(87 W. Va, 608) (No. 3961.) MILLER v. LILLY et al. (Supreme Court of Appeals of West Virginia. Feb. 1, 1921.) (Syllabus by the Court.) 1. Guaranty 602-Accommodation indors. er cannot dispose of property mortgaged as indemnity to the loss of his guarantors. poses to say that, as to this matter, the finding of the jury was in favor of the state's contentions, that is to say, they found that the alleged assault with a hammer was neither made nor attempted to be made. At least, the jury had the right so to find; and this court, therefore, has no choice but to accept that theory or some other legitimate theory that tends to uphold the verdict. An accommodation payee and indorser of Moreover, the assault with the hammer, if it a note, indemnified against loss resulting from was made as claimed by the defendant, va- his indorsement, by a deed of trust on propries, as a matter of law, from the assault erty of the principal debtor, which also sewith the brick in so far only as the doctrine cures payment of the note, and further indemof reasonable fears is concerned; and even nified against such loss by a guaranty agreethat question was one for the jury, requir- ment between him and other persons, which ing them to determine, not whether the kill-contains a clause obligating them to repay to ing was murder or was justifiable, but wheth-him any sum he should be compelled to pay by reason of his indorsement, cannot actively er it was voluntary manslaughter or justifi- participate in, or cause, such a disposition of the property on which the debt is secured as From what is above said it clearly follows will inflict direct and inevitable loss upon the that the ruling announced in the first head-guarantors, and still hold them liable to him note is applicable to the facts of this case, upon their contract of guaranty. that the court did not err in giving in charge 2. Guaranty 601⁄2 Indemnified indorser to the jury the law of voluntary manslaugh- cannot purchase and rely on property securter, and that the verdict for that grade of ing him, defeating right of his guarantor to homicide was not unauthorized. And this purchase at better price. is true notwithstanding the judge was not required, in the absence of a timely written request, to charge on that theory of homi able homicide. cide. If, in such case, the indemnified indorser, being liable with other persons for other debts of the maker of the note, or being his creditor, forms a combination with other persons for the purpose of purchasing such property at a [7] The defendant requested the court to sale thereof to be made by the trustee, at a charge as follows: "Good character alone, when established, may generate in the minds of the jury a reasonable doubt and produce an acquittal." The court refused to adopt the language of the request, but, in lieu thereof, charged the jury as follows: "I charge you that good character is a substantive fact in the case, to be considered along with the other facts in the case; and, even if the other facts in the case may not leave a reasonable doubt in the minds of the jury as to the guilt of the defendant, still if the good character that is established, or may be, in the minds of the jury, has the effect to raise a reasonable doubt in the minds of the jury as to his guilt, it would be the duty of the jury to give him the benefit of the doubt and acquit him." price insufficient to pay the debt secured upon it, with intent to endeavor to realize enough out of the property to protect himself and associates similarly situated, in respect of such other debts as well as the secured debt, and actively participates in causing the sale to be made, and, at such sale, purchases the property for himself and his associates, at such price, with knowledge of the desire, readiness, and ability of one of the guarantors to purchase it at a price sufficient to pay the secured debt, and without actual notice to such guarantor of the time of the sale, and then pays the part of the debt remaining after application of the proceeds of the sale thereon, he cannot recover any part of the money so paid from such guarantor. On an issue, in such case, as to whether the purchasers, in raising a fund sufficient to In view of the charge given, the court did pay all of the debts of the debtor, prior to the not err in refusing to adopt the exact lan- sale, or obligating themselves to do so, inguage of the request. Battle v. State, 105 tended to take the property in consideration Ga. 703 (1), 705, 32 S. E. 160; Mixon v. of payment of all of the debts, so as to reState, 7 Ga. App. 805, 68 S. E. 315 (7).lieve the guarantors, all of the facts and cirSee, also, Hill v. State, 18 Ga. App. 259, 89 S. E. 351. [2-6] The other grounds of error are sufficiently dealt with in the headnotes. Judgment affirmed. BROYLES, C. J., and BLOODWORTH, J., concur. cumstances attending the transaction, both before and after the sale, are admissible in evidence. 4. Guaranty 92(2)—Instructions relating to purchase of property by indemnified indorser held properly refused in action to recover from guarantor. Instructions requested by the defendant, in the trial of such a case, which, if given, would (105 S.E.) have authorized a verdict for him, on the finding of a purchase of the property by the indorser for himself and his associates, at a price less than the secured debt, intention on their part to pay all of the debts of the principal from a fund raised by them and the mak-. ing of an offer to him by another person to take the property and pay the secured debt, but not requiring any finding as to the time of such offer, are properly refused. 