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such proof, it is essential that the surety pay to the creditor the whole of what is due to him from the principal (f), or a part in discharge of the whole.

Upon payment to the creditor by the surety of the amount of his own obligation (where the engagement of indemnity is to a limited amount), the surety will, where the creditor has proved, be entitled, pro tanto, to stand in the place of the creditor (g), though the debt proved by the creditor, under the

fiat of the principal, may be different (h), or to a larger amount (i); and such surety is entitled to dividends upon proof by the creditor under the bankruptcy of the principal debtor, subject to a deduction of the proportion of the dividends upon the residue of the debt proved, beyond that for which the surety was engaged, supposing that expunged ; thus, if the surety limits his liability to the sum of 1,0001., and the principal is, at the time of his bankruptcy, indebted to the creditor in the sum of 2,0001. (including the sum of 1,0001., for which the surety is answerable), and the creditor proves his whole demand under the bankruptcy, and receives from the bankrupt's estate 5s. in the pound, the surety is entitled to the sum of 2501. in respect of the dividends so received by the creditor, and will be held discharged from his liability on payment to the creditor of 7501. (j); and paying that sum, is entitled to a proportion of the dividends under the proof by the creditor to any greater amount under the bankruptcy of the principal debtor (k). And if the creditor has any mortgage, or if any pledge has been deposited

(f) Capel v. Butler, 2 Sim. & (*) Ex parte Turner, supra ; ex S. 457; and see Browne v. Carr, parte Rushforth, 10 Ves. 409;

Paley v. Field, 12 Ves. 435. (g) Ex parte Turner, 3 Ves. (1) Ex parte Rushforth, 10 Ves. 343.

409. (h) Ex parte Turner, supra. (k) Ex parte Rushforth, supra.

2 Russ. 600.

with him by way of indemnity, or as a collateral security for the repayment of the money for which the surety had become responsible, the surety is entitled to have the same made available in the first instance in reduction of the debt for which he is answerable (1). But the surety is not entitled to the benefit of proof against other estates, in respect of which (the transactions being distinct) the creditor may have distinct securities (m).

If, however, the security given by the surety is for the whole debt of the principal (the contract of the surety not limiting the advances of the creditor), as in a case where the surety deposits with the creditor bills of exchange accepted by him for the accommodation of the bankrupt principal, as a security for any floating balance that may be due from the principal to the creditor, the surety is not entitled, upon payment by him to the creditor of the amount of his acceptances, to have paid to him by the creditor any dividends previously received by the creditor under the principal's bankruptcy, if the creditor's debt is then unsatisfied (n). But inasmuch as that portion of the creditor's debt, as shall have been paid by the surety, will be ordered to be expunged from the proof, the assignees under the bankruptcy will be considered to be trustees for the surety in

any future dividends that would (if such proof had not been expunged) have arisen on that part of the creditor's debt so paid by the surety, and the surety will be entitled to receive those dividends instead of the creditor (0).

It seems that the Court of Bankruptcy will, if necessary, and upon payment to the creditor by the surety of the debt of the principal, direct the credi

respect of

() Ex parte Rushforth, supra; and see in the matter of Westzinthus, 5 B. & Ad. 817.

(m) Paley v. Field, 12 Ves. 435.

(n) Ex parte Holmes, 3 Deac. 662.

(6) Ex parte Holmes, supra.

124 Rights of Surety against Creditor. tor (upon receiving a proper indemnity from the surety) to sue out a fiat against the principal debtor, so as to work out the surety's indemnity by payment (P); or will, where the debt has been paid, and the proof expunged, direct it to be reinstated for the surety's benefit (9).

Where the petitioning creditor issued a fiat on a debt which was afterwards reduced to a sum below 1001., and consequently of itself insufficient to support the fiat, but who had also accepted bills of exchange for the accommodation of the bankrupt (the amount of which bills added to the petitioning creditor's debt exceeded the sum of 1001.), and which bills had been indorsed by the bankrupt to C., and had been by him proved under the fiat, and the same were subsequently paid by the petitioning creditor : it was held, that on indemnifying C., and on presenting a petition in the name of C. for that purpose, the petitioning creditor was entitled, under the 6th of Geo. 4, chap. 16, sections 18 & 52, as a surety paying the debt, to substitute the debt so proved on the bills by C., for the original petitioning creditor's debt, so as to support the fiat, notwithstanding the words “any other creditor in the 18th section (r).

(p) See the observations of Sir George Rose in ex parte Rogers, 4 Deac. & Ch. 623; S. C. 2 Mont. & Ay. 153.

