Gay & Co. v. Blanchard

The opinion of the court was delivered by Spencer, J. This case was before us in April last on an exception of prescription. In 1870, Francis T. Nicholls sold to defendant, Mrs. Suthon, one half of a plantation for $10,000, represented by her'four notes of $2500 each, falling due in 1871,1872,1873, and 1874, and secured by mortgage and vendor’s lien. In 1871, Mrs. Suthon sold this property to F. W. Pike, who, as part [501] of the price, assumed the payment of these four notes, Pike granting mortgage, etc., to secure the performance of his obligations. W. W. Pugh became owner of these notes, and in 1874 sued Pike on his assumpsit, and to foreclose the mortgages. Pike confessed judgment in favor of Pugh “ for the amount, and in manner and form as. prayed for in plaintiff’s petition, and consents that judgment be entered according to the prayer of said petition. A stay of execution to be given me, provided Mrs. Suthon consents thereto, for one third for one year, one third for two years,” etc. It seems that Mrs. Suthon never gave, nor was called upon to give,, her consent to this stay of execution. Subsequently Pugh transferred this judgment and the four notes to Gay & Co., who, in May, 1877, brought this suit, on the notes, against Mrs. Suthon, the maker. She plead by way of exception, prescription against the notes, which plea was sustained by the court below as to two of the notes, falling due in 1871 and 1872. Plaintiffs appealed, and that was the question before us last April. We affirmed that judgment. The question was whether the suit of Pugh vs. Pike, above referred to, interrupted prescription as to Mrs. Suthon. We held it did not, because sho was neither the surety of, nor debtor in solido with, Pike. If Mrs. Suthon was either the one or the other, then the suit did-interrupt prescription. Strangely, not to say inconsistently' enough, her counsel now contend that she was the surety’ of Pike, and press us to-reconsider the opinion then rendered. In other words, when seeking to escape on the plea of prescription, she was not the surety. Having got the benefit of that plea, to the extent of one half her debt, we are now told that she was the surety. If there were no other or better reason,, that of estoppel would preclude her from maintaining such a proposition now. But we have been led to reconsider our views on the question, and have been thereby confirmed in their correctness. Under our Civil Code, suretyship is an accessory contract, and presupposes the existence of a principal obligation. C. C. (old) 8004. It is also a consensual contract, as between the creditor and the surety. One may become security for a debt without the consent of the debtor, but not without that of the creditor. O. C. (old) 3007. It follows, necessarily, from these elementary principles, that where-one is a principal obligor, he cannot without the consent of the creditor transform that principal obligation into the accessory one of suretyship. Defendant argues, no doubt correctly, that Mrs. Suthon, upon paying her notes in the hands of Pugh or Gay, would be legally subrogated to the original Nicholls’ mortgage held by them, and could invoke and enforce it against Pike. [502] His nest proposition is that sureties enjoy this right of full legal subrogation — ergo Mrs. Suthon is a surety. This argument is fallacious, in this, that it is not sureties alone who, under our law, enjoy the rights of legal subrogation. It also exists, first, in favor of one creditor who pays another creditor who is preferred to him; second, in favor of any purchaser of an immovable who employs the price of his purchase in paying credits mortgaged upon the property. Third, in favor of the beneficiary heir, who has paid succession debts with his own money. C. C. (old) 2157. Yet those are not cases of suretyship. In none of these cases are the persons paying sureties for the debts they pay. The test of subrogation vel non is therefore fallacious. Perhaps a better test of the existence of the relation of principal and surety will bo found in the right of discussion. Our Code gives to the surety the right of requiring the previous discussion of the property of the principal before resort is had to him. C. C. (old) 3014, 3015, 3016, and 3017. Applying this test, it is manifest that Mrs. Suthon was not the surety of Pike. Pugh or Gay were under no obligation to discuss Pike’s property before resorting to her. They could have wholly disregarded Pike in the matter, and have proceeded against her personally or bypothe-carily, and she would have had none of the rights granted by articles 3014, 3017 of Civil Code.. As between her and the holder of her notes, she was not, therefore, the security of Pike, but a principal debtor. The contract of suretyship is one created and governed by the Civil Code, and we will follow that, whatever may be the rule at common law. But the citation from Brandt’s Law of Suretyship and Guarantee, p. 32, sec. 24, does not go to the extent claimed, since the author expressly limits its application to the case as between the assumer and assumee, i. e. as between Pike and Mrs. Suthon. He seems to think that because the latter would, up on payment to the creditor, be subrogated, that puts her in the position of “ any surety.” No doubt to that extent her rights are the same as a surety would have, but that does not make her a surety. ¥e held in our former opinion that Pike and Mrs. Suthon were not debtors in solido in the sense of the Code. Solidarity may be'perfect or imperfect. It is perfect, and the obligors are the