5. Guaranty 92(1)-Instruction in action against guarantor of indorsement for defendant, as offer to purchase property mortgaged to secure indorser, held erroneously refused. It is reversible error, however, to refuse an instruction, requested by the defendant, in such case, which, if given, would have required a verdict for him, on a finding that he had, before the sale, made an offer to the plaintiff to purchase the property at a price sufficient to pay the debt secured upon it, and rejection thereof by the latter. 6. Guaranty 85(1)—Declaration on contract of guaranty of indorsement need not allege insolvency of principal debtor. A count in a declaration upon such a contract of guaranty as the one above described need not allege insolvency of the principal POFFENBARGER, J. The judgment under review on this writ of error was rendered in an action of assumpit, for contribution; and the defense was, in substance, payment of the secured debt by the plaintiff, out of property of the principal debtor. If there was such payment, it was so involved in indirectness, and beclouded by uncertainty, as to give rise to the controversy culminating in this litigation. The principal debtor was a corporation known as the Hinton Foundry, Machine & Plumbing Company, and the parties to this litigation and others originally bound for the debt were its stockholders, and all of them, save one, the plaintiff herein, directors. On December 16, 1907, the company borrowed $6,000 from the National Bank of Summers, on its note executed to A. E. Miller, the plaintiff, and indorsed by him, with which it paid off its indebtedness to said bank. At the same time the six directors of the company entered into an agreement with Miller, by which they obligated themselves to indemni fy him from loss, by reason of his indorsement; and, three days later, the company executed a deed of trust, by which it conveyed its property to a trustee to secure payment of the note and all renewals thereof, and to indemnify the indorser and save him harmless. On March 8, 1919, the debt remaining unpaid and having grown to $6,500, the property was sold under the deed of trust and purchased by Miller, for the sum of $3,000, a substantial, but probably not a full and adequate, consideration, and he took a conveyance thereof March 27, 1919. A few days later, April 1, 1919, he conveyed it to his brother, C. L. Miller, as trustee to hold for the use and benefit of himself, J. T. McCrerry, A. D. Daly, G. A. Miller, Lee Walker, C. L. Miller, and the personal representatives of H. Ewart, deceased, constituting what is called a "pool," three of whom, McCreery, Walker, and Ewart, had been guarantors of the debt, and all of whom had been interested in the corporation. Walker having retired from the "pool," the other six members paid and agreed to pay the trustee $9,120, out of which all of the indebtedness of the company is to be, or has been, paid, and Miller reimbursed, or to be reimbursed, for all of the money paid by him in the transaction, if the testimony is to be taken literally in dealing with it. Besides the $6,500 debt, the company owed another, amounting to $850, for which Miller was bound, and the defendant Lilly was not; and still another, amounting, with accrued interest, to about $2,600, all of which, except one aliquot part, had been paid by the sureties therefor, of whom Lilly was one, before the sale of the property. Miller and his associates in the new trust of April 1, 1919, undertook to provide for payment of these and all other debts of the company, and to take its property in lieu of the money, but to take it in such manner as would deny to Lilly and his associates in the guaranty, not joining them in the enterprise, the benefit of such payment, and leave them still liable for their pro rata shares of the $6,500 debt, after application thereon of the $3,000 paid for the property by Miller, less the costs of the sale. Accordingly, the trustee who sold the property, after deduction of the expenses, $78, paid the residue of the proceeds of the sale, $2,922, on the note. This left an unpaid balance of $3,637.58, and this action was brought to recover from Lilly one-sixth of that amount, $606.26. Before the sale, Miller and others interested contemplated, and may have consummated, an arrangement by which the property was to be taken by them for a sufficient amount of money to pay the debts. In his testimony, he swears he did not sell it to the trustee to whom he conveyed it, nor to the beneficiaries of the new trust. His language is: "I didn't sell it. I turned it over-just [ antors may enable the "pool" to save and retransferred it to the people that I bought it for." In response to an interrogation as to whether he had "just made a deed to it," he said: "Transferred it to the people I bought it for." In a letter written to the defendant, after the sale, he said: "Some time before the sale I sent out a circular letter, requesting the various guarantors to enter a pool for the purpose of buying the property