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The Right to Indemnity from the Principal


THE RIGHT TO INDEMNITY FROM THE PRINCIPAL. The principal being the real debtor, and the guarantor or surety only being responsible for his default, the law implies a promise on the part of the principal to indemnify the surety, and a right of action immediately accrues to the surety or guarantor against the prin cipal upon payment of the debt. (Wilson v. Crawford, 47 Ia., 469; Kimmel v. Lowe, 28 Minn., 265.) The right of action by the guarantor or surety against the principal does not accrue until he pays the debt of the principal. (Cotton v. Alexander, 32 Kans., 339; In ye Estate of Hill, 67 Cal., 238.) This being so, the surety could not bring an attach ment or hold property in his hands not appropriated for the payment of the debt, until he had actually paid the debt. (Dennison v. Soper, 33 Ia., 183; Ingalls v. Dennett, 6 Greenl., Me., 79.) The surety may pay the debt before due and sue the principal for indemnity after it has become due. (White v. Miller, 47 Ind., 385.) The action for indemnity should be brought in the name of the surety and not in the name of his obligee. (Hardware Co. v. Deere, Etc., Co., 53 Ark., 14o.) No demand or notice need be made or given to the principal by the surety who has paid the debt before suit is brought for indemnity. The contract of indemnity is said to arise at the moment when the surety con tracts his obligation, and is broken the moment the surety is damnified (Ward v. Henry, 5 Conn., 595; Brandt, Sur. & Guar., Sec. 2ro.) The surety need not pay the debt of the principal in cash, but any form of payment accepted by the creditor will answer to support his right to sue the principal for indemnity. Thus the surety may pay with his note, by the delivery of property, or a mortgage thereon to the creditor will constitute a payment. (Sapp v. Aiken, 68 Ia., 699; Peters v. Barnhill, i Hill, Law, 237; McVicar v. Royce, 17 Up. Can. [Q. B.], 529.) A few cases hold that the note would have to be paid before the surety could sue the principal for indemnity. (Stone v. Ham mell, 83 Cal., 547.) But where the surety gets a compromise from the creditor and extinguishes the debt for less than its full amount, he cannot recover from the principal more than the amount of the settlement with inter est and costs. (Coggeshall v. Ruggles, 62 Ill., 401; Hicks v. Bailey, 16 Tex., 229; Feamster v. With row, 12 W. Va., 611.) To recover costs made, the surety must have had reason for making them. (Carpenter v. Minter, 72 Tex., 370.) So the surety cannot recover indirect or consequential damages for his loss by reason of having to pay the debt of the principal, or for sacrificing his property, or for being imprisoned, but simply the amount actually paid out with necessary costs. (Powell v. Smith, 8 Johns., 249; Vance v. Lancaster, 3 Haywood [Tenn.], 130.) But by agreement with the principal he may recover a stipulated sum for the use of his credit. (Perrine v. Hotchkiss, 58 Barb., 77.)

surety, debt, recover, paid and payment