Promissory Note — Contribution between Indorsers becoming Co-sureties — Assumpsit — Statute of Frauds — Joint Action — Liability of Director to account for Profit in Purchase and Sale of Assets of Corporation.
If there is an understanding between the directors of a corporation that they shall indorse certain promissory notes for the benefit of the corporation, and it is also intended and understood that the indorsements are to be joint and not several, the indorsers are, as between themselves, co-sureties. It is not necessary that there shall be a contract in so many words to sign as co-sureties.
It may be shown by parol evidence that as between themselves the relation between successive indorsers of a promissory note is that of co-sureties.
Assumpsit will lie by one surety against another on the contract implied from their relation as co-sureties to recover from him his share of the amount paid in settlement of the common liability; and even if there is an express agreement between them to contribute, it does not follow that assumpsit will not lie.
The statute of frauds does not apply to an action by one indorser of a promissory note, after he has paid it, to recover contribution from his co-indorser, the indorsements being made with the understanding that they shall be joint and not several.
Two persons, each of whom is jointly liable with another for the amount of a promissory note, may join in one action, after payment of the note by them, to recover from him his share of the sum so paid; and if one of the plaintiffs dies after action brought, the other may maintain the action for the benefit of himself and the estate of the deceased plaintiff.
If a director of a corporation, who, with other directors, indorses a promissory note made by the corporation with the understanding that the indorsements shall be joint and not several, buys a portion of the assets of the corporation sold by an assignee at public auction and afterwards sells them, it not appearing that the sale by the assignee was not conducted fairly and in good faith, such director is not required to account for the profit, if any, which he may have made by the purchase and sale, in an action by him, after he has paid the note, to recover contribution from a co-indorser.
MORTON, J.
We see no error in the rulings or refusals to rule. The court found that there was an understanding between the directors that they should indorse the notes for the benefit of the corporation, and that it was intended and understood that the indorsements were to be joint and not several. There was evidence warranting this finding, and it follows from it that the indorsers were as between themselves co-sureties. It was not necessary that there should be a contract in so many words to sign as co-sureties. It was sufficient if it appeared, taking all of the circumstances into account, that that was the nature of the liability which as between themselves the parties intended to assume and did assume. Clapp v. Rice, 13 Gray, 403. Mansfield v. Edwards, 136 Mass. 15. Mulcare v. Welch, 160 Mass. 58. Hagerthy v. Phillips, 83 Maine, 336. Macdonald v. Whitfield, 8 App. Cas. 733.
We interpret the refusal of the court to find whether there was an express contract as meaning that, as the court in substance ruled, it was not necessary to show an agreement in so many words. In view of the finding as to the intention and understanding of the parties, it is manifest that the defendant was not harmed by the refusal of the court to find that there was not an express agreement, using the word "express" in the sense which we have given to it above. It is too well settled to require any extended citation of authorities that it may be shown by parol evidence that as between themselves the relation between successive indorsers is that of co-sureties. Clapp v. Rice and Mansfield v. Edwards, ubi supra. It is also well settled that indebitatus assumpsit will lie by one surety against another on the contract implied from their relation as co-sureties to recover from him his share of the amount paid in settlement of the common liability. Bachelder v. Fiske, 17 Mass. 464. Mansfield v. Edwards, ubi supra. "The right of contribution does not arise out of any contract or agreement between co-sureties to indemnify each other, but on the principle of equity, which courts of law will enforce, that where two persons are subject to a common burden, it shall be borne equally between them. In such cases the law raises an implied promise from the mutual relation of the parties." Warner v. Morrison, 3 Allen, 566.
Even if there had been an express agreement to contribute, it would not have followed that indebitatus assumpsit would not lie, and therefore the ruling that was asked for to that effect was rightly refused. Gibbs v. Bryant, 1 Pick. 118. But it was not necessary to show an express agreement to contribute, and there being no finding that there was an express agreement, the question presented by the request became a purely academic one. The statute of frauds does not apply, because the parol agreement related to the obligations of the indorsers inter sese, and not to a promise to pay the debt of another; also, so far as there was any promise it was one implied by law, as already observed, from the mutual relation of the parties when it was established that they were co-sureties. We do not see, under the circumstances disclosed by the exceptions, any difficulty in the bringing of the action by the plaintiffs jointly, or its maintenance, since Holman's death for the benefit of himself and Holman's estate. That matter is disposed of by Clapp v. Rice, 15 Gray, 557, it seems to us. We discover nothing in the facts stated in the bill of exceptions in regard to the sale of the assets of the corporation and the purchase of a portion thereof by Weeks, and the subsequent sale by him of the portion so bought, which requires that he should account for any profit that he might have made. It does not even appear that he made any profit. But there is nothing tending to show fraud or collusion on the part of Weeks, or that the assets did not bring all that they were fairly worth, or that the sale was conducted otherwise than in entire good faith. Under such circumstances the fact that Weeks was a director of the corporation does not require, we think, that he should account for the profit, if any, which he may have made.
Judgment for the plaintiffs on the findings.