and holding it for the mutual benefit of the parties involved. Some of the parties agreed to this, but others did not take advantage of it." He also admits that the recovery in this action, if any, is to go to the beneficiaries of the C. L. Miller trust, or to C. L. Miller, trus tee, for them. Nevertheless, his theory and contention is that there was no agreement on his part, in acting for himself and his associates, that they were to pay the trustee, from whom they bought the property, enough money to pay the debts, or to pay the debts in consideration of a conveyance of the property to them. On the contrary, his position, though not clearly expressed, is that the property was to be obtained at the trustee's sale for such sum as it could be purchased for, and that then they would pay all of the debts and endeavor to reimburse themselves out of the property. Some of their acts in execution of their plan harmonize with this interpretation. Through their representative, Miller, they purchased the property for $3,000. Miller personally paid the balance of the bank debt, $3,637.58, and collected from four of the six guarantors the pro rata portions thereof assigned and charged to them, under the terms of the guaranty. But his contention is apparently inconsistent with other acts. The "pool" members raised and put into the hands of their trustee $9,120, the estimated amount of the company's aggregate indebtedness. If Miller is to reimburse himself for payment of the balance of the bank debt, by contribution from the guarantors, there is no occasion for resort to the "pool" fund for that purpose. That part of the indebtedness, $3,637.58, will be paid by the guarantors, and, the property having been validly purchased and taken over by the "pool," they cannot charge it. In that case they must lose, and it is the theory of this action that they must. Yet the "pool" raised enough money to pay the debt for which the guarantors are liable, and the recovery, the plaintiff says, will inure to the benefit of the "pool." At the same time, he claims he has sustained a loss, and, if his testimony is true, he had paid out money that has not been returned. This inconsistency and contradiction may be susceptible of solution, however. The turn to its contributors part of the money raised. In that way, the recovery would inure to the benefit of the contributors to the fund, but not by way of reimbursement for payment of the debt. The purpose of raising a sufficient sum to pay all of the debts may have been, in part, full and complete protection to the plaintiff herein, the indorser of the $6,500 note. He may have exacted the raising of enough money to pay all of the debts, by way of provision of a fund to which he could resort for reimbursement, in case he should not want to wait for repayment thereof by the guarantors. Besides, he was an indorser or surety as to the $850 debt, and, as surety or guarantor, he had paid his part of the $2,600 note, and other "pool" members, C. L. Miller, McCreery, Walker, and the Ewart estate, had paid their portions of that debt. Miller, of course, wanted the $850 note paid, and all desired reimbursement for the money they had paid on the other note. These two debts were not included in the deed of trust. The defendant Lilly and two other parties, Litsinger and Meador, not in the "pool," were on the $2,600 note, and Lilly and Litsinger Payment of all had paid their parts of it. the debts by the "pool" would include reimbursement of Lilly and Litsinger, who refus ed to join the "pool" and share its burdens and hazards, and this was probably not intended. But as they were creditors, and might attempt to assert their claims, and Miller was to be the nominal purchaser of the property and take the risk of possible litigation with them, he may have required the raising of a sufficient sum to cover these claims, but not to be used therefor, except upon condition. Exclusion thereof, and exaction of contribution from the guarantors not in the "pool," would inure to its benefit, if it was formed for protection, and not for purchase at a price equal to the debts. Though contemplated and tentatively provided for before the sale, it may not have been actually formed until afterward. [1, 2] Miller was virtually an indemnified surety of the maker of the note, not a cosurety with Lilly and the other guarantors. Nevertheless he and they were not strangers. They were intimately associated. One who agrees to indemnify a surety, and who afterwards pays the debt for which the surety is bound, is entitled to subrogation, the same as the surety would have been if he had paid the I debt. Rittenhouse v. Levering, 6 Watts & S. (Pa.), 190. He has a right to demand that property of the debtor on which the debt is a lien be applied to payment of the debt, and is entitled to the benefit of the lien by way of subrogation. Guarantors of a mortgage, who have been compelled to pay the mortgage debt, are entitled to be subrogated to all of (105 S.E.) the debt secured by the original mortgage, to the character thereof. The legal principle and therefore to a subsequent mortgage ob- just referred to amply justified the action of tained by the mortgagee as an additional se- the court in its refusal thereof. curity. Havens v. Willis, 100 N. Y. 482, 3 N. E. 313. See also Drew v. Lockett, 