Davis v. Mikell

The Chancellor. The complainant files his bill for the purpose of being .relieved against a judgment at law in favor of the present defendants, founded upon the joint promissory note of one John McKnight, with the complainant and others. Upon the face of the note the makers all appear as principals. It is alleged, however, by the bill, and admitted by the answer of the defendant Robinson, (who is. now the sole executor of Moore,) that the complainant was, in point of fact, a mere surety, and that McKnight was the principal debtor. It appears, from the proofs in the case, that, after the judgment was recovered, an execution was issued and levied upon a quantity of land belonging to McKnight, which was regularly advertised for sale. In the mean while, and' before the day appointed for the sale of the land, the sheriff levied the same execution on some personal property of McKnight, and took a bond with sureties from him, conditioned for the delivery of such property, in the — 569 — manner .required by the statute on that subject, and thereupon, abandoned the levy made upon the real estate. The complainant, being one of the defendants in the judgment, was required by the sheriff to unite in the bond so taken, that it might conform to the execution; but he expressly refused to sign it, and remonstrated against a- dismissal of the levy on the land, and urged that it should be sold according to the advertisement, saying that he would make it bring the amount of the judgment and costs. The defendant admits that he agreed to receive the.,bond as it was made. This bond was afterwards quashed, on motion of the obligors, in the circuit court, and the plaintiffs at law (who are defendants in this court) have resorted back to their original judgment, and are attempting to enforce its collection by execution against the complainant. It is admitted that McKnight and the other parties to the judgment have in the mean time become entirely insolvent. Whether these facts entitle the complainant to any relief, in his character of surety, is the question to be examined. There is, however, a preliminary question made by the counsel for the defendants, which must be disposed of before I proceed to notice the case on its merits. It is contended, as the complainant appears from the face of the note to be a joint maker, without any designation of the character in which he signed it, that he is to be regarded as a principal, and is estopped by the form of his contract from averring the contrary. The rule at law in England seems to be this: where several persons bind themselves jointly and severally by the terms of their contract, and nothing appears from the face of it to show that there exists the relation of principal and surety, all are to be- regarded as principals. In such case it is said that the form of the contract precludes a party from averring at law that he signed as surety. Rees v. Barrington, 2 Ves. jun. 542; Theobald on Principal and Surety, 117. But in a court of equity, so far as I can find, it has not been doubted, either in England or in this country, that the true relation of the parties may be shown, notwithstanding the form of the contract holds them all out as principals. The’ authorities referred to expressly admit this position. The same distinction is recognized, and the same doctrine admitted, in the — 570 — case of Sprigg v. Bank of Mount Pleasant, 10 Pet. R. 257; also in the case of The People v. Jansen, 7 John. R. 336. I think, then, that this preliminary objection cannot be sustained. Whether the complainant is not precluded from the relief which he seeks, by reason of the judgment against him, is a question of much graver character. In the case of Bay v. Talmadge, 5 John. Ch. R. 305, chancellor Kent held, that after a judgment against a surety, he becomes bound as a principal debtor; that it is then too late to inquire into the antecedent relations between the parties, and that, the surety cannot afterwards avail himself of any want of diligence on the part of the creditor, in pursuing the principal debtor. The case of Lenox v. Prout, 3 Wheat. 520, is supposed to be an authority to the same effect. A different rule has been laid down in the case of Baird v. Rice, 1 Call. 18, and of Bullitt’s Executors v. Winstons, 1 Munf. 269. These cases show that a surety will be relieved after judgment, upon the same principles which would entitle him to relief before judgment. The case of Sneed’s Executor v. White, 3 J. J. Marshall, 527, sustains the same doctrine. I am relieved from deciding between these conflicting authorities by a decision of our own supreme court upon the point in question. Newell & Pierce v. Hamer et al. 4 How. Rep. 684. I understand the doctrine of that case to be, that a judgment against a principal and surety does not convert the surety into a principal debtor, so as to strip him of any equity he might subsequently have against the creditor, growing out of his character, as surety. I not only yield to that decision as a binding authority, but humbly conceive that it is fully sustained by the soundest principles. I perceive no solid reason for dispensing, with the same measure of good faith, on the part of the creditor towards a surety, after judgment, which he is required to observe before judgment. The whole doctrine of equity, in extending relief to sureties, rests upon the moral and equitable obligation of the creditor to obtain payment from the principal debtor, or at least to do no act by which the liability of the surety is increased, or the means of recovering the debt from the principal may be lost. It — 571 — is difficult to see how the act of the creditor, in reducing his debt to a judgment, can absolve him from any pre-existing duty which he owed to the surety, or take away the right of the surety to avail himself of any subsequent act of the creditor, by which the payment of the debt is attempted to be unjustly and exclusively thrown upon him, without the hope of remuneration. Having thus shown that the complainant is not estopped, by his attitude in this case, from seeking relief, it remains to be seen whether he is entitled to the relief which he asks. This must depend upon the effect of the levy made upon the land, and the subsequent abandonment thereof, and upon the privity and connection qf the defendant with that procedure. There can be no doubt, upon principle, that if the first levy had been made upon sufficient personal property of McKnight to satisfy the execution, it would have effectually discharged the complainant, notwithstanding any subsequent release of the property so seized. This consequence would have followed from the fact that the judgment was a joint one against the principal debtor and surety. 