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Page:Harvard Law Review Volume 1.djvu/340

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that the creditor’s rights could be no greater than those of the surety, and that consequently the former would take the securities, if at all, subject to the same set-off which was good against them while in the hands of the latter.

The doctrine of the Connecticut cases will be found to exist with slight modifications in several other States.[1] The rule in Ohio seems to be that where the surety’s liability has been fixed by judgment and his principal has become insolvent, a court of equity will permit the creditor to proceed directly to appropriate the securities to the payment of the debt. “It prevents circuity of action, the surety is better indemnified, not being disturbed, unless his securities are insufficient, and the creditor has the benefit of having his claim satisfied.”[2]

Why an equity should be held to arise in favor of the creditor on the insolvency of the surety is not quite clear. The latest Connecticut case[3] states particularly that the mortgage is both in effect and form for indemnity. That being so, is there any justice in saying that on the insolvency of the surety the right of his estate to indemnity suddenly ceases, merely because a particular creditor may otherwise have to forego full payment, or because he himself may no longer have control of his property?[4]

It is believed that the doctrines most prevalent in this country touching the right of a creditor to the securities held by his surety for his personal indemnity have been referred to,[5] and it is now proposed, thirdly, to consider the English decisions, the leading one of which is Ex parte Waring.[6] This case is at variance with the earlier one of Maure v. Harrison, and has undoubtedly settled the law of England on the question now before us. The rule of Ex parte Waring is that where both principal and surety are bankrupt, the creditors can claim the benefit of the securities. The facts of the case were briefly these: Brickwood & Co. had ac-


  1. St. Louis Ass’n v. Clark, 36 Mo. 601; Logan v. Mitchell, 67 Mo. 524; Stone v. Furber, 22 Mo. Ap. 496; Constant v. Matteson, 22 Ill. 546.
  2. Ohio Insurance Co. v. Reeder, 18 O. Rep. 35.
  3. Jones v. Quinnipiak Bank, 29 Conn. 15.
  4. In Alabama the creditor is substituted to the rights of the surety, to relieve the latter from the vexation of a suit and from having to resort to the security for redress. Toumlin v. Hamilton, 7 Ala. 362; O. Insurance Co. v. Ledyard, 8 Ala. 866; Saffold v. Wade’s Ex., 51 Ala. 214; Daniel v. Hunt, 77 Ala. 567.
  5. The Mississippi cases will be mentioned in connection with the Scotch cases under head four.
  6. 19 Ves. 345; 2 Rose, 182, S. C. See also Eddis, Rule of Ex parte Waring.