32 Beav. 499, and Brandt, Sur. & Guar. § 348. Of course subrogation is an equitable doctrine, and, ordinarily, can be effected only in courts of equity; but legal rights often stand upon equitable principles and are accorded in courts of law, when invocation of the remedies peculiar to courts of equity is unnecessary. If the cosurety obtains indemnity from the principal debtor and pays the debt out of it, he cannot have contribution. Brandt, Sur. & Guar. §§ 294, 295. And if he has such indemnity, and relinquishes it or loses it by his negligence or misconduct, he is denied right of contribution. Id. §§ 297, 298. By the deed of trust above referred to the property was annexed to the debt secured by it. Miller was substantially, though not technically, a surety for that debt. As such, he had right of recourse to the property, and so did the guarantors. He could not directly nor indirectly appropriate it to his own use, nor divert it to any other purpose; nor could any of the guarantors do so. Property so pledged cannot be diverted from the purpose of the pledge by anybody. The creditor may pursue it as long as any of his debt remains unpaid, unless he has lost his right, by some wrongful act of omission or commission; and any of his sureties having paid any part of the debt, are subrogated to his rights against the debtor. By misconduct, the creditor may lose his right against the surety. He must exercise reasonable diligence in his efforts to enforce his right against the debtor. Having the debtor's property partially under his control, by means of the deed of trust, Miller's relation to his guarantors was analogous to that of the debtor. At the same time, he was, in the broad sense of the term, their creditor. They were obligated to him. Manifestly, therefore, he was under some of the duties, and subject to some of the restraints, of a cosurety, a debtor, and a creditor. Viewed as a cosurety, he could not purchase the property for a merely nominal consideration and still hold the guarantors. Sanders v. Weelburg, 107 Ind. 266, 7 N. E. 573; Livingston's Ex'rs v. Van Rensselaer's Adm'rs, 6 Wend. (N. Y.), 63. No doubt, he had right to purchase it at a reasonable and fair price and in an open and fair way. Crompton v. Vasser, 19 Ala. 259; Keiser v. Beam, 117 Ind. 31, 19 N. E. 534; Elrod v. Gastineau, 124 Ky. 609, 99 S. W. 903; 32 Cyc. 292. As a creditor, his situation would be the same or similar. As a debtor, it would be less favorable. [4] The main purpose of five of the six instructions requested by the defendant and refused by the court was to give him the benefit of the plaintiff's purchase, without regard Whether the price paid by Miller was baldly inadequate, or merely nominal, is not well developed by the evidence. As to this highly important factor it is slight. While the "pool" raised $9,120, apparently on the faith of it, its members may not expect full reimbursement. The defendant offered the plaintiff over $6,700 for the property after the purchase, and testified that it was worth $8,000. But the five instructions above mentioned are not predicated on the relation between the value and the purchase price. They do not go beyond the offer of purchase made by the defendant. In this respect they are entirely too narrow. [5] The sixth instruction asked for by the defendant, if given, would have directed the jury to find for him, if they should believe that, before the sale, the defendant had made a proposition to purchase the property on which the $6,500 debt was secured, at a price sufficient to pay that debt in full, and, after the sale, made a further offer to take it at a price that would have made the plaintiff whole and free from loss. Justification of the refusal of this instruction is attempted on the ground of lack of evidence; but the plaintiff testified very positively that he had made such a proposition to the plaintiff, before the property was advertised for sale, and his evidence as to this was not definitely contradicted, if contradicted at all. It was manifestly sufficient to carry the case to the jury as to that issue, and the good faith of the offer finds support in the subsequent offer to take the property for an amount sufficient to make the purchaser whole in respect of the secured debt. The deed of trust was an indemnity given to Miller and placed under his control, for his protection; but his guarantors were entitled to have it faithfully and properly applied to payment of the debt, for their relief. Hence, if he had an opportunity to have it disposed of by his trustee, at a price that would pay the debt in full and relieve him and his guarantors, it was his duty to do so, under principles already stated. He could not forego an opportunity to have the property sold to a purchaser for enough to pay the debt and save him from loss, and then buy it, directly or indirectly, at a lower price, or cause it to be sold to some other person at such price, and still hold the guarantors. He was under a duty to abstain from any act or conduct with reference to the security that would prejudice the guarantors; wherefore he could not rightfully cause a sacrifice of the property out of which the debt could have been paid. It matters not that he was liable for other debts of the principal debtor. The property was placed under his control, through