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Decisions of the Superior Courts of New South Wales, 1788-1899

Hughes v. Quinn [1837] NSWSupC 48

guarantees, liability on - cosureties, liability of

Supreme Court of New South Wales

Dowling A.C.J., and Burton and Kinchela JJ, 22 July 1837

Source: Australian, 25 July 1837[1 ]

J. T. Hughes v. Quinn. - This was an action of assumpsit for money paid to the use of the defendant as co surety with the plaintiff and one Henry, deceased, in a joint and several bond to the local government, given by one Fagan as tenant of a military canteen, the bond being executed by the principal and all the sureties, and the rent payable by instalments.

It appeared in evidence, that in May 1835, there was arrear of rent due for the canteen to the amount of £268 14s. 3d.; there was no proof that Fagan had made a default or had been applied to by the government for payment, but in April 1837, nearly two years after the last instalment was due, the bond was lying in the Commissariat Office without any endorsement upon it showing that it was satisfied.  In that month the plaintiff and one Hoskins, his partner in trade, having a claim upon the government upon a contract for goods supplied to the government, applied for payment of the amount.  The Commissariat clerk consented to pay that amount, deducting the sum of £268 14s. 3d. claimed to be due on Fagan's indemnity bond.  The plaintiff agreed to this, and so satisfied the bond, and had credit with the Commissariat for the amount, he adjusting the transaction with his partner.  This was done without notice to the defendant - his co-surety, who, upon being afterwards called upon to pay his contribution, refused to pay, on the ground that he was not liable.  This action was brought for £89 11s. 5d., being the third of the sum alleged to have been paid by the plaintiff on his account.  At the trial before His Honor Mr. Justice Burton at the late sittings, the action was resisted on three grounds - 1st, that there was no proof of default by Fagan the principal; 2d, that it was a voluntary and not a compulsory payment by the plaintiff; and 3d, that the defendant ought to have had notice before the plaintiff paid the amount in the manner proved.

Contra it was urged - 1st, that the bond being in the hands of the government without any indorsement acknowledging the payment of the arrears proved to be due, that was sufficient proof of default in the principal; 2d, that the plaintiff having been called upon to pay, that was sufficient without proof of a compulsory payment; and 3d, that the defendant as a co surety, being under a legal obligation by force of the bond to pay his contribution, notice was not necessary.

The learned Judge was inclined to notsuit [sic] on the ground that there was no proof that Fagan was in default, but allowed the plaintiff to take a verdict for £80 11s. 5d. with liberty to the defendant to move to enter a nonsuit.  Mr. Windeyer on a former day moved for a nonsuit on the grounds taken at the trial, and after hearing Mr. Foster contra, the Court took time to advise upon the case.

We are of opinion that a nonsuit must be entered - this species of action must be governed by equitable rules.  It is so treated on all the authorities, and before a co-surety can recover against another for contribution, he must show that he has not prejudiced the latter by any neglect or misconduct of his own.  Both are primarily on an equal footing, and have the same equitable rights.  Suppose this were an action against the principal himself, what proof would it have been necessary for the plaintiff to adduce?  After proof of the bond or other instrument, he must prove that he was called upon to pay the money, and that he had paid after notice given to the defendant, or that the defendant had refused to pay the money.  In a book of high authority, 3 Starkie 1384, it is laid down, that ``A surety in an action against a co-surety must in like manner prove their obligation as co-sureties, his application to the defendant to pay his share and the payment by himself."  The reason and good sense of this rule is obvious, for if the co surety has notice, he may be in a condition to look after the principal, and possibly guard against he default of the latter, or ascertain whether he is really in default.  Here the present defendant has no notice either of the default of the principal, or that the plaintiff has been called upon to pay.  These were points upon which the plaintiff was bound to satisfy the defendant, before he took upon himself to pay in the manner proved, so as to charge the defendant with contribution.  But we apprehend this must be treated as a voluntary payment by the plaintiff in his own wrong.  Without requiring proof that the principal was in default, ws of inability to pay, or had been called upon to pay, he goes to the Commissariat Office, not ostensibly to discharge this obligation, but expressly to demand a debt due from the Crown to himself and his partner, and upon being simply told that Fagan's bond was in the office without any indorsement of payments upon it, he voluntarily consents, upon being called upon by the clerk in the office, to deduct the amount claimed, in reduction of his partnership demand upon the Crown, and this without any notice whatever to the defendant.  Suppose this action had been brought by the Crown against the plaintiff, it would have been incumbent on the Crown to prove that Fagan had been called upon the pay or had otherwise made a default.  Without requiring this proof from the Crown, or being prepared to prove it himself, the plaintiff has no equity to make the defendant liable.  We must construe the call to pay, to mean a legal and obligatory one, under a compulsory demand.  Non constat that the Crown could legally have enforced payment against any of the co sureties.  About two years had elapsed since the last instalment had become due.  That delay ought to have been accounted for.  The Crown might have considered it a desperate debt, or one which could not have been enforced.  Payment therefore under the circumstances proved, without notice to the defendant, appears to us to relieve the defendant from obligation in this action.  It would be ``contrary to natural justice" to us the expressions in one of the cases cited, to hold the defendant to be liable

under these circumstances.

-- Rule absolute for a nonsuit.

Notes

[1 ] The authenticity of this report is shown by Dowling, Proceedings of the Supreme Court,  Vol. 138-1, State Records of New South Wales, 2/3322, p. 59, which has the same report in manuscript form.  See also Sydney Herald, 24 July 1837; Sydney Gazette, 25 July 1837.

Published by the Division of Law, Macquarie University