Ryland v. Commercial & Savings Bank

California Supreme Court Feb 6, 1900 No. S.F. No. 1827.Published

Before: Chipman

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Holding. The court held that a surety's cause of action against a corporation's stockholders for reimbursement arises only upon the surety's payment of the corporate debt, and the statute of limitations begins to run from the date of that payment rather than the date of the original obligation.

Issues

Does the statute of limitations for a surety's claim against corporate stockholders for reimbursement begin to run from the date of the original corporate debt or the date of the surety's payment?
Does the exception to the statute of limitations apply when a surety pays a debt after the statute has run against the original creditor?

Disposition. affirmed

Quotations verified verbatim against the opinion

“The statute could not be set in motion against the sureties until a liability to them had arisen, and no liability arose until they paid the debt of their principal or some part of it.”

“Where a surety is compelled to pay a debt, the statute begins to run against his claim from the day of such payment, and not from the date of the original obligation”

“The law implied an agreement on their part to indemnify the surety whenever he paid the obligation, and this implied agreement was distinct from their liability to the payee”

Synopsis

APPEAL from a judgment of the Superior Court of Santa Clara County. A. S. Kittredge, Judge.'

The fadts are stated in the opinion.

CHIPMAN, C.

Action against defendant as a stockholder in the Paul 0. Burns Wine Company, a corporation. Defendant pleaded the statute of limitations by demurrer, which being overruled, and defendant declining to answer, judgment passed for the plaintiff, from which this appeal is prosecuted. On August 15, 1894, the wine company was indebted to defendant and others in the sum of $30,000, to pay which it on that day made to defendant three promissory notes for $10,000 each, payable respectively September

25,

1894, October 15, 1894, and November 15, 1894, and they were indorsed by plaintiff and his assignors; on July

27,

1895, the wine company borrowed from one Cozzens the sum of $10,000, payable one year after date,

[526]

said money being borrowed to pay the above note for $10,000 falling due September' 25, 1894, and it was so paid by the wine company; plaintiff-and his assignors indorsed the note given to Cozzens; the wine company paid these several liabilities in part, and plaintiff and his assignors were compelled to pay the balance, which they did as follows: January 21, 1897, $3,000 on the Cozzens note; January 25, 1897, $400 to defendant; January 28, 1897, $20 to defendant; April 8, 1897, $1,200 on Cozzens’ note; April 8, 1897, $1,150 to defendants; April 8, 1897, $50 to defendant; February 21, 1898, $6,073.75 to defendant on the note due October 15, 1894; February 21, 1898, $2,234.75 on the Cozzens note. The complaint was filed August 23, 1898.

Appellant’s contention is, that the indebtedness of the wine company amounting to $30,000 on August 15, 1894, was created on that day within the meaning of section 359 of the Code of Civil Procedure, and the statute of limitations commenced to run in favor of appellant as a stockholder on that day, at least as to the $20,000 represented by the two notes which were then given, maturing respectively October 15, 1894, and November 15, 1894, and that the statute began to run as to the remaining $10,000 note at least as early as July 27, 1895, when the $10,000 note was given to Cozzens; that unless the payment by the sureties can be held to be the creation of an entirely new indebtedness of the wine company to them, and consequently of the wine company’s stockholders to them, or in some way stopped the running of the statute, the judgment was erroneous.

Ryland v. Commercial & Savings Bank

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Synopsis

CHIPMAN, C.

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