United States v. Price (50 U.S. 83)/Opinion of the Court

2. The result of this is:--

1. The bond being merged in the joint judgment, the plaintiffs, up to the time of its rendition, had 'a remedy in law.' That remedy continues against the survivor. Hence no equity jurisdiction.

2. If it were that an obligee, who has obtained a joint judgment against all the obligors, might afterwards sue them or their representatives severally, the plaintiffs have a 'remedy at law,' and cannot invoke the aid of a court of equity. The basis of the bill is, that the plaintiffs have no remedy at laws.

3. On the rendition of the joint judgment, Mifflin and Archer stood in the relation of joint contractors or judgment debtors, with all the incidents thereto appertaining in law and equity. Among them are,--

1. Acceptance of a judgment against one; a discharge of the others.

2. Release of one discharges all.

3. The death of one joint debtor discharges his estate (except by statutory lien on real estate, which is not the case here), casts the burden on the survivors, and the remedy at law is only against the survivors.

4. Other matters occurring after the rendition of the judgment (see propositions which follow), discharged the right against the estate of Joseph Archer, and for want of right there was no remedy either in law or equity.

At law, the death of Joseph Archer, a co-debtor in the joint judgment, after its rendition, discharged his assets, and no action at law lay against his executor, upon the bond, being merged in the judgment, or upon the judgment itself, the only proceeding at law being against the surviving defendant therein.

1. The plaintiffs' bill impliedly assumes this as to the remedy, or otherwise they could not come into equity at all.

2. The plaintiffs' right in law against the assets of the decedent is ipso facto by the death defeated. And to this point are all the authorities.

Per Kennedy, J.:-'That one of two joint debtors dying is thereby discharged, both in person and estate, at law, from the payment of the debt, is too well established to be controverted.' (Only exception, case of special lien on lands, post.)

U. States v. Cushman, 2 Sum. 310; Reed v. Garvin's Ex., 7 S. & R. 357; Lompton v. Collingwood, 4 Mod. 315; 4 How. 77; Kennedy v. Carpenter, 2 Whart. 364; Towers v. Moor, 2 Vern. 99; Foster v. Hooper 2 Mass. 572; Lang v. Keppele, 1 Binn. 123; Smart v. Edson, Lev. 30; 2 Saunders, 51, 148, a, note 4; Thomas Raymond, 26; 1 Sid. 238; Stat. West. 2d; Stiles v. Brock, 1 Barr, Pa. St. Rep. 215, and all the cases collected therein as to special lien on malty by judgment, created by statute.

Note.-There is a class of cases which do not interfere with this proposition, and are clearly distinguishable. These are to the effect, that, where a joint judgment is obtained against more than one defendant,-and by statutes in England and many of the United States, such judgment is a specific lien on the lands or realty of all the defendants, for various periods,-in such case a scire facias may be issued, to have execution of the lands of a deceased defendant in the hands of executors, terre-tenants, heirs, or devisees, by force of the special statutory provision. This may be coupled with a scire facias, to have execution against the goods of the surviving defendants; but the personalty and general assets or estate of the deceased defendant are discharged by his death.

In the present case there was no such specific statutory lien. There was no real estate of Joseph Archer deceased to bind by lien by the judgment in which he was a joint defendant at the time of his decease.

This is a case purely of general assets, and personalty unfettered by any statutory lien, and wholly subject to the general rule, as set forth in this proposition.

In equity, the right and remedy are extinguished, as well as at law, against the estate and assets of Joseph Archer deceased, by reason of his (a joint debtor and surety's) death.

1. In general, if the right against decedent's estate is discharged at law, it must be in equity, because equity creates no other right in favor of a claimant, or liability on the part of those against whom the claim is made, than exists by general law. The distinction between law and equity merely applies to the remedy or its form, and not to rights or duties.

2. But what is conclusive, Joseph Archer was a mere surety, in no wise personally benefited by the consideration of the original transaction, bound only by the original bond and the judgment thereon, who was under no moral obligation to pay; there being no question (in the sense of equity) of accident, fraud, or mistake, and the legal liability of his estate was gone.

