Opinion
(February Term, 1897.)
Action for Contribution Among Sureties — Pleading — Principal and Surety — Contribution — Equitable Action.
1. An action at law by a surety for contribution lies only against the co-sureties, severally, for the aliquot part due from each.
2. While a party may, under the present practice, unite legal and equitable grounds of action or defense, they must be clearly set up in the pleading.
3. The remedy to which a party is entitled is determined, not by the prayer for relief, but by the facts alleged and approved.
4. Where a complaint in an action by a surety for contribution joined the principals as parties, and alleged the contract of suretyship, payment by the plaintiff and demand of the co-sureties "for their contributive shares," and asked judgment against all, but did not allege insolvency of the principal except by the averment that plaintiff was compelled to pay the debt: Held, that though the proper relief was not asked, and the insolvency of the principals was imperfectly alleged, the cause of action will be construed, on demurrer, as equitable rather than legal, in order to confer jurisdiction below.
ACTION, heard on complaint and demurrer, before Bryan, J., at Spring Term, 1896, of WATAUGA.
The complaint was as follows:
"The plaintiff in the above-entitled action, complaining of the defendants, alleges:
"1. That on 30 May, 1888, F. M. Hodges and R. A. Adams, doing business under the style and firm of Hodges Adams, executed their promissory note to L. A. Green for the sum of $600, with J. L. Hodges, Wm. T. Hayes, E. H. Dougherty, E. F. Lovill and this plaintiff as sureties on said above note.
"2. The principals in above-mentioned note having failed to pay off and satisfy same at maturity, suit was accordingly entered at Spring Term, 1891, in the Superior Court of Watauga, by L. A. Green, (384) plaintiff, for balance due on said note, towit, $526 principal, and $23.52 interest, together with $11.40 cost of action, making a total amount of $560.92; and at June Term of Watauga County Superior Court judgment was obtained against F. M. Hodges and R. A. Adams, principals, and J. L. Hayes, Wm. T. Hayes, E. H. Dougherty, E. F. Lovill and this plaintiff, Z. Adams, as sureties, when this plaintiff, Z. Adams, one of said sureties, paid off and satisfied said judgment in full.
"4. That $160.66 was paid by plaintiff as receiver of Hodges Adams, out of funds of said Hodges Adams, which came into his hands as said receiver, leaving a balance of $400.32, which amount this plaintiff was forced to pay under said execution out of his own private funds.
"5. That repeated demands have been made upon J. L. Hayes, Wm. T. Hayes, E. H. Dougherty, and E. F. Lovill, the co-sureties, for their contributive shares, which they have neglected and refused, and still neglect and refuse, to pay, to the great damage of this plaintiff.
"Wherefore, plaintiff prays that he may have judgment against the defendants in this action for the sum of $320.24, with interest from 10 October, 1895, which said amount is four-fifths of amount paid by this plaintiff, and for costs of this action, and for such other and further relief as the Court may adjudge."
The demurrer was as follows:
"The defendants in the above-entitled action demur to the complaint of the plaintiff, and for the demurrer, say:
"1st. That the plaintiff cannot maintain his action in the Superior Court jointly against all the defendants for contribution, but aver that if they have a cause of action against the defendants at all, it is not joint, but several, in which the amount claimed from each (385) defendant would be less than $200 and not within the jurisdiction of the Superior Court."
His Honor sustained the demurrer and plaintiff appealed.
Messrs. W. B. Council, Jr., and E. C. Smith for defendants.
No counsel for appellant.
On 30 May, 1888, F. M. Hodges and R. A. Adams borrowed $600 from L. A. Green, for which they executed their note as principals, with J. L. Hodges, W. T. Hayes, E. H. Dougherty, E. F. Lovill and the plaintiff Adams, as sureties. The note was not paid and Green brought suit thereon, and recovered judgment against the principals, and sureties for the full amount of the note, principal, interest and cost, which the plaintiff alleged he paid off and satisfied — paying $160.66 out of money in his hands as receiver of the principals in the note, and the residue $400.32 out of his own money, and this action is brought for contribution from his co-sureties.
The complaint is very inartistically drawn, which makes it difficult to determine whether it was intended to be what would have been an action at law or a suit in equity before the joinder of these jurisdictions. Before the joinder of these jurisdictions, this was determined by the Court in which the action was brought. But now, it must be determined by the pleadings. It is true that a party can now, in the same action, set up both legal and equitable grounds of complaint or defense. But these grounds should be set up if the party wants the benefit of them.
The Code abolishes the distinction between actions at law and suits in equity, but the principles that governed in the separate jurisdictions before their junction are still preserved.
There are some reasons for supposing that this action was (386) brought under the conception that it would have been an action at law, as the plaintiff does not distinctly aver the insolvency of the principals in the note, as he demands a judgment, in solido, for four-fifths of what he paid against all his co-sureties. If it be considered that it is what would have been an action at law, it is clear that it cannot be maintained. While actions on the case, at law, were allowed under the doctrine of assumpsit, and in this State, under the statute of 1807, they could only be brought against one co-surety for his aliquot part; in this case, one-fifth of the amount the plaintiff had to pay. Powell v. Matthis, 26 N.C. 83; Bispham Eq., secs. 328 and 329. And treating the action as at law, the demurrer should have been sustained.
But there are other reasons for supposing that the plaintiff intended it as an equitable action. Among these are: That he made the principals parties defendant; that he alleges that he had made demand of each of the co-sureties for their ratable portion of what he paid; and he also alleges, though in a very imperfect manner, the insolvency of the principals, by saying he was compelled to pay. It must be admitted that if this alleges insolvency at all, it is poorly done. But this appeal comes to us upon demurrer to the complaint, in which the grounds of demurrer are assigned, as our practice requires they should be. And this ground of objection to the complaint is not assigned, and therefore the question as to the insolvency of the principals in the note is not before us for determination. And we only notice what the plaintiff said, as to being compelled to pay, as tending to show this to be an equitable action.
If it is to be considered as an equitable action, that is, what would have been a suit in equity under the old jurisdiction, then the Court had no jurisdiction. And this is another reason why we are disposed (387) to treat it as an equitable action. When a party brings an action in which it is not plain to be seen whether it is an action at law or a suit in equity, we think, in favor of the jurisdiction of the courts and in fairness to the parties, we should so construe it as to maintain the jurisdiction of the court.
The doctrine of contribution between co-sureties is an original equitable jurisdiction, administered by courts of equity long before courts of law assumed to have any jurisdiction whatever in such matters. And when courts of law did assume jurisdiction, it was very imperfect and did not extend to cases where some of the sureties were insolvent or had died. And for these reasons, among others, courts of equity continued to hold and exercise their original jurisdiction. Allen v. Wood, 38 N.C. 386; Rainey v. Yarborough, 37 N.C. 249; Bispham Eq., sec. 329; 3 Pomeroy Eq. Jur., sec. 1418.
Upon reason and authority we must hold that this action is equitable in its nature, and must sustain the jurisdiction of the court.
But under this complaint, as now framed, the plaintiff is only entitled to a separate judgment against each of his co-sureties for one-fifth of what he was compelled to pay out of his own money.
But, sustaining the jurisdiction of the court, as we do, the demurrer should have been overruled. There is error.