3 Serg. and Rawle, 465; 2 Dallas, 373. Although a levy may be released by the consent of the plaintiff and principal defendant, and a new levy made as to such defendant, yet I apprehend that where such release is made not only without the consent of the surety in the case, but in the face of his declared remonstrance against it, he would be thereby discharged.. This question was directly decided in the case of Baird v. Rice, 1 Call’s Rep. 18. In that case the property of the principal debtor was seized under a writ of fieri facias, and afterwards restored to the defendant, by order of the plaintiff without the consent of the defendant’s surety, and it was held that the surety was thereby discharged, and that a new execution could not properly issue against him on the judgment. The difficulty in the case before me consists in the levy having been made on land, in the first place, instead of personalty, and it is urged that this difference places it without the rule just referred to. I find it laid down in the English books that after an elegit has been extended on the land of the defendant, no other execution can issue against his personal property unless the elegit is quashed or otherwise proves ineffective. Cro. Jac. 338; Bac. Abr. tit. Execution D; 1 Archbold’s Prac. 273. Hence I conclude, — 572 — that although a levy on land does not discharge the defendant, because it does not of itself divest his title thereto, yet while it is pending and undisposed of it must be regarded as a quasi satisfaction to the extent of preventing a new execution or a further levy upon personal property, provided the land is sufficient for the payment of the debt. Hopkins v. Chambers, 7 Monroe’s Rep. 262. In the case of McGehe v. Handley et al. 5 How. Rep. 625, the High Court of Errors held, that after an execution had been levied on land and the sale postponed, according to the provisions of the statute of 1840, the levy still continued in force, being merely suspended by operation of law, and that pending that levy no new execution could be issued with a view to a levy on other property. Chief Justice Sharkey, alluding to the first levy made on the land by the sheriff, says, “having enough in his hands, it would be unjust and oppressive to authorize him to take more, and a levy is presumed to be a sufficient one. A first sufficient levy must be disposed of before a second can be made.” The present is a much stronger case. Here the sheriff, after a levy upon land sufficient to satisfy it, without any return 'of the execution, and while the levy on the land was still pending, made a further levy,upon personal property, and then proceeded exclusively against such personalty, abandoning entirely the levy upon the land of the principal debtor. That the conduct of the sheriff in this particular, was approved by the defendant Robinson, is sufficiently evident from his answer. He admits that he interposed no objection, and strongly intimates his approval of the sheriff’s action in the matter, but at the same time interposes the guarded and cautious denial that these steps were taken “at his instance.” If it be true that after the levy upon the land no new execution could issue, it must be because such levy had the effect of pledging the land for the payment of the debt. That the abandonment of the levy on the land and making a levy on the personal estate of the debtor amounted to a waiver of the lien created by the judgment, is, I think, perfectly clear upon both principle and authority. A purchaser of the land, after the levy on it was released and a new levy made on the personal property of McKnight, would certainly have held it discharged from the judgment lien of the plaintiff at law. 13 John. R. 533. And — 573 — it would follow as a legal consequence that if the lien or pledge thus acquired, was lost by the neglect of the creditor, the surety should be discharged. If a creditor discharges a lien which he has obtained upon the property of his principal debtor, acquired either by virtue of a judgment or the levy of an execution, I am unable to perceive any reason why the same consequences should not follow as to a surety, which would attend the discharge of a lien acquired by contract. In the case of Sneed’s Executor v. White, 3 J. J. Marsh. 527, it was held that a stay of execution by a creditor after a levy made on the property of the principal debtor, by which the lien on the property was lost, would exonerate the surety, unless his assent to such stay was first obtained. It is well settled that where a creditor releases any security which he holds, for the payment of his debt, the surety is thereby discharged, to the extent at least, of the value of the thing released. Hays v. Ward, 4 John. Ch. 129. In the case of Lechtenthaler v. Thompson, 13 Serg. & Rawle, 157, the doctrine was carried still farther. The court held that where a creditor has the means of satisfaction, actually or potentially in his hands, and does not choose to retain them, the surety is discharged. So in the case of Caple v. Butler, 1 Cond. Eng. Ch. Rep. 543, it was held that where a creditor loses by his neglect, a fund pledged for the payment of his debt, he could not afterwards resort to the surety. In. the case before me, it is evident that Robinson knew of the levy on the land, and tacitly assented to its abandonment, by accepting of the forthcoming bond subsequently taken. The effect of this procedure was the loss of the lien upon the land; when it is shown by the proof, that if the land had been sold according to the advertisement, the surety stood ready to make it bring the debt and thus satisfy the creditor, and at the same time indemnify himself against loss. While this state of things was in progress, it seems that McKnight’s property was placed beyond the reach of the judgment, and he himself became insolvent. To hold the complainant still liable under such circumstances, would be to depart from all the rules established for the. protection of sureties. I shall accordingly direct a decree for the complainant, perpetually enjoining execution against him, from the defendant’s judgment at law.