The pleadings in this case assume these as facts.

The acts of Congress distinguish between principal and surety, both before and after judgment against them.

After the judgments (rendered in 1829), the plaintiffs recognized, by the release of Foster in 1833, Archer as a mere surety.

Independent of this, and the provisions of the acts in general, the relation of the principal and surety, after judgment, exists as to third persons.

In such case, then, equity will give no relief against the representatives or the estate of the deceased surety, and so are all the authorities, except the hastily considered Circuit case in 2 Sumner. Commonwealth v. Haas, 15 S. & R. 252; Potts v. Nathans, 1 Watts & Serg. 158.

In Hunt v. Rousmanier, 1 Peters, 16, (referring to a class of cases hereinafter mentioned,) the court say, 'Equity has afforded relief against the representatives of a deceased obligor in a joint bond given for money lent to both the obligors, although such representatives were discharged at law. The principle upon which these cases manifestly proceed is, that, the money being lent to both, the law raises a promise in both to pay, and equity considers the security of the bond as being intended by the parties to be coextensive with this implied contract by both to pay the debt.'

In Waters v. Riley, 2 Harr. & Gill, 310, the Court of Appeals of Maryland say that the rule is, 'When the remedy at law is gone, chancery will not revive it, in the absence of any accident, fraud, or mistake; to which the case of a bond where all are principals has been held to be an exception, each being equally benefited, and under an equal moral obligation to pay the debt, independent of the bond, to which equity relates back, when the remedy on the bond at law is gone. But in case of a surety who is bound only by the bond itself, and is not under the same moral obligation to pay, equity will not interfere to charge him beyond his legal liability.'

The Supreme Court of Pennsylvania, per C. J. Tilghman, say, of all the cases cited in reference to this question, 'So far from establishing any principle by which the estate of the deceased obligor, a bare security, can be charged in equity, they rather prove that it should be discharged, because in none of them has the estate of the obligor who died first been charged, unless he might fairly be considered as a principal, who derived benefit from the money for which the bond was given, thus establishing a distinction between principal and security.' Weaver v. Shryrock, 6 S. & R. 266. (Equity principles were always a part of the law of Pennsylvania, administered through common law forms.) Same point. 'The obligation between C. & B. to the bank being joint, it cannot be questioned but that at law the obligation at the death of C. survived against B., and the estate of C. became thereby discharged from all liability on account of it. Had C. derived any benefit or advantage by having received the money, or any portion thereof, the bank might then have had a claim in equity, &c. But C. & B. appear to have derived no advantage whatever from the advancement of the money or creation of the debt, and are therefore in equity as mere sureties; consequently the bank can have no claim, founded upon equitable principles, against the estate of C., after his death, for the payment of the money.' Kennedy v. Carpenter, 2 Whart. 361, and the cases therein reviewed. Same point. 'A well-considered case,' says C. J. Tilghman, in Weaver v. Shryock. The decree of the chancellor, who had granted relief to the obligee against the executor of the deceased obligor, the survivor being insolvent, was reversed in the Court of Appeals of Virginia. Harrison v. Field's Executors, 2 Wash. 136.

Bearing in mind the distinction in case of joint debts between the principal, who had consideration and advantage, and the estate of a deceased mere surety, who in his lifetime had none, all the cases (with a single exception) are confirmatory of this proposition in principle. Story's Eq. §§ 162, 163, 164, 676; Primrose v. Bromley, 1 Atk. 90; Simpson v. Vaughan, 2 Atk. 31; Bishop v. Church, 2 Vesey, 101, 371; Devaynes v. Noble, 1 Meriv. 568; Sumner v. Powell, 2 Meriv. 36.

See the English cases to the point all well collected in Pitman on Principal and Surety, 91 (Law Lib., Am. ed. 74). The author says, 'No case has hitherto occurred where equity has varied the legal effect so as to charge the surety.'