the trustee, to pay this particular debt, and if he desired the surplus for indemnity against the (87 W. Va. 564) Mayor, et al. (No. 4276.) other debts, it was his duty to make it bring STATE ex rel. WESTFALL et al. v. BLAIR, the guaranteed debt, or pay it and look to the property for his indemnity, or rely upon his guaranty and leave the property to the guarantors. If the defendant made such an offer, and it was rejected, as he says it was, he was under no duty to be on the alert as to the time of the sale. Miller then knew, or had reason to believe, the property could be sold to him for the full amount of the debt, and it was his duty to apprise him of the time of the sale. The good faith and diligence exacted by the law, under such circumstances, required him to refrain from causation of a sacrificial sale without notice to the defendant, or to any other prospective purchaser at a price that would pay the debt, when notice could have been easily given. Lilly swears he was out of town on the day of the sale, and had no knowledge of it, until he was advised of it on his return. For these reasons, we are of the opinion that there was reversible error in the refusal of the sixth instruction prayed for by the defendant. [3] The defendant's objection to certain evidence of payments made by some of the guarantors was overruled, and defendant's objections to offered evidence of substantial transactions, rights and obligations constituting parts of the procedure of the purchasers after the sale of the property by the trustee, were sustained. These facts and circumstances are all relevant, though some of them may not be very material. In its exclusion of evidence, the court took the view that what occurred after the sale was irrelevant and immaterial. Inasmuch as these matters cast light upon the intent and purposes of the parties to the "pool," which may have been formed before the sale, they were all relevant, and should have been admitted. (Supreme Court of Appeals of West Virginia. Feb. 1, 1921.) (Syllabus by the Court.) 1. Municipal corporations 150-Resignation of majority of council to prevent filling of vacancies held not to absolve them from official duties. Resignation of a majority of the common council of a town, chartered under chapter 47, Code (secs. 2382-2494), thus preventing appointments to fill the vacancies because of the fective, and will not absolve them from the disinability of the minority to act, will not be efcharge of official duties. 2. Mandamus 74(4)-Writ will lie to compel members of common council who have resigned to act as board of canvassers. of the common council of such municipality, inMandamus will lie to compel the members cluding those members who have so attempted to resign, to convene as a board of canvassers and to canvass the vote returned in a regular municipal election for town officers, declare the result, and cause proper certificates to be issued to the persons elected. 3. Mandamus 63-Municipal corporations 150-Officers attempting to resign may be compelled to perform duties until successors appointed. Urgent public duties cannot be avoided by a municipal officer by resigning from his office in such a way and manner as to prevent the selection and qualification of his successor and prompt performance of such duties; and he will be compelled by judicial mandate to perform them until his successor is legally elected or appointed and qualified. Mandamus by the State, on the relation of W. H. Westfall and others, against R. S. Blair, Mayor, and others. Writ awarded. S. A. Powell, of Harrisville, for relators. R. S. Blair, of Harrisville, for respondents. [6] A demurrer to the second count of the declaration, on the ground of lack of an averment of insolvency of the principal debtor, LIVELY, J. W. H. Westfall, Guy R. was properly overruled. The special agree- Moats, R. R. Hali, W. W. Lawrence, J. G. ment to repay to the indorser any sum he Cooper, Gilbert Hoyden, and Daniel Starr, should be compelled to pay, fund in the guar- claiming to have been legally elected as anty agreement, absolved him from duty to members of the common council of the town exhaust the resources of the principal debt- of Harrisville, a municipality incorporated or, as a condition precedent to right of ac- under chapter 47, Code 1918, Ritchie county, tion. If he was compelled to pay, as the at a municipal election therein held on the count alleges, this agreement gave an imme- first Tuesday in January, 1921, W. H. Westdiate right of action against the guarantors. fall as mayor, Guy R. Moats as recorder, For the error in the refusal to give the and the other named persons as councilmen, last one of the six instructions requested by all composing the then elected common coun the defendant, the judgment will be reversed, cil, seek peremptory writ of mandamus to the verdict set aside, and the cause remand- compel the common council in office when ed for a new trial. It is unnecessary to en- the election was held to meet as a board of ter upon an inquiry as to whether other er- canvassers and to canvass the returns, certirors noted would call for reversal. Presump-fy the result of the election, and issue proper tively they will not be repeated upon the certificates to those elected. The petition new trial. charges that R. S. Blair, P. G. Smith, W. A. |