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III. After payment. Ist. Where the principal is solvent; and, 2ndly. Where the principal is bankrupt or insolvent.
1st. Where the principal is solvent.
Upon payment by the surety to the creditor of the debt of the principal, the surety may enforce its repayment from the principal debtor, in an action of indebitatus assumpsit at law(); or (where he has no counter-security from the principal), by bill in equity (p) (6); and payment by the surety's attorney or agent is (it would seem) sufficient, though at the time of action brought by the surety against the principal, the money had not been repaid by the surety; the allegation of payment being sufficiently proved, by showing that the creditor had been satisfied, and could make no further claim ; it being immaterial, as regards the principal, in what way the surety afterwards settles the account with the person who paid the money at the surety's request (9). If, however, the principal is a defaulter to the crown, and his surety makes good to the crown the debt due from the defaulting principal, the surety is entitled to stand in the place of the crown, and to have the same remedy that the crown itself would have had (r).
(0) Morricev. Redwin, 2 Barnard. (p) Ford v. Stobridge, Nels. 24; 26; Huntley v. Sanderson, i Cr. and see the observation of Lord & Mees. 467; and see Hodgson Cowper, C., in Hungerford v. v. Shaw, 3 Myl. & K. 183; Cart- Hungerford, Gilb. Eq. Rep. 67. wright v. Cooke, 3 B. & Ad. 701 ; (9) See Adams v. Dansey, 6 Bing. Layer v. Nelson, 1 Vern. 456; and 506; S. C. 4 Moo. & P. 245. the judgments of Lord Kenyon, (r) Doughty's Case, Wightw. C.J., in Exall v. Partridge, 8 T. 2, n.b; Babố's Case, Wightw. 2, R. 308; and of Lord Eldon, C., n. c; Rex v. Bennett, Wightw.l; in Ware v. Horwood, 14 Ves. 28; Anon. Sav. 30, pl. 72; and see and post, part 4, chap. I, “ Of Lord Eldon's judgment in WhiteActions by the Surety against the house v. Partridge, 3 Swanst. 365. Principal.”
(6) A recourse to a court of equity for this purpose is now rendered unnecessary, as the surety is permitted in a court of law to recover in an action of assumpsit (which formerly he was not allowed to do), the money paid by him on account of his principal. (See post.)
If the creditor, in a suit instituted by him against the principal and his surety, is paid by the surety, what the Master reports to be due to the former in respect of his demands, and for his costs of the suit, the Court will, upon further directions, make a declaration that the principal ought to indemnify the surety in respect of such payments, and reimburse the surety what he has so paid, and that the surety shall be at liberty to prosecute the decree against the principal in the name of the creditor, and make use of the name of the creditor for that purpose, the surety indemnifying the creditor against any costs or damage he may be liable to on that account (s). And if the creditor has a mortgage on property belonging to the principal, the equity of redemption in which the creditor by his bill seeks to foreclose, the creditor will, upon payment being made to him by the surety (the latter being a party to the suit) of what is due for principal, interest, and costs, be ordered to convey the mortgaged premises to the surety, or as he should direct (t). So in a suit instituted by one surety against his co-sureties for contribution, the principal will be decreed to indemnify the plaintiff and his co-sureties (u).
Courts of law permit the surety to recover from the principal, in an action of assumpsit, the money so paid by the surety, upon the ground that in the absence of an express stipulation between the parties, a promise is raised by implication of law on the part of the principal, to repay the money so paid by the surety for the principal's use (v) (7): but
(s) Weston v. Woolball, Set. on 253, in notis ; Lawson v. Wright, Dec. 244; and see Lord Hard- i Cox, 275. wicke's observations in Walker v. (o) See the judgments of AshPreswick, 2 Ves. 622.
hurst and Buller, Justices, in (t) Beckett v. Micklethwaite, 6 Toussaint v. Martinnant, 2 T. R. Madd. 199.
100, (7.) (u) Greerside v. Benson, 3 Atk.
(7) From the observation of Mr. Justice Buller, in Toussaint v. Mar.
the rule only applies where no other remedy exists ; consequently, if the surety take from his principal any security upon which he may proceed for the recovery of the money paid by him, he cannot resort to an action of assumpsit, but is left to the remedy given to him by the security which he has thought proper to take (w).
It has been observed, that it is the right of the surety, in the events which have been mentioned, to compound with the creditor (x), but in so doing, the surety is entitled to claim from the principal no more than he has actually paid (y), it being his duty to settle the debt of the principal upon the best terms he can, and if he get rid of the obligation at a less sum than its full amount, he cannot, as against his principal, make himself a creditor for the whole amount, and can only claim, as against his principal, what he has actually paid in discharge of the common obligation ().
