the judgment creditor, is a matter cognizable by a court of equity. Mason v. Pierron, 63 Wis. 244. Mr. Justice Lyon there said: “The extent to which subro-gation may be decreed has been a matter of some conflict between the courts of this country and of England. It was formerly held in England, following the Roman law, that a surety subrogated to the rights of a -creditor had precisely the same rights the creditor had, and stood in his place; but in later times the rule has been restricted in that country, and it is there now held that the right of subrogation extends only to securities other than the obligation or instrument which is the evidence of the debt. . . . The courts of this country, however, have very generally adhered to the ancient rule, and hold that although the lien or obligation be extinguished at law by the payment of the debt, yet, for the benefit of the surety Jit continues in equity in full force. This is believed to be the more just and reasonable rule.” In support of this proposition numerous cases might be cited. See Fleming v. Beaver, 2 Rawle, 128, 19 Am. Dec. 629; Edgerly v. Emerson, 23 N. H. 555; Brewer v. Franklin Mills, 42 N. H. 292; New Bedford Inst. v. Hathaway, 134 Mass. 69, 45 Am. Rep. 289. In the New Hampshire cases cited, an attachment of the property of the principal debtor was kept alive for the benefit of the surety who paid the debt and took an assignment of the cause and right of action. As observed in Mason v. Pier-ron, s%vpra, “ the American rule is fully recognized in our statute, which prescribes the procedure by which one of several judgment debtors, who has paid more than his just share of the judgment, may keep the judgment alive and retain the lien thereof upon the land of the other judg — 398 — ment debtors for the purpose of enforcing contribution by tbe latter.” Secs. 3021-3024, R. S. These statutes assume the continuance of the lien at law for at least twenty days after payment, without anything being done, and then provide a way for preserving such a lien at law by simply filing an affidavit. But such remedy is accumulative, and does not take away the right which previously existed of enforcing the same as between the parties by apt proceedings in equity. McDaniel v. Lee, 37 Mo. 206. It was there said, in effect, that prior to the statute in that state a surety who had paid the debt had a remedy against his co-sureties either by bill in equity to enforce contribution against all, or he might proceed against each separately at law for his proportionate share of the excess paid; and since the statute he also had a summary remedy by motion for judgment for such proportionate share of the excess. It being thus established that in equity a defendant surety, on payment of the original judgment, is subrogated to the rights of the judgment creditor, especially where, upon making such payment, an assignment of the judgment is taken to keep alive the security as here, it only becomes necessary to consider whether the proper remedy has been resorted to in the case at bar. Ordinarily, to secure the benefit of such judgment lien against such co-surety or co-accommodation indorser, the one paying the amount of the judgment should proceed by bill, suit, petition, or some proceeding in equity, wherein the equitable rights of the respective parties may be adjudicated and enforced. Cuyler v. Ensworth, 6 Paige, 32; Speiglemyer v. Crawford, 6 Paige, 254; Goodyear v. Watson, 14 Barb. 481; Townsend v. Whitney, 75 N. Y. 425; Smith v. Rumsey, 33 Mich. 183; Neal v. Nash, 23 Ohio St. 483; Furnold v. Bank of State, 44 Mo. 336; Lidderdale's Ex'rs v. Robinson's Ex'rs, 12 Wheat. 594. But such relief has been granted by order of the court upon hearing of the parties. Springer's Adm'rs v. Springer, 43 — 399 — Pa. St. 518. Thus, in McDaniel v. Lee, 37 Mo. 206, the non-paying joint debtors sought relief upon petition in a court of equity, and it was held, in effect, that although the proceedings were irregular yet, as the court had thereby acquired jurisdiction over the subject matter, it would retain it and do full justice between the parties by enforcing contribution according to their equitable rights. So here, August 15, 1885, Fritz invoked the equitable powers of the court to relieve him from the judgment by fully satisfying and discharging the same. Blanlcenburg resisted the motion, and after a full investigation and hearing the court found the facts as stated, and ordered, in effect, the judgment released as to one half as against Fritz, but binding against him and in favor of Blcvnhenburg for the payment of the other half by way of contribution. Not satisfied with such order, which seems to have been in Strict accordance wfith the equitable rights of the parties, Fritz, upon new affidavits, renewed, substantially, the same application, and, after full hearing upon the merits, that motion was denied, November 17, 1885, as stated. No appeal was taken from either of those orders, and both, and the affidavits upon which they were respectively based, appear in the record. The original and alias executions, which were each subsequently issued upon leave granted by the court, recited the orders as stated. The motion to set aside the alias execution and proceedings under it, was, in effect, to renew, open, and reconsider what was thus twice' before solemnly determined, and, as we think, was properly denied. Fritz, having thus had a full hearing in a proceeding equitable in its nature and apparently just, must be regaixled as concluded. By the Court.— The order of the circuit court is affirmed.