Batchelder v. Wendell

Bell, J. By the first objection we understand nothing more can be intended than that the case stated by the complainants is not one proper to be relieved in equity. Wells v. Pierce, 7 Foster (27 N. H.) 512; Walker v. Cheever, 35 N. H. 339. But we think there is no foundation for this suggestion, on the first ground taken by the plaintiff’s counsel, that the contract stated is one of indemnity, in which cases it is usual to afford redress by a decree for specific performance. On this point the authorities cited by the counsel are decisive. Phillips v. Berger, 8 Barb. 527. II. As a general rule, all parties legally as well as those equitably interested, should be made parties. Busby v. Littlefield, 11 Foster (31 N. H.) 197. As the contract is stated in the bill, we are unable to perceive that Hadley, one of the complainants, has any interest but that of a subscriber only. He is not named as one of the directors with whom the agreement was made, and he is not one of those who have procured money for the railroad. It is alleged that he — 214 — signed the contract and received the fifty dollars, voted by the directors, for so doing. He stands in the same position as the defendants, and he would seem one to be properly made a defendant. But while this suit presents in one view a claim, by those who have procured the money for the railroad, for the repayment of that money, it also presents a claim, by those who have agreed to indemnify the borrowers, against those who have joined with them in the contract to indemnify, and who now refuse to perform that contract. Any of the parties who admit their own liability may join in a bill, for the purpose of compelling the other subscribers to perform their agreement. Bach of these signers has an interest in compelling the other subscribers to pay their part, since he will be thereby so far relieved from the burden resting on himself. In this view the bill is of the nature of a bill -for contribution, and Hadley appears properly as a complainant. Fletcher was one of the directors, and was, in terms, one with whom the contract was made. Nothing appears to raise any question as to his acceptance of the contract. But he was not a signer of the contract, and he has never taken any part in procuring any loan, or in taking any mortgage or security. He has no claim to make as a subscriber. If he has any right to prosecute the suit, it is because the contract is made with him by name, thus, as is suggested, giving him a legal interest in the contract. 5 Coke 18, b.; Hob. 172; Yelverton 177; Archbold P. & E. 54. The contract is thus stated: the subscribers named did promise and agree to and with the said Haven, Pierce, Walker, Batch-elder and Fletcher, and A. Ladd, since deceased,,who were then directors of said railroad, that in case said directors, or any of them, should loan or hire money for the use of said railroad, they would indemnify said directors, all, any, or either of them, so loaning or hiring, &c. This makes Fletcher a party legally interested in this contract, though he did nothing about it, and he is, therefore, properly joined. — 215 — III. The prayer of the hill is, that each of the subscribers should be required to perform his agreement, and to pay to the directors his proportion-of said $27,500, and to pay his proportion of- the shares of Laighton and Gookin, who are insolvent. It is very clear that here is no attempt to hold the defendants jointly. They agree to indemnify, &c., against all loss, &c., to an amount not exceeding $1,000 each; each subscriber to be severally and not jointly holden for a sum not exceeding $1,000. The plaintiffs claim that the solvent contractors are still bound to make up the deficiency resulting from failure of any of their number, provided the whole amount to be paid by éach does not exceed the $1,000 stipulated. At this stage of the case it does not seem to be necessary to consider this question, as the bill is sustainable on other grounds, whether this construction is adopted or not. IY. Though it is clear that no action can be brought at law upon a contract where some of the promisors are also promisees, yet the authorities cited by the plaintiff show that the contract is not therefore void. And it is a familiar case that a promissory note is written payable to the order of the maker, or one of the makers, and in such a case an indorsee may well recover upon it. In equity there is no such principle, and parties to a contract may maintain their bill, though they have contracted both as promisors and promisees. Burley v. Harris, 8 N. H. 237; Heywood v. Wingate, 14 N. H. 77 ; 1 Story’s Eq. 630 ; Story on Partnership, sec. 222. Y. It is objected that the conditions of the contract, on the complainants’ part, have not been performed, because $35,000 was not subscribed — the promisees, who subscribed, not being counted; but this objection is answered by the answer to the last point. Though they cannot be parties to a suit at law, they are nevertheless bound. And because the money is alleged to have been expended, not in finishing and furnishing the railroad, as is stipulated, but in building, finishing and furnishing it; and the suggestion seems to be that it may have been applied to other uses, under the word building. It is clear that the plain — 216 — tiffs were bound to see to the due application of the money, and to show in the bill that they have done so. To finish a railroad implies the building of such parts as are unbuilt, and are necessary to be built in order to finish it. ■ It is not, therefore, at once apparent what occasion there was for using this term building. Yet as it is used in reference to the money alleged to be raised under this contract, and is not so used in the next averment, respecting the $20,000 alleged to be raised in addition to the $27,500, it is not unjust to the plaintiff to suppose a distinction was intended to be made, and it is clear that if any thing else than finishing can be meant by this word, the averment is insufficient. YI. It is objected that the conditions implied in law were not complied with. 1. Notice was not given to the defendants of the acceptance of this guaranty by the plaintiffs. But it is answered that no notice was necessary in this case, and we think the authorities cited by the plaintiffs are conclusive on this point. The contract was in its nature mutual, and the signatures, which attest that the plaintiffs bind themselves by the contract, are equally evidence that they accepted the agreement of other parties, and the contract itself was notice to all of its acceptance. If other notice was required, the vote to allow the guarantors fifty dollars each, was notice enough to those who received the money, and to others who knew of it. 2. It is said notice of the amount advanced was not given in a reasonable time. The allegation of the bill is, that notice was given to each of the subscribers in July and August, 1856, before the suit was brought, December 1, 1856. But it was held in Beebe v. Dudley, 6 Foster (26 N. H.) 253, that where an undertaking to pay is absolute, notice to the guarantor is unnecessary. His liability is fixed without demand or notice. It was held in the same case, that when the party for whom the undertaking is made becomes insolvent, so that no advantage can arise to the guarantor by notice being given, no notice is necessary. It must appear that the neglect to give notice has — 217 — produced some loss, or prejudice to the guarantor ; otherwise a notice and demand, before the action brought, is sufficient. In this case, though this is a contract of indemnity, yet it is not of the nature of a guaranty, except in its effect. It was an absolute, unqualified contract to indemnify, and seems undistin-guishable from the case of Morse v. Stevens, 7 N. H. 549. The whole transaction bears upon its face, not a guaranty for the debt of a party expected to pay, but an indemnify to those who should procure money to aid a concern which was totally unable to go forward with its business. VII. It is said the contract is only to make good any deficiency, after the security stipulated is exhausted. But the plaintiffs deny any obligation to prove payment, and say it is • enough that they have bound themselves to pay, and may at any time be compelled to pay. On one side it is contended that the parties who advance the money are to make the securities taken for it available, as far as practicable, before they call on the subscribers ; while on the other side it is claimed that the securities are taken by the trustees, not for the lenders, but for the subscribers. The terms of the contract are that the subscribers will indemnify and secure the directors, &e., so loaning, &c., against any and all loss or damage for so doing, to an amount not exceeding $1,000 each. The terms are equivocal. To indemnify may import to save harmless ; to secure against a future damage, or penalty; or to make good, to reimburse to one what he has lost. We indemnify a man by giving sufficient surety to make good a future loss, or by actual reimbursement of loss, after it has occurred. Webster’s 4to. Diet. It is clear the contracting party is bound by the strongest sense, indeed, by the full meaning of the terms he has used, and we think it a fair construction of this contract, that the subscribers assume to do whatever is necessary to guard the heirs from impending loss, as well as to repair the damage they have sustained. It is not enough that they stand ready to repair the damage, when it had been done. At law they might be liable only for the damages resulting from a breach of the contract, and to the amount of the damage actually sustained, — 218 — if we suppose the parties so situated that an action at law could be supported, and the remedy there would be practically available only for the repair of the loss after it has occurred. The authorities cited for the plaintiff seem entirely satisfactory, that the party entitled to indemnity against the payment, is not in equity bound to wait until he has been obliged to pay. It is the duty of the party contracting to indemnify, to do whatever is necessary to guard the party secured, against being compelled to pay. Burroughs v. McNiel, 2 D. & B., ch. 297 ; Chamberlain v. Blue, 6 Blackf. 491; Gilbert v. Wiman, 1 Comst. 550. The security to be taken is manifestly for the benefit of the subscribers, and not of the heirs. “ The engines, &c., should be mortgaged to said directors, &c., as security for the money loaned, or hired, as aforesaid, and holden for the benefit of all the subscribers,” and they may at once be called upon to pay. Crocker v. Gilbert, 9 Cush. 134. The several objections raised by the demurrer are overruled, except the fifth, which may be obviated by an amendment. If ¡not amended, the demurrer on that ground must prevail.