Moore v. Topliff

Citations

• 107 Ill. 241
• 1883 Ill. LEXIS 256

Syllabus

<p>1. Surety—when that relation exists. Three partners, A, B and 0, executed their firm notes to C, who indorsed the same, and the firm paid interest thereon until A withdrew from the firm, B and G taking all the assets and assuming all liabilities. It was held, that, as between themselves, upon this state of facts B and 0 became principal debtors, and A surety, upon the notes.</p> <p>2. Same—right to subrogation. It is a settled principle in equity, that a surety, upon paying the debt of the principal, is entitled to be substituted in the place of the creditor as to all securities held by the latter, and have the same benefit that he would have therein.</p> <p>'3. Same—whether a mortgage security to the creditor is extinguished, so as to defeat the surety’s right to subrogation—discharge of principals, in bankruptcy. Notes were given by a partnership firm, composed of A, B and 0, and indorsed to third parties, which notes were secured by a mortgage to the creditors, from 0, on real estate. A afterward sold out all his interest in the firm to B and 0, who assumed all the firm indebtedness, and formed a new partnership, the new firm paying interest on the notes until their bankruptcy, in which proceeding in bankruptcy the creditors proved their debts, and received forty-two per cent as a composition, in full discharge of the personal liability of B and C: Held, that as A was still personally liable on the notes as surety for B and 0, the mortgage was not extinguished, and that A’s existing equity, as surety, to have the mortgage security surrendered by the creditors to him upon his payment of the balance of the debt, was unaffected by the bankruptcy discharge.</p> <p>■ 4. Same—rights of the surety, before paying the debt, to secure indemnity. A surety, after the debt has become due, may, without having made payment himself, come into a court of equity and compel the principal to pay the debt, making the creditor a party, that he may be at hand to receive the money. T