An isolated case stands in opposition to all the rest, and it is suggested that it was not well considered at Circuit. The learned judge, in his Commentaries, also says, 'If one of the sureties dies, the remedy at law lies only against the surviving parties; but in equity it may be enforced against the representative of the deceased party, and he may be compelled to contribute to the surviving surety, who shall pay the whole debt.' U. States v. Cushman, 2 Sumner, 430, &c.; 1 Story's Eq. Jur. §§ 475, 497.

The Supreme Court of Pennsylvania, in commenting on this passage say, 'In support of this, he (the learned Judge) refers to Primrose v. Bromley. By the term 'sureties' here, joint debtors are merely meant, such as had all derived a benefit from the debt, and therefore were bound in equity, on account of the beneficial consideration, while living, to pay it; it could not have been used for the purpose of distinguishing mere sureties from those for whose benefit the debt was created. The authority will not support any other meaning than that now suggested.' And so of the authorities relied on in United States v. Cushman; all were cases of principal debtors. Kennedy v. Carpenter, 2 Whart. 364; 1 Atkyns, 69.

Mr. Justice GRIER delivered the opinion of the Court.

As the decision of one of the points raised in these cases will rule them both, it will be unnecessary to notice the others.

The complainant seeks a remedy in equity against the assets of a deceased surety, in certain bonds given for duties. The bonds were joint and several, but a joint judgment had been recovered on them against all the obligors. The principal in the bond survives, but is insolvent.

The question for our consideration will, therefore, be, whether a court of equity will interfere to give a remedy against the personal assets of a deceased surety, when the remedy at law has been lost by the election of the obligee to take a joint judgment on a joint and several obligation.

The obligation of suretyship arises only from positive contract. This contract is construed strictly both at law and equity, and the liability of the surety cannot be extended by implication beyond the terms of his contract. If he contracts jointly with his principal, it is a legal consequence known to all the parties, that his personal estate will be discharged in case he should die before his principal. Such being the law, it may be considered as a part of the written condition of the bond. And equity will not interfere to extend the liability, as against his estate, on the ground that such discharge arises from the mere technicalities of the law.

So, where a surety enters into a joint and several obligation with his principal, the obligee and all the parties are supposed to be aware of the doctrines of law connected with such securities, and to incorporate them therein, as part of the contract. The obligee knows that this bond will entitle him to either a joint or several judgment, at his election; he knows also that he cannot have both, that his bond is extinguished by his judgment, or merged in it, as a security of a higher nature, and he knows that, if he elects to take a joint judgment, and neglects to have execution levied in the lifetime of the surety, his personal estate will be discharged at law.

Assuming, as we have a right to do, that these known and established principles of law form a part of the written conditions of the bond, it is not easy to perceive how a chancellor could interpose in the latter case, more than in the former, without disregarding the terms of the contract, and extending the liability of the surety beyond the letter and spirit of his bond.

It is true that, in cases of fraud, accident, or mistake, equity will relieve as well against the surety as the principal. Thus, in case of a lost bond, equity will set it up against a surety, or where a bond has been made joint, instead of joint and several, by mistake of a scrivener; but it will require a very clear and strong case where a surety is concerned. (3 Russell, 539.) On the contrary, where the parties are joint debtors, and there is no surety in the case, equity will reform the bond, on the mistake presumed from the fact that both are bound in conscience to pay, and therefore intended to bind themselves severally.

In the present case, we have no allegation of fraud, accident, or mistake. The bill assumes that the legal liability of the surety is gone, by coming into equity for relief, and it shows affirmatively, that the loss of legal recourse to the assets of the surety has resulted from the voluntary election of the obligee to extinguish the several remedy on his bond, without any allegation of mistake or surprise.

'If the obligee of a joint bond by two or more agree with one obligor to release him, and do so, and all the obligors are thereby discharged at law, equity will not afford relief against the legal consequences, although the release was given under a manifest misapprehension of the legal effect of it, in relation to the other obligors.' (Hunt v. Rousmaniere's Adm., 1 Peters, 1.)

