Smith v. . Hays , 54 N.C. 321 ( 1854 )

The plaintiff Joseph Smith became surety for one Henry Helton to the defendant John Hays for the sum of one hundred and seven dollars, upon which sum a final judgment was rendered against him in the Superior Court of Burke County. Plaintiff alleges that this debt arose on two smaller judgments, on which judgments were rendered against the principal debtor, Helton, and himself, in April, 1842, and that the plaintiff, shortly after the rendition of these judgments, requested the said Hays to press the collection of them out of Helton, and that the defendant Helton was then abundantly able to pay the same. That Hays not only refused and neglected to make the money out of Helton, but that he fraudulently assisted him to remove with his assets from the State; that this removal took place in November, 1846, and that it was done with the fraudulent view of throwing the whole liability of these debts upon the plaintiff. That in January, 1847, he caused suit to be brought against plaintiff, upon which the judgment in question was finally rendered. The prayer of the bill is for an injunction and for general relief.

The defendant Hays answered, and a judgment pro confesso was entered as to Helton. There was replication to the answer and commissions under which proofs were taken and the cause sent to this Court. The allegations of the bill present this question (322) of law: a creditor fraudulently aids and assists the principal debtor in removing out of the county, with an intent to hinder, delay and defraud the surety in his remedy against the principal for the amount that he afterwards would be compelled to pay to the creditor; has the surety an equity to enjoin the collection of the debt from him, and have it considered discharged, so far as he is concerned, by the fraud of the creditor?

The mere statement is enough to show that it is against conscience for the creditor, after removing the principal, to require the surety to pay the money. Every one, from a natural sense of justice, will exclaim at once "he ought to be enjoined."

As a surety receives no part of the consideration, and is not benefited in any way, and binds himself merely for accommodation, he is looked upon with favor to some extent in a court of equity, or rather he is allowed to stand strictly upon his rights. If, therefore, the creditor without his consent modifies the contract in any way, or does any act by which he is prejudiced, it operates as a discharge; e. g., if the creditor enters into a binding contract with the principal by which further time is given for payment, the surety is discharged. He may say: "I agreed to stand bound for six months; you had no right to extend the time to twelve months, and to take from me the right at the end of the six months to pay up the money and sue my principal." Adams Eq., 107. The doctrine is carried much further in some of the States. It is held that if the creditor refuses or neglects to sue at the request of the surety, it amounts to a discharge. We do not go so far, but the doctrine is sound to the extent laid down above. If so, the question before us, where the creditor does an act fraudulently with an intent to injure the surety, is too plain for argument.

The defendant insists that upon the plaintiff's own showing he had a remedy at law by an action under the statute for fraudulently removing a debtor. March v. Wilson, 44 N.C. 143; Booe v. Wilson, 46 (323) N.C. 182, were actions at common law; so we may, for the sake of argument, suppose that the plaintiff has a remedy under the statute, but if we assume it, there is an equitable ingredient in our case by which the Court is induced to take jurisdiction, i. e., the creditor is the party who has been guilty of aiding and assisting in the fraudulent removal of the debtor; so if he recovers with one hand, he is bound to pay back with the other. Now, apart from the consideration that equity seeks to avoid multiplicity of suits, and that to receive with one hand and pay back with the other is not only useless, but can be of no advantage to the one and may put the other party to inconvenience — probably subject him to loss — we have here the equitable ingredient that the conduct of the creditor has not only given to the plaintiff a cross-action, but it amounts in equity to a discharge of the debt, so far as the surety is concerned, and gives him a right to demand a release or a perpetual injunction.

The law being with the plaintiff, the next question is in regard to the facts. Much evidence was read on both sides, and serious impeachment is made of many of the witnesses, in respect to character; so that we find the questions of fact cannot be satisfactorily decided by us upon depositions, when one witness looks just as good as another, and there is no opportunity to pass upon the degree of credit to which he is entitled by observing his looks, manners, etc., as is the case upon jury trials. Besides, according to our mode of taking depositions, it is impossible to make the testimony as full or to give the test of cross-examination the force it sometimes has, when the witness is in the presence of the jury. The fact must be tried by an issue submitted to a jury.

The defendant Hays denies that he aided in removing the other defendant, Helton, and he insists, by way of justification (supposing he did aid in the removal), that the plaintiff has no ground to complain, for that Helton had let the plaintiff have a horse and other property, in consideration that he would pay the debt to Hays, (324) whereby the plaintiff became the principal debtor, to whom Hays was to look in the first instance for payment.

If this be the fact, there is no question that it is a full answer to the plaintiff's equity; an issue will also be submitted to the jury to try this allegation. Fisher v. Carroll, 46 N.C. 27; S. c., 41 N.C. 485.

PER CURIAM. Decree accordingly.

Cited: Brittain v. Quiet, post, 331.