Frew v. Scoular

Rose, J. This is an action for contribution between sureties. It is alleged in the petition that, April 17,1894, George Scoular, William Frew, Thomas Donald and Janet Scoular, as sureties, and Robert and William Scoular, as principals, executed a bond for the payment of a loan of £1,500. The bond matured May 15, 1894, and was secured by a mortgage on land in Scotland, where all the parties resided except defendant, a resident of Nebraska. It is also alleged that the principals in the bond became insolvent, that the incumbered land was sold in satisfaction of prior liens, and that, in 1912, William Frew and the trustees of the estate of Thomas Donald, plaintiffs herein, were compelled to pay the debt. It is alleged further that the laws of Scotland do not bar an action on the bond before 40 years. The suit is brought against George Scoular to compel contribution in the sum of $2,999, his alleged liability as one of three solvent sureties. Defendant pleaded that he signed the bond in Nebraska, that he was then, and has since been, a resident thereof, and that the action is barred here by the statute of limitations — a five-year period. Rev. St. 1913, sec. 7567. Defendant also pleaded that he was not a surety, but that he signed the bond under an agreement to merely release any inheritable interest he might have in [133] the mortgaged land. The trial court directed a verdict for plaintiffs, and from a judgment in their favor for $3,018.* 12, defendant has appealed. Should defendant’s plea of the statute of limitations be sustained? The question may be stated thus: May a surety in whose favor the statute of limitations has not run, who has done nothing to suspend its operation, and who has been compelled to pay the debt of his principal, exact contribution from a cosurety in another state, though under the laws thereof the creditor’s claim against the latter was barred when the principal’s debt was paid? While the decisions appear to be in conflict, the better reason and the weight of authority seem to support the rule requiring contribution. Camp v. Bostwick, 20 Ohio St. 337; Wood v. Leland, 1 Met. (Mass.) 387; May v. Vann, 15 Fla. 553; Crosby v. Wyatt, 23 Me. 156; Crosby v. Wyatt, 10 N. H. 319; Martin v. Frantz, 127 Pa. St. 389; Aldrich v. Aldrich, 56 Vt. 324; Wolmershausen v. Gullick, 2 L. R. (1893) Ch. Div. (Eng.) 514. In Camp v. Bostwick, 20 Ohio St. 337, it was contended, as in the present case, that, since the statute of limitations had barred an action by the creditor against the defendant before the plaintiff paid the debt, defendant received no benefit from such payment and was not liable for contribution. In answer to this argument the court said: “If the right of a cosurety to claim contribution rested upon the doctrine of subrogation to the rights of the creditor, the proposition might be true. The doctrine of subrogation has its origin in the relation of principal and surety, whereby a surety 'who pays the debt of his principal is, in equity, substituted in the place of the creditor and is entitled to all the rights which the creditor may have against his principal. But the doctrine of contribution has its origin in the relation of cosureties or other joint promisors in the same degree of obligation. It is not founded upon the contract of suretyship. 1 Ohio St. 327, and 1 Cox, 318. It is an equity which springs up at the time the relation of cosureties is entered into, and ripens into a cause [134] of action when one surety pays more than his proportion of the debt. 4 G-rat. (Ya.) 268. From this relation the common law implies a promise to contribute in case of unequal payments by cosureties. But equity resorts to no such fiction. It equalizes burdens and recognizes and enforces the reasonable expectations of cosureties because it is just and right in good morals, and not because of any supposed promise between them. This equity, having once arisen between cosureties, this reasonable expectation that each will bear his share of the burden is, as it were, a vested right in each, and remains for his protection until he is released from all his liability in excess of his ratable share of the burden. Neither the creditor, the- principal, the statute of limitations, nor the death of a party, can take it away.” Defendant argues that the Ohio case is based upon Wood v. Leland, 1 Met. (Mass.) 387, a suit in equity which must be distinguished, contribution now being a