all that he is liable for at law, regardless of whether or not the other sureties are able to pay. A surety who pays the debt can sue at law for contribution as soon as there is default by the principal, but he must sue each surety separately for his proportion of the debt, based on the number of co-sureties, without regard to their solvency. Thus, in an English case (35) it was found that there were twelve sureties for a debt, of which the defendant was one. Two of the twelve were insolvent. The defendant admitted he was liable to contribute one-twelfth the amount of the debt, all of which had been paid by the plaintiff, and paid one-twelfth into court. The plaintiff claimed he should pay one-tenth, as there remained only ten solvent sureties, but the court held that, in an action at law for contribution, a surety was liable for only his proportionate share, based on the total number of sureties, and hence one-twelfth was all the defendant was liable for. Had the suit been brought in equity, the defendant could have been forced to pay one-tenth. The surety who pays the debt is of course entitled to contribution for necessary costs of suit and other necessary expenses. In some states the equitable rule as to contribution is applied by the law courts, and the amount of contribution is based on the number of solvent sureties (36).

§ 94. Rights of surety to benefits obtained by co-surety: Advantageous settlement. Co-sureties are entitled to the benefit of all bargains and advantages secured by one

(35) Batard v. Hawes, 2 Ellis & Blackburn, 287.

(36) Smith v. Mason, 44 Nebraska, 610.

of their number in settling the claim. A surety is not entitled to derive benefits from the suretyship relation which are not shared by his co-sureties. If he pays less than the whole debt in full settlement he can recover only the pro rata share of what he paid from the cosureties. If he pays in property, he can recover only on the basis of the actual value of such property. Thus, one of the sureties on an obligation for $1200 bought it from the creditor for $900, and then sued the two cosureties for contribution, claiming he was entitled to recover $400 from each of them. The court, however, held that the plaintiff's co-sureties were entitled to share in the benefits of his bargain, and that he could recover from each only one-third of the amount he paid, or $300 (37).

§ 95. Same: Securities. Indemnity paid to one surety enures to the benefit of his co-sureties. If the surety has securities given him for the debt and releases them, he loses his right of contribution against co-sureties, just as the release of securities by the creditor releases the sureties (§ 31, above); for the co-sureties have a right of subrogation to the benefit of any security held by any one of their number, and a release of it injures this right. As the New Jersey court said (38):

"It is not questioned but that co-sureties are entitled, not only to contribution from each other towards the moneys paid in discharge of this joint liability, but also to the benefits of all the securities which any of them may have taken to indemnify himself. Nor is it disputed that when

(37) Acers v. Curtis, 68 Texas, 423.

(38) Paulin v. Kaighn, 29 New Jersey, 480.

one surety holds securities for his indemnity, the mere fact of his holding such securities will not bar a recovery in an action for contribution. After such recovery and payment of the judgment, the defendant may, in a proper tribunal, enforce his right of subrogation to such securities and so secure the benefit of them. If, however, the surety, before the action for contribution, shall have converted the securities for indemnity into money, that will go pro tanto in liquidation of the amount paid on the liability; and it is competent for the co-surety, in an action against him, to show that money has been so realized. It is a payment of so much by the original debtor, and so far an extinguishment of the liability. All of the sureties have an equal interest in the indemnity, and in the money realized from it. The surety who held it has no right to appropriate to his own use the whole money so realized, nor has he a right to deprive his co-sureties, without their consent, of the benefits to be derived from it. He becomes their trustee, and as such must faithfully hold the securities for the benefit of all his co-sureties, and he has no right, without their consent, to transfer surrender, or cancel them."

In this case, the surety suing for contribution had surrendered securities given him to the principal, without consent of co-sureties, and it was held this released such co-sureties to the extent to which such surrender might have injured them. Similarly, if a surety wastes the collateral security in his hands or negligently suffers it to be lost or impaired in value, he must account to his cosureties for such loss or depreciation.

§ 96. Co-Sureties under different undertakings. It is well settled law that parties may become co-sureties under different suretyship contracts, executed at different times, even though those bound by one contract have no knowledge that another contract, on which there were other sureties, was made. But the obligations into which they enter must be for the same engagement and for the same principal. It is enough to sustain the right of contribution, if it appears that the parties are under obligation to pay the same debt as sureties for the same person. A striking instance of the application of the right of contribution, as between sureties for the same obligation who became sureties at different times, is furnished by a Massachusetts case. The plaintiff had sent negotiable notes to a corporation, which was to sell them on commission and remit the proceeds, and the defendants had also sent some notes to the same corporation for the same purpose but at a different time. The corporation wrongfully pledged the notes of both the plaintiff and defendant to secure a debt it owed the pledgee; and the pledgee, being a bona fide holder of the notes, collected enough of the notes of the plaintiff to satisfy the debt due him from the corporation, the pledgor. The corporation was insolvent and the plaintiffs sought contribution in equity from the defendants, whose notes were pledged for the same debt as the plaintiff's. The court said that the liability to contribute did not depend on a contract between the parties, and was not affected by the fact that the notes were pledged and fell due and were paid at different times, or that some were paid only in part, or not

at all. The notes were all pledged to secure the same indebtedness. The various parties selected a common agent, and this agent used its power to place them all under a common liability, thus virtually making them all sureties for itself. All the notes being pledged for the same indebtedness, the whole loss in consequence thereof was to be borne by all the makers in proportion to the amount of the notes so pledged, and to that extent the plaintiffs were entitled to contribution from the defendants (39).

§ 97. Same: Liability limited to different amounts. Sureties may by contract limit their liability to a certain amount. When all are liable to the same extent they must bear the loss equally, but the rule is different in the case of sureties for the same debt of the same principal, if such sureties have their obligations limited to different amounts. In such case they are liable to contribution in proportion to the limitations of their respective liability, and not in equal amounts. This is well illustrated by the following case: A party was appointed guardian of a minor's estate, and there were three sureties on his guardian's bond which was for $10,000. Several years later the court required a further bond of the guardian, and a new bond for $5,000 was given on which there were three new sureties. The guardian misappropriated some funds of the estate and at the time of the suit was insolvent. One of the sureties on the first bond was forced to make good the amount misappropriated by the guardian. This amounted to the sum of $5,

(39) McBride v. Potter-Lovell Co., 169 Massachusetts, 7.