If equity would not interfere in such a case to revive the legal obligation, even as against the principal debtor thus unwittingly released, it is difficult to perceive on what principle it should interpose to revive an extinguished remedy against a surety who is not bound beyond his legal liability, and who has been discharged therefrom by the voluntary act of the obligee, without any allegation of surprise or misapprehension of the law.

That equity will not hold a surety liable, where he is discharged at law, seems to be well settled both in England and in this country, as a reference to a few of the decisions on this subject will fully show. In Wright v. Russel, 3 Wilson, 530, it is said, 'that courts of equity are favorable to sureties, and where they are not strictly bound at law, equity will not bind them.' And in Simpson v. Field, 2 Ch. Cas. 22, it was held, 'that, where a surety is not bound at law, he will not be made liable in equity.' In the case of Waters v. Riley, 2 Harris & Gill, 310, the Court of Appeals of Maryland say, 'A surety is bound only by the bond itself, and is not under a moral obligation to pay; equity will not therefore interfere to charge him beyond his legal liability.' The same doctrine is established by the Court of Appeals of Virginia, in Harrison v. Field's Ex., 2 Washington, 136, and by the Supreme Court of Pennsylvania, in Weaver v. Shryock, 6 S. & R. 206, and Kennedy v. Carpenter, 2 Wharton, 361.

The only case which asserts a contrary doctrine is that of United States v. Cushman, 2 Sumner, 426.

Although, as a Circuit decision, it is not binding in its authority upon this court, yet, proceeding from so eminent a judge, it is entitled to high respect. The case is precisely parallel with the present in all its circumstances, and the positions there assumed have been urged upon the court in this case, as sufficient to entitle the appellant to a decree in his favor. The opinion of the court in that case, and the argument of the learned counsel for appellant in this, are based on the two following propositions, to neither of which is this court prepared to give its assent.

1st. 'That when a party enters into a joint and several obligation, he in effect agrees that he will be liable to a joint and a several action for the debt; and if so, then a joint judgment can be no bar to a several suit: that by electing a joint suit, the obligee does not waive his right to maintain a several suit; and that a joint judgment is not per se a satisfaction of a joint and several contract.'

2d. 'That even if the joint judgment could be treated at law as a merger of the several obligations, so far from that constituting a ground in equity to refuse relief against the assets of the deceased party, it furnishes a clear ground for its interference; for it is against conscience, that a party who has severally agreed to pay the whole debt should, by the mere accident of his own death, deprive the creditor of all remedy against his assets.'

1st. The first of these propositions proves too much for the case. For if the surety is still liable at law, the complainant has made no case for relief in equity. But the cases cited in support of it, viz. Higgens's case, 6 Coke, 44, and Lechmere v. Fletcher, 1 Crompton & Meeson, 623, will not sustain the doctrine stated in this proposition. They establish this position and nothing more, viz.:-'That, in case of a joint bond, a judgment against one joint contractor would be a bar to an action against another; but if two are bound jointly and severally, and the obligee has judgment against one of them, he may yet sue the other.' The case of Sheehy v. Mandeville, 6 Cranch, 253, in this court, although sometimes criticized and doubted in other courts, goes no farther than to decide, that, where one partner is sued severally on a joint or partnership contract, and judgment obtained against him, it is no bar to a suit against the other, because this contract was not merged in the judgment, and because the first judgment was founded on a several, not a joint, promise.

But these cases give no countenance to the assertion, 'that a joint judgment is not per se a satisfaction of a joint and several bond.' The law on this subject is too well settled to admit of a doubt, or require the citation of authorities, that, if two or more are bound jointly and severally, the obligee may elect to sue them jointly or severally. But having once made his election and obtained a joint judgment, his bond is merged in the judgment, quia transit in rem judicatam. It is essential to the idea of election that a party cannot have both. One judgment against all or each of the obligors is a satisfaction and extinguishment of the bond. It no longer exists as a security, being superseded, merged, and extinguished in the judgment, which is a security of a higher nature. The creditor has no longer a remedy, either at law or in equity, on his bond, but only on his judgment. The obligor is no longer bound by the bond; but by the judgment, it has become the evidence of his indebtedness, and the measure of his liability.