legal remedy to which the statute of limitations should be applied. The argument is not conclusive. The question is not whether the statute of limitations runs against a surety’s claim for. contribution, but when does the cause of action for contribution accrue? Ordinarily the statute of limitations does not commence to run until the cause of action accrues. The right of a surety to contribution does not arise until he has paid more than his proportion of the debt or until his liability has been determined by judgment. May v. Vann, 15 Fla. 553; Wolmershausen v. Gullick, 2 L. R. (1893) Ch. Div. (Eng.) 514; Ex parte Snowdon, 17 L. R. Ch. Div. (Eng.) 44. Upon this point most of the cases cited by defendant appear to be distinguishable. Cochran v. Walker’s Ex’rs, 82 Ky. 220, and Shelton v. Farmer, 9 Bush (Ky.) 314, are decisions under local statutes modifying the general rule. Lovell v. Nelson, 11 Allen (Mass.) 101, and Spelman v. Talbot, 123 Mass. 489, rest upon special statutes relating to clhims against the estates of deceased persons, but recognize the general rule announced in Wood v. Leland, 1 Met. (Mass.) 387. Stockmeyer v. [135] Oertling, 35 La. Ann. 467, without discussion, follows Ledoux v. Durrive, 10 La. Ann. 7, and neither case involves the statute of limitations. Turner’s Adm’r v. Thom, 89 Va. 745, appears to be a case where payment by the plaintiff was voluntary; the statute of limitations having run in favor of both sureties. Stone v. Hammell, 83 Cal. 547, is a case where the plaintiff by absence from the state had suspended the operation of the statute. McLin v. Harvey, 8 Ga. App. 360, without any discussion of the principles underlying contribution, and Screven v. Joyner, 1 Hill Ch. (S. Car.) *252, announce the rule urged by defendant herein, but the reasoning is not convincing. The action for contribution was not barred by the statute of limitations. The trial court excluded testimony tending to show that defendant signed the bond at the request of his brother, one of the principals therein, and that it was agreed between them and the obligee that defendant was merely releasing whatever inheritable interest he might have in the incumbered land, and that plaintiffs knew defendant was not to be held as a surety. This is not an action on the bond, but a suit between sureties to enforce contribution. Evidence was therefore admissible to show the actual relation of the parties to the bond. 4 Wigmore, Evidence, secs. 2444, 2445; Chapman v. Garber, 46 Neb. 16; Cox v. Ellsworth, 97 Neb. 392; Oldham v. Broom, 28 Ohio St. 41; Chapeze v. Young, 87 Ky. 476; Leeper v. Paschal, 70 Mo. App. 117; Shea v. Vahey, 215 Mass. 80; Enterprise Brewing Co. v. Canning, 210 Mass. 285; Bulkeley v. House, 62 Conn. 459, 21 L. R. A. 247. In the case last cited it was said: “In considering the questions involved it should be borne in mind that this is an action for contribution. Contribution does not rest upon contract, but on the broad equitable principle that equality is equity. Justice and fair dealing demand that where one or more parties sign the same obligation,. and become equally obligated in precisely the same degree thereby, and stand upon the same [136] footing as to their liabilities thereunder, one of the number shall not be compelled to assume the whole burden for his associates, but may compel them to share equally with him any loss that may occur as the result of their joint liability. In actions for contribution, therefore, the principle seems noAV to be Avell established that parol evidence is admissible to show the true relations existing between the several parties bound by a written obligation. * * * Such evidence is not offered to contradict or vary the contract contained in the writing, but simply to show the actual relations subsisting between the joint makers of the note and the real nature of the contract between them. Such facts are not a part of the contract and do not affect its terms, but are wholly collateral to it. To support his claim for contribution therefore, the plaintiff clearly had the right to show his true relation to the note, and this without regard to the knowledge of the defendant.” If defendant was not one of the sureties, he is not liable for contribution. The trial court therefore . erred in excluding evidence on this issue. It follows that the judgment is reversed and the cause remanded for further proceeding®. Reversed. Cornish and Dean, JJ., not sitting.