
    *Hopewell and Others v. The Cumberland Bank of Alleghany.
    April, 1839,
    Richmond.
    (Absent Tucker, P.)
    Subrogation-Rights of Indorsers — Case at Bar. — Several persons being bound as sureties for M. in bonds, and others being indorsers of notes for his accommodation at different banks, which notes had come to maturity and been protested for nonpayment, M. by deed of trust, mortgages property to be sold and applied to the indemnification of each and all of the sureties and indorsers, without preference of any over the others, in case they should sustain loss by reason of their surety-ships and indorsements ; the endorsers of a note held by one of the banks, are discharged irom liability by the laches