2d. The second proposition repudiates the doctrine of courts of equity, that, where a surety is not bound at law, he will not be made liable in equity. It does not controvert the well settled principle, that, where the bond is joint only, the personal assets of the surety will be discharged by his death, but asserts that his conscience is affected because his bond was originally both joint and several. But if it is not against conscience that the estate of a surety should be released by his death, when his undertaking was originally joint only, it is hard to apprehend how it becomes so, when the obligee, having a choice of both securities, elects to hold the surety bound jointly, and not severally.

If a surety is under no moral obligation to pay, where he is not legally bound by his contract, his conscience cannot be reached, when the law discharges him from his obligation. The law, as we have before stated, makes a part of every contract; and in case of a joint and several bond, the contract of the parties is, that the estate of the surety shall be discharged by his death, if the obligee elect to hold him jointly, and not severally, liable. So that, in the present case, it is the obligee who is acting against conscience, because he seeks to hold the surety liable, contrary to their contract.

'No case can be found in the books,' says a learned author, (Pitman on Principal and Surety, page 92, note,) 'where equity has varied the legal effect of the instrument so as to charge the surety.' To give a remedy against the estate of a surety after it is discharged at law, and by the election of the obligee, would be varying the legal effect of his contract in a most material point.

The cases cited in support of the second proposition will be found on examination to have no bearing on the point now under consideration. They are too numerous to be severally noticed. They may all be found collected in 1 Story's Equity, § 162, in note, commencing with Simpson v. Vaughan, 1 Atk. 31, and ending with Thorpe v. Jackson, 2 Younge & Collyer, 562, and Wilkinson v. Henderson, 1 Mylne & Keen, 582. They chiefly refer to cases of partnership, and other joint debtors whose liability at law is joint only, but equity administers relief as against the estate of the deceased partner or joint debtor on account of the moral obligation of each to pay the debt, and because they have received a benefit from the transaction. The doctrine of these cases is clearly stated by Sir William Grant in the case of Sumner v. Powell, 2 Merivale, 35. 'Where,' says he, 'the obligation exists only in virtue of the covenant, its extent can be measured only by the words in which it is conceived. A partnership debt has been treated in equity as the several debt of each partner, though at law it is only the joint debt of all. But there all the partners have had a benefit from the money advanced or the credit given, and the obligation of all to pay exists independently of any instrument by which the debt may have been secured; so, where a joint bond has been in equity considered as several, there has been a credit given to the different persons who have entered into the obligation. It is not the bond that first created the liability.'

'It is for this reason,' says Mr. Justice Story (Equity Jurisprudence, § 164), 'that equity will not reform a joint bond against a mere surety so as to make it several against him, on the presumption of a mistake from the nature of the transaction.'

When an obligee takes a joint and several bond, he has nothing to ask of equity; his remedy is wholly at law. If he elects to take a joint judgment, he voluntarily repudiates the several contract, and is certainly in no better situation than if he had originally taken a joint security only; equity gives relief, not on the bond, for that is complete at law, but on the moral obligation antecedent to the bond, when the creditor could have had no remedy at law.

An obligee who has a joint and several bond, and elects to treat it as joint, may sometimes act unwisely in so doing, but his want of prudence is no sufficient plea for the interposition of a chancellor. Nor can the conscience of a mere surety be affected, who, having tendered to the obligee his choice of holding him jointly or severally liable, has been released at law by the exercise of such election.

The decree of the Circuit Court is, therefore, affirmed.

Mr. Justice McLEAN and Mr. Justice WOODBURY dissented.

This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the Eastern District of Pennsylvania, and was argued by counsel. On consideration whereof, it is now here ordered and decreed by this court, that the decree of the said Circuit Court in this cause be, and the same is hereby, affirmed.