(9) Ex parte Matthews, 6 Ves.

285; and see ex parte Holmes, supra.

(n) Ex parte Rogers, 4 Deac. & Ch. 623; S. C. 2 Mont. & Ay. 153.

125

CHAPTER II.

OF THE RIGHTS AND REMEDIES OF THE SURETY,

WITH RELATION TO THE PRINCIPAL.

I. BEFORE payment.
II. As to payment.
III. After payment.

.
I. Before payment.

A surety may, it would seem, when his liability has attached by reason of the default of the party for whom he became responsible, notwithstanding the surety may not have been sued by the creditor, or the person to whom the instrument of suretyship was given, apply to a court of equity for the

purpose of compelling the principal to relieve him from his liability (s); “for if a person is security on a contract, there is a joint contract that the principal shall indemnify the security, and that the ground of equity is, that when the money. is due the equity arises” ((); and it is unreasonable that a surety should be for ever at the mercy of the creditor, in respect of an engagement which ought to be performed by the principal (u). But to entitle the surety to such equitable relief, there must have been (as before observed), a failure of the engagement on the part of the principal; as where the principal engaged to pay the creditor a sum of money at a time stated, and the day of payment had

(s) See the observations of Lord William Grant, M. R., in Antrobus Thurlow, C., in Nisbett v. Smith, v. Davidson, 3 Meriv. 569; and 2 Bro. C. C.579; of Lord Cowper, see Evelyn v. Evelyn, 2 P. Wms. C., in Hungerford v. Hungerford, 659; s. C. 20 Vin Abr. 103, Gilb. Eq. Rep. 67; of Sir Joseph pl. 7. Jekyll, M. R., in Lee v. Rook, (t) Per Lord Cowper, C., in Mos. 318; of Lord Keeper North, Hungerford v. Hungerford, supra. in Ranelaugh v. Hayes, 1 Eq. Ca. (u) See the observation of Lord Ab. 79, pl. 5; S. C. 1 Vern. 190; Keeper North in Ranelaugh v. S. C. 2 Ch. Ca. 146; and of Sir Hayes, supra.

elapsed without payment of the money (v): and a bill will not lie upon any general equity by a surety to have an indemnity, or to have the money paid 'into court, where the day of payment has not elapsed, and the surety has not been damnified (w).

Where the principal, with the view to indemnify the surety, in consequence of his having become answerable for him to the creditor in a certain amount, gives the surety a bond conditioned for the payment to the surety, at a day named, of the same or other sum of money (though really given by way of indemnity), the debt accrues from the day mentioned in the condition, and if the money is not then paid by the principal to the surety, the condition is broken, and the surety may sue the principal upon the bond (x), although the surety may not have been called upon by the creditor (y), or have paid him any thing in respect of the original transaction (z); and the principal will not be allowed to plead that the bond was given by him to the surety, merely as an indemnity (a).

If the surety has received from his principal a bond of indemnity merely, the surety must show that he has been damnified (b), and having so done, the bond, at law, becomes forfeited (3).

(v) See Lord Eldon's observa- Rhodes, i Bos. & P. 638; Touistions in Cock v. Ravie, 6 Ves. sant v. Martinnant, supra.

(a) Mease v. Mease, Cowp. 47 ; (w) Dale v. Lolley, 2 Bro.C.C.

Holmes v. Rhodes, supra. 582, in notis, Belt's ed.

(6) Challoner v. Walker, 1 Burr. (x) See the judgment of Bayley, 574; Duffield v. Scott, 3 T. R. J., in Penny v. Foy, 8 B. & Cress. 374; Cutler v. Southern, 1 Saund. 11; S. C. 2 Man. & Ry. 181; and 116; S. C. 1 Lev. 194; and see see Touissant v. Martinnant, 2 T. the judgments of Bayley, J., in R. 100.

Penny v. Foy, 8 B. & Cress. 11; (y) Per Bayley, J., in Penny v. S. C. 2 Man. & Ry. 181; and of Foy, supra; and see Touissant v. Gibbs, C. J., in Young v. Taylor, Martinnant, supra.

8 Taunt. 315; S. C. 2 J. B. Moo. (2) Per Bayley, J., in Penny v. 326. Foy, supra ; and see Holmes v.

(3) Of the forfeiture of administration bonds.

In pursuance of the statutes 21 Hen. 8, c. 5, and 22 & 23 Car. 2, c. 10, sufficient bonds, with two or more sureties, are directed to be

283.

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