Gawthrop Co. v. Fibre Specialty Co.

Citations

• 257 Pa. 349
• 101 A. 760
• 1917 Pa. LEXIS 743

Syllabus

<p>Suretyship —Default of principal — Payment by one surety — Subrogation — Contribution—Preferences.</p> <p>1. Except as to rights and property connected with the surety-ship obligation, the claim of a cosurety for contribution is no higher than that of any other claim, and subrogation, which is founded upon equity and benevolence, will never be granted- to the prejudice of other rights of equal or higher rank.</p> <p>2. It is not the liability to pay but actual payment to the creditor which raises the equitable right in a surety to be subrogated to his cosurety’s remedies.</p> <p>3. Claims against an insolvent estate which were in existence at. the date of an assignment for the benefit of creditors have at least as strong an equity as one thereafter arising, even though the obligation out of which the latter aróse antedated the assignment.</p> <p>4. One of two sureties on the bond of a treasurer of a corporation made a loan of $5,000 to the corporation on the latter’s note. Subsequently such surety made an assignment of his property, including the $5,000 note, to a trustee for the benefit of his creditors. A receiver, appointed for the corporation, filed an account and an auditor was appointed to make distribution. The treasurer of the company in the meantime had defaulted and the corporation brought suit against the treasurer and his two sureties. The estate of the second surety paid the amount of the default. The executors of the second surety contended that they were entitled to be subrogated to the right of the other surety for the amount of the dividend awarded by the auditor on the $5,000 note, in preference to the other surety’s general creditors whose claims arose before the treasurer defaulted. Held, that as the dividend on the $5,000 note was an entirely separate matter from the suretyship obligation, the estate of the surety who had paid the principal debt was merely a general creditor of the other surety and had no preference in such dividend over the