A person who has become bail for another is entitled to recover from his principal all expenses fairly arising from his situation as bail, the relation of principal and bail being the indemnity of the principal as regards the bail, in respect of all charges which are necessary for his security, and
(w) See the observations of Ashhurst and Buller, Justices, in Toussaint v. Martinnant, supra ; and see Crafts v. Tritton, 8 Taunt. 365; S. C. 2 J. B. Moo. 411.
(2) See ante, p. 131.
(y) Butcher v. Churchill, 14 Ves. 567; Reed v. Norris, 2 Myl. & Cr. 361.
(2) Reed v Norris, supra ; and see Smith v. Compton, 3 B. & Ad. 407.
tinnant, it seems, that a surety who paid the debt of his principal had formerly no remedy against him at law, except he had a countersecurity, but was driven to a court of equity for relief; and even now, the remedy at law for the surety who pays the debt of his principal, must (in general) be confined to those cases where the surety appears to be so upon the instrument itself; for if P. and S., as principal and surety, are co-obligors in a bond, which upon the face of it appears a common money bond, and the surety discharges the bond, and has no other security, he must (it is conceived) have recourse to a court of equity to obtain repayment.
he may therefore recover his expenses in sending after the principal (who had absconded), to take him in order that he might surrender him in discharge of himself (a); he cannot, however, maintain an action for his trouble and loss of time, in going to a place to become bail for another; because he does not undertake the journey as work or labour, or as a person employed by the defendant, but merely as a friend from motives of kindness (b). Nor will the surety be allowed his costs if he put the party to a useless expense, by defending an action which he ought not to have defended (c), notwithstanding he may have received an indemnity (d). However, it is said, that if a party be surety to the crown, and an extent is taken out against his effects, and some expenses have been incurred in consequence of the surety's disputing the debt (though a just one), he, nevertheless, shall be allowed those expenses; as an extent is both an action and an execution in the first instance, and the surety cannot be supposed to be prepared to pay the debt immediately (e).
2ndly. Where the principal is bankrupt, or insolvent.
To entitle the surety to go in and prove under the fiat issued against his principal, the debt, for which the party is surety, must be a subsisting debt at the time of the issuing of the fiat, and payment or satisfaction must be made to the creditor by the surety, in respect of such debt (f ). Where S. was a surety for the payment of rent by a lessee to his landlord, which rent did not
(a) Fisher v. Fallows, 5 Esp. 171.
lows, 5 Esp. 171.
(d) Gillett v. Rippon, Mood. & M. 406.
(b) Reason v. Wirdnam, i Car. & P. 434.
(c) Bleaden v. Charles, 7 Bing. 246; Roach v. Thompson, Mood. & M. 487; and see Fisher v. Fal
(e) Per Lord Hardwicke, C., in ex parte Marshall, 1 Atk. 262.
1) See ante, p. 101, et seq.
become due until after (8) the bankruptcy of the lessee, it was held, that the money paid by the surety, in respect of such rent, could not be proved by the surety under the commission issued against the lessee (8).
Neither can a surety, who has received a bond of indemnity from his principal, whether the bond is in its form conditional or absolute, go in and prove under the fiat issued against the principal, if no payment has been made by the surety, notwithstanding the bond was forfeited before the bankruptcy (h); but the forfeiture of an indemnity bond, before the bankruptcy of the principal obligor, entitles the surety to prove under the fiat, in respect of payments made by him subsequently to the bankruptcy, as well as in respect of payments made by him prior to the bankruptcy (i).
And where no payments have been made by the surety, the Court of Bankruptcy will allow a claim to be entered, and a dividend to be reserved, without prejudice to the ultimate right to prove, if the claimant should be damnified (J).
Where a surety in a warrant of attorney, in order to discharge himself from his personal liability, paid part of the debt due to the creditor of
(9) M‘Dougal v. Paton, 8 Taunt. v. Court, 2 T.R. 640; and Hodgson 584; S. C. 2 J. B. Moo. 644. v. Bell, 7 T. R. 97.
(h) Ex parte Finden, Coo. B. L. (i) Ex parte Cockshott, 3 Bro. 163, ed. 1812; ex parte Brown, C. C. 502 ; and see ex parte Marib.; Young v. Taylor, 8 Taunt. shall, ante, p. 105. 315; S. C. 2 J. B. Moo. 326, over- (.)) Ex parte Marshall, i Mont. ruling on this point Toussaint v. & Bli. 242; S. C. 2 Deac. & Ch. Martinnant, 2 T. R. 100; Martin 589.
(8) Where S. accepted a bill of exchange for the accommodation of P. before an act of bankruptcy committed by P., and after the act of bankruptcy paid the amount to a third person, to whom it had been negotiated, it was held, that the payment by S. did not create a good petitioner's debt; for S. only became a creditor by payment, which was not till after the act of bankruptcy. (Ex parte Holding, i Glyn & Ja. 97.)