sureties as a principal for the fraction of the debt which he ought to pay, and as a surety for the remainder. If the creditor by any dealings with one co-surety impairs the suretyship rights of other co-sureties, they will be discharged from such a proportion of the debt as they would equitably have been entitled, on payment of it, to throw upon the co-surety with whom the inequitable dealings have been had. A release, therefore, of one co-surety even though he is severally liable by the terms of his obligation, 35 discharges other cosureties to the extent to which they are deprived of their right of contribution.36 The same effect is given to any other discharge of a co-surety due to the creditor's fault, as by failing to proceed against the principal in jurisdictions where a surety is entitled to demand such action;37 or by the wasting of security, 38 or by giving time.39

35 If the co-sureties are liable jointly or jointly and severally, a release of one discharges the others absolutely except as this rule is changed by Statute. See supra, § 333.

38 Ex parte Gifford, 6 Ves. 805; Jemison v. Governor, 47 Ala. 390; Saint v. Wheeler, etc., Mfg. Co., 95 Ala. 362, 374, 10 So. 539; Lewis v. Armstrong, 80 Ga. 402, 7 S. E. 114; Lewis v. Hill, 87 Ga. 466, 13 S. E. 588; Wilkinson v. Conley, 133 Ga. 518, 66 S. E. 372; Thomason v. Clark, 31 Ill. App. 404; Hunter v. First Nat. Bank, 172 Ind. 62, 87 N. E. 734; Barron v. Shields, 13 La. An. 57; Allison v. Thomas, 29 La. Am. 732, 736; Thompson v. Adams, Freem. Ch. (Miss.) 225; Currier v. Baker, 51 N. H. 613; Morgan v. Smith, 70 N. Y. 537; Wanamaker v. Powers, 102 N. Y. App. D. 485, 93 N. Y. S. 19; Benedict v. Rea, 35 Hun, 34; Hilleboe v. Warner, 17 N. Dak. 594, 118 N. W. 1047; National Building, etc., Assoc. v. Fink, 182 Pa. 52, 56, 37 Atl. 1009; Waggoner v. Dyer, 11 Leigh, 384. See also Wetmore & Morse Granite Co. v. Ryle (Vt. 1919), 107 Atl. 109; cf. Ward v. National Bank, 8 App. Cas. 755; Gillespie v. Smith, 229 Fed. 760

(rev'd on other points in Riggs v. Gillespie, 241 Fed. 311, 152 C. C. A. 191); Stockton v. Stockton, 40 Ind. 225. The same result is reached where co-sureties are jointly bound and a statute provides that a release of one joint debtor discharges others only to the extent of the sum equitably due from the party released. Walsh v. Miller, 51 Ohio St. 462, 38 N. E. 381; Alford v. Baxter, 36 Vt. 158, Hallock v. Yankey, 102 Wis. 41, 78 N. W. 156, 72 Am. St. Rep. 861. If a release is fraudulently obtained by one co-surety it is voidable as to him and the other co-sureties are not discharged. Riggs v. Gillespie, 241 Fed. 311, 152 C. C. A. 191.

37 Wilson v. Tebbetts, 29 Ark. 579, 21 Am. Rep. 165; Gordon v. Moore, 44 Ark. 349, 358, 51 Am. Rep. 606; Trustees v. Southard, 31 Ill. App. 359; Routon's Admr's v. Lacy, 17 Mo. 399; Klingensmith v. Klingensmith's Exr., 31 Pa. 460. But the co-surety was held released altogether in Towns v. Riddle, 2 Ala. 694; Wright's Adm'r v. Stockton, 5 Leigh. 153.

38 Margretts v. Gregory, 10 W. R. 630.

39 Stirling v. Forrester, 3 Bligh,

The problem is somewhat complicated by the uncertainty which may exist as to the extent of a co-surety's right of contribution against another co-surety. Where there are a number of co-sureties, the ultimate amount which one who has paid more than his share can recover from another co-surety, depends on whether the co-sureties are solvent.40 The extent, therefore, to which an injured co-surety is discharged from liability to the creditor will depend on whether all the cosureties are solvent, since a discharge of a solvent co-surety injures another co-surety in proportion to the number of solvent co-sureties who still remain liable.41

A creditor who discharges one co-surety either in full or in part, may reserve his right against a co-surety either for the entire claim, 42 or for the portion equitably due from such co-surety.43 And where a co-surety, jointly liable with others, has been released only as to his proportion of the debt, courts seek to construe the agreement as reserving the creditor's right as against other co-sureties for their proportion.44

575; Dunn v. Slee, 1 Moore, 2 Holt N. P. 399; Gosserand v. Lacour, 8 La. Ann. 75; Ide v. Churchill, 14 Ohio St. 372. But see Greeenwood v. Francis, [1899] 1 Q. B. 312.

