Parrott v. Chestertown National Bank

Briscoe, J., delivered the opinion of the Court. The bill in this case was filed in the Circuit Court for Kent County by the appellant, surety, to be subrogated to the rights of the Chestertown National Bank, one of the appellees, and also for a discovery of sundry payments made by the maker of a promissory note held by the appellee bank. A demurrer was interposed to the bill, answers by two of the defendants and exceptions filed to the answers. The case was thus submitted to the Court below, and the plaintiff’s bill having been dismissed, he has appealed.

There can be no question, and it is so conceded by the appellant here, that he is not entitled to an application of the doctrine of substitution or subrogation because it does not appear that he has paid in full the debt on which the assignment is claimed, nor any part of it. The law is well settled that an equitable assignment in favor of a surety cannot be effected unless he has paid the entire debt of the creditor; the principles of substitution require payment in full of the debt on which the equitable assignment is claimed. Freaner v. Yingling et al., 37 Md. 491 ; Swan v. Patterson et al., 7 Md. 164 ; Neptune Insurance Co. v. Dorsey, 3 Md. Chan. 334. The only question then presented by the record is whether the bill alleges such facts as entitle the plaintiff to relief by a Court of Equity, and this requires an examination of the allegations of the bill.

The bill states that the appellant, with a certain Colin F. Stam and Benjamin F. Fleming, two of the appellees, were indebted to the Chestertown National Bank on a prom ⁵¹⁷ issory note drawn by Fleming, with the appellant, Parrott, and the appellee, Stam, as sureties; the balance due on the note, at the time of the filing of the bill, being the sum of $546.52; that on the 9th of July, 1892, Fleming executed to the appellee bank a mortgage on certain real estate situate in Kent County, which recited that “ whereas Fleming is indebted unto the Chestertown National Bank, in the sum of twenty-nine hundred dollars evidenced by sundry notes, contracts and evidences of debt, and for the purpose of securing the payments of the notes and contracts and debts, the mortgage was executed.” The bill further states that the Fleming note, on wdiich the appellant and the appellee, Stam, are sureties, is a part of the sum of $2,900, and one of the notes which the mortgage was given to secure; that the appellee bank declines to disclose, although application has been made to it, the necessary information as to the true state of the application of payments from the sale of the property described in the mortgage so as to enable the appellant to defend his rights as surety in an action at law, which has been threatened