Hampton v. Phipps

The appellee, who was a complainant below, is the  holder, and filed his bill in equity, on behalf of   himself and the other holders of bonds, executed and   delivered by Theodore D. Wagner and William L. Trenholm,   to the amount of $710,000, and paid to creditors in   settlement of the liabilities of two insolvent firms, in   which they were two of the copartners. These bonds were  dated January 1, 1868. The payment of the principal and  interest of each of these bonds was guarantied, by   writing indorsed thereon, by George A. Trenholm and   James T. Welsman, who were sureties merely. These  sureties entered into a written agreement each with the   other, dated May 3, 1869, in which it was recited that,   in becoming parties to said guaranty, they had agreed   between themselves that the said George A. Trenholm   should be liable for the sum of $400,000, and the said   James T. Welsman for the sum of $310,000, of the   aggregate amount of the bonds, and no more, and that   each would be respectively liable to the other for the   full discharge of the said sum and proportion by them   respectively undertaken, and that each would take and keep harmless and indemnify the      other from all claim, by reason of the said guaranty, beyond      the amount or proportion respectively assumed, as stated; and      it was thereby further agreed that, at any time when either      of them should so require, each should, by mortgage of real      estate, secure to the other more perfect indemnity, because      of the said guaranty. Thereupon, and on the same date, each     executed to the other a mortgage upon real estate of which      they were respectively the owners, the condition of which was      that the mortgagor should perform on his part the said      agreement of that date. The guarantors, as well as the     principal obligors, had become insolvent before the present      bill was filed.

It also appears that, of the sum of $573,300 due on account of outstanding bonds, George A. Trenholm, one of the guarantors, had paid $108,454, leaving still due from his estate to make good the proportion assumed by him $214,532; and that the proportion for which the estate of James T. Welsman, the other guarantor, was liable, was $250,314, of which nothing had been paid The appellees claimed that the mortgages interchanged between the guarantors inured to their benefit as securities for the payment of the principal debt, and prayed for a foreclosure and sale for that purpose.

This was resisted by the appellants, one of whom, Hampton's administrator, as a judgment creditor of George A. Trenholm and James T. Welsman, claimed a lien on the mortgaged premises; the others, executrixes of James Welsman, deceased, being subsequent mortgagees of the same property.

A decree was passed in favor of the complainants, according to the prayer of the bill, and is now brought under reveiw by this appeal.

T. G. Barker and W. G. De Saussure, for appellants.

James Lowndes and A. G. Magrath, for appellee.

[Argument of Counsel from pages 261-263 intentionally omitted]

MATTHEWS, J.