mandataiies of each other, when by the same act, at the same time, they bind themselves to the performance of the same thing. It is imperfect (and they are not mandataries of each other) when they bind themselves to the same thing by different acts or at different times. See Marcadé, vol. 4, p. 509; also, 12 K. 183 ; 2 An. 332 and 792 ; 15 An. 168. While, therefore, we think it clear that Mrs. Suthon was neither security of, nor co-obligor in solido with, Pike, still she was bound “with” him for this debt; and as Pike was, under his contract with her, the ultimate debtor, upon her paying the debt, she was entitled to a full [503] ••subrogation thereto, as well as to the mortgages and privileges securing it. This was expressly held in the case of Baldwin vs. Thompson, 6 La. 475, a case in all respects similar to this. She now alleges that she has been discharged from her obligation on the two remaining notes, for the reason that'Pugh and Gay & Co., without her knowledge or con•sent, extended time to Pike, and compromised with him touching said -debt, so as to hinder, delay, and impair her right of pursuit, on paying 'the debt. We take the rule to be that where two persons are bound to a third, for the same debt, and where one of these obligors has, upon payment of the debt, a right of subrogation thereto, and of recourse for the ¡amount paid, upon his co-obligor, any contract between the creditor and the ultimate debtor, whereby delay is granted,-or securities surrendered or diminished, will discharge the obligor entitled to such recourse and subrogation if his consent be not obtained. The creditor in such case must maintain a position which will enable, him to subrogate the party paying to all the original rights, privileges, and actions incident to the debt. See 1 B. 301 ; 9 An. 497 ; Bayley on Bills, 357; Story on Prom. Notes, 544 ; 3 B. 299. Has Pugh or Gay, by any agreement of theirs, put it out of their power at any time to give to Mrs. Suthon this full subrogation and ■Bight of pursuit of Pike ? If so, she is discharged. We.find nothing in the confession of judgment having that effect. "The stay of execution was expressly conditioned upon Mrs. Suthon’s •consent thereto, and was inoperative if she refused to consent. . But we find Gay & Co. entering into contracts with Pike, which in •our opinion precluded them from enforcing the judgment and mortgage against Pike ; and which therefore deprived them of ability to subro-gate Mrs. Suthon to the full extent to which she was entitled. On 19th day of May, 1877, Gay & Co. entered into a contract with Pike to furnish him money and supplies to enable him to cultivate and manufacture a crop of sugar on the mortgaged premises. The advance was to be of $750 per month, but not-to exceed in the aggregate for the year $10,500. These advances were to be made by Gay & Co. upon the following conditions, to wit: That said Pike shall cultivate the said plantation to the best advantage, so as to produce thereon a 'successful crop of sugar, etc.:; that as fast as the crop is ready for market, he will ship it to Gay & Co., of New Orleans, to be sold in the usual way ; that the proceeds of said crop should be first applied by Gay & Co. to the re-imbúrsement of their said advances, and any surplus over ¡that sum they were to apply to sundry other debts held by them against Pike, and among these is enumerated the debt now in question before [504] ns. Pike further pledges the crop for all these debts, and binds himself to ship Gay & Co. the whole thereof. On 24th January, 1879, Pike leased the same plantation, for one. year, to Ed. J. Gay of the firm of Gay & Co. for the sum of $1000, for which Gay gave his note, and which note Pike agrees to deliver to Gay & Co. at once, as a credit on his debt to them. During the continuance of either of these contracts, could Gay &, Oo. have foreclosed their mortgage and sold the place? They could not-have done so, without thereby forcing Pike to violate his contracts with them. They stipulated and Pike promised, that he would cultivate that, place during the year 1877, and that the proceeds of the crop should go. to the discharge of his debts to Gay & Oo., including that now sued on. By the contract of lease Gay stipulated and Pike promised, that the former should have the enjoyment of the place for one year. Under both contracts Pike was to be advantaged and'benefited to the extent his debts were paid. Gay & Oo. would. have violated both agreements by seizing and selling the property, thus rendering it impossible for. Pike to fulfill his engagements under either. We take it, that where a. party stipulates that another shall do a certain thing, he thereby impliedly promises that he will himself do nothing which may hinder or obstruct that other in doing that thing. Had Gay & Oo. attempted the seizure and sale of the place during the continuance of these contracts,. Pike would have had the undoubted right to enjoin them, as violating the implied obligations of their contracts. If Gay & Oo. could not themselves have executed the judgment,, they could not by subrogation have conferred such right on Mrs..Suthom Nemo plus juris ad alienum transfers potest quam ipse habet. We hold therefore that Mrs. Suthon has been discharged from liability to pay the two remaining notes, by the act of tlie creditor. ■ We think the court a qua did not err in permitting defendant to-amend her answer, and set up additional grounds of defense, as there was no inconsistency. The judgment below was in favor of defendant. It is correct, and is affirmed with costs of both courts.