40 See infra, §§ 1271, 1277.

41 Dodd v. Winn, 27 Mo. 501; Wetmore & Morse Granite Co. v. Ryle (Vt. 1919), 107 Atl. 109.

42 Deering v. Moore, 86 Me. 181, 29 Atl. 988; Morgan v. Smith, 70 N. Y. 537.

43 Hood v. Hayward, 124 N. Y. 1, 26 N. E. 331.

44 Gordon v. Moore, 44 Ark. 349, 51 Am. Rep. 606; Smith v. State, 46 Md. 617; State v. Matson, 44 Mo. 305; Massey v. Brown, 4 S. Car. 85.

CHAPTER XXXV

SURETIES' RIGHTS AND REMEDIES

Sureties' equitable rights....

Subrogation.....

1264

1265

The surety is entitled to be subrogated to securities held by the creditor... 1266 The surety is subrogated to intangible advantages of the creditor.... 1267 Subrogation to rights of the creditor which have been legally destroyed by

A surety is entitled to subrogation against a co-surety.

1271

Security for several debts.....

1272

Subrogation against a bankrupt principal in favor of a surety for part of a debt...

1273

The surety's right of reimbursement.

1274

The surety's right of exoneration..

1275

The surety's right to compel the creditor to resort first to security, or to the

A surety must share with his co-sureties the benefit of security.

1281

Co-sureties and successive sureties.....

1282

A surety who pays unnecessarily is not entitled to indemnity or contribution. 1283 Measure of surety's recovery..

1284

The surety is limited to reimbursement.

1285

When a surety who has paid the debt is denied relief against the principal or co-surety because of a defence of the latter..

1286

Laches.

1287

§ 1264. Sureties' equitable rights.

Though a creditor is generally entitled to collect his claim from any securities or obligations which he holds in the manner which may seem most to his advantage, it is the duty of the court, especially a court of equity, to adjust the rights of the parties so far as possible, so that the ultimate loss shall accord with the equitable position of the parties. The method by which this is accomplished is by the enforcement of the equitable principles of (1) subrogation of the surety to the creditor's rights; (2) reimbursement of a surety by the princi

pal debtor of whatever loss the surety has suffered from his suretyship; (3) exoneration by the principal debtor of the surety from his liability to the creditor before it has been enforced against him, and (4) contribution among several sureties.

§ 1265. Subrogation.

Subrogation is generally understood to mean putting one to whom a right does not legally belong in the position of the legal owner of the right. Sometimes, however, subrogation may involve the creation of a new right in favor of the party entitled to be subrogated, not the enforcement of the original right, for sometimes the original right has been cancelled by payment or otherwise, before subrogation takes place, and moreover the party subrogated generally enforces his claim in his own name without joining the creditor as a party defendant. But the original right measures the extent of the new right. Suretyship does not furnish the only application of the doctrine, but it furnishes the commonest one. A surety who has paid the debt is entitled to the right for the purpose of charging property or persons equitably bound to pay the debt before himself. The justice of the principle will be apparent if it is observed that in this way the creditor is denied the power of throwing the ultimate payment of the debt in one way or another as suits his caprice. Subrogation does not depend upon contract, but on the equities of the situation.1 Therefore, a surety who did not become such at the request of the principal, and who has no privity of contract with him, is not thereby deprived of subrogation on payment of the debt.2

1 Duncan V. North and South Wales Bank, 6 App. Cas. 1; Ohmer v. Boyer, 89 Ala. 273, 7 So. 663; Talbot v. Wilkins, 31 Ark. 411; Smith v. Foran, 43 Conn. 244, 21 Am. Rep. 647; Devine v. Harkness, 117 Ill. 145, 7 N. E. 52; Davis v. Schlemmer, 150 Ind. 472, 50 N. E. 373; Bishop v. Rowe, 71 Me. 263; Stevens v. King, 84 Me. 291, 24 Atl. 850; Amory v. Lowell, 1 Allen, 504; Stewart v. Parcher, 91 Minn. 517, 98 N. W. 650; Union, etc., Banking Co. v. Peters,

72 Miss. 1058, 18 So. 497, 30 L. R. A. 829; Philbrick v. Shaw, 61 N. H. 356; Morehouse v. Brooklyn Heights R. Co., 185 N. Y. 520, 78 N. E. 179; Moring v. Privott, 146 N. C. 558, 60 S. E. 509; In re Hoge's Estate, 188 Pa. 527, 533, 41 Atl. 621, 1119; Royalton Nat. Bank v. Cushing, 53 Vt. 321.

2 Howard v. Burns, 279 Ill. 256, 116 N. E. 703; Davis v. Schlemmer, 150 Ind. 472, 50 N. E. 373; Matthews v. Aikin, 1 N. Y. 595; Bishop v. Rowe, 71

§ 1266. The surety is entitled to be subrogated to securities held by the creditor.

On paying the debt the surety is entitled to be subrogated to securities held by the creditor. The equitable character of the right is shown by the fact that it is immaterial that the securities in question were given after the contract of the surety was entered into. Or that the surety was ignorant of the existence of security at that time. Nor is the principle confined to ordinary kinds of collateral security. A surety for one who has entered into a contract to purchase land acquires, on paying the latter's obligation, the vendor's rights against the land. So if the creditor has a lien to secure the debt for