Whitworth v. Tilman

HaNdy, C. J., delivered the opinion of the court. This bill was filed by the appellee, a surety for one Hudson, on a bond, against the distributees of the principal, to recover a sum of money paid by the appellee on account of that surety-ship, and certain costs and expenses incurred and paid by him in consequence of litigation carried on by him in relation to his liability. The bill shows, that the appellee became surety on a bond for $2,405, executed by Hudson, in April, 1840, for the purchase money of certain property purchased at sheriff’s sale under execution by Hudson, which bond was executed under the valuation law, then in force, and was payable in twelve months from its date; that at April term, 1841, of the Circuit Court, a motion was made to quash the bond, but the motion was overruled, and that in October, 1841, an execution was issued on the bond against principal and surety, which was levied on certain property, but the execution was superseded, and a writ of error presented to this court to the judgment overruling the aforesaid motion to quash, and at January term, 1844, that judgment was affirmed in this court, and judgment was rendered here against the administrator of Hudson, who had died pending the writ of error, and against the surety on the bond. It further shows that, about the year 1849, Hudson’s estate was legally distributed by his administrator, to and [81] among tbe appellants, Ms distributees, and the administration finally settled. It also shows that an execution was issued on the bond to December term5 1852, and was levied on certain lands of this surety, who thereupon made a motion in the Circuit Court to quash the execution; that this motion was granted, and a writ of error thereto prosecuted to this cqurt, and, at the October term, 1854, that this judgment was reversed and a new execution issued on the bond, and was levied on certain personal property of the surety, but that property was claimed by one Miller, who filed his bill in equity enjoining the sale of it; that pending that proceeding, the surety made a compromise with the plaintiff in the execution, by which he paid the sum of $3,000, which was received in satisfaction of the debt. This sum and certain sums paid by the surety for costs incurred, both by the litigation carried on during Hudson’s lifetime and since his death, and for counsel fees in the litigation since his death, were sought to be recovered by the bill; ■ and a decree was rendered accordingly in the court below. As to the legal costs incurred by the litigation, instituted by the principal in his lifetime, in which the surety was joined, and which were subsequently paid by the latter, there can be no doubt that such costs were properly recovered by the surety. And it is not controverted here that he was entitled to recover the sum of $3,000, paid by him by way of compromise of the execution. But it is insisted that' the decree is erroneous, in awarding to him the costs taxed, and the counsel fees paid by him on account of the litigation which he instituted and carried on after the death of the principal, and after the determination of the litigation instituted by him which was determined after his death. It is well settled, and on sound reason, that a surety cannot charge his principal with costs and expenses unnecessa/rily incurred by litigation instituted and carried on by him in order to get rid of his liability or to defeat the efforts of the plaintiff to enforce it (Wynn v. Brooke, 5 Rawle, 106; Sedgwick on Damages, 291, 335); and it appears to be incumbent on the surety seeMng to recover costs and expenses from his principal, [82] to show that the litigation was entered into by him in good faith and upon reasonable grounds, and as a measure of defence proper to the interests of both parties. 3 Parsons on Contracts, 213 (5 edition). As a means of showing good faith, it is often proper, and sometimes necessary, in the commencement of a suit against the surety, ¿hat he shall give notice to his principal, in order to enable him to pursue the course that he thinks best for his own safety with reference to the claim against the surety, and to the consequences of that action to himself. But if no notice be given, and if the surety do not show that he undertook the litigation in good faith and upon reasonable grounds, and in order to protect the interests of the principal as well as his own, and that it was calculated so to result, he cannot recover against the principal the costs and expenses of his litigation. Upon these principles, this decree cannot stand, as to the costs and expenses incurred subsequent to 1844. That litigation was entered into by the surety after the death of the principal, and after the litigation commenced by him had been determined and had resulted in a judgment of this court fully establishing the liability of the principal and surety, in a writ of error in which they were joined. There is no showing, either by the allegations of the bill, or by the proofs, that this litigation of the surety was undertaken upon any reasonable grounds of success, or with any view of protecting the interest of the principal; but it would rather appear to the contrary, as it was all unsuccessful, that it was resorted to as the means of preventing the enforcement of the execution against the surety. It is said that it resulted in a benefit to the principal, because it enabled the surety to compromise and settle the sum due on the execution for about half its amount. But this does not appear to have been caused by the litigation conducted by the surety after the principal’s death; for that was all ended and the judgment was finally fixed for its full amount against the surety. It was not until execution on that judgment had been issued and levied on property claimed by Miller, the sale of which was enjoined by him, that the surety made the compromise. [83] It does not appear, and conld scarcely be said, that tbe surety was privy to tbat proceeding, and bence it does not appear that the litigation of the surety had any effect in producing the compromise. But, in addition to this, the amount of the judgment was largely increased by the accumulation of interest upon it, occasioned by the litigation from 1844, after the principal’s death, to the time of the compromise in 1858 ; and, at the time the judgment was rendered in this court, finally fixing the liability of the principal and surety on the claim, the judgment was about of the same amount as that paid by the surety in the compromise. If he had paid it then, as it appears he was bound to do, the large accumulation of interest would have been prevented, and he might, for aught that appears, have recovered the amount paid by him, out of the estate of the principal. It thus appears that he cannot claim to have benefited the estate of the principal by the compromise, and thereby charge it with the expenses of an unnecessary and protracted litigation conducted by him. It follows that the decree is erroneous and must be reversed, and that a decree must be made here, correcting these errors, in accordance with the views herein stated. And a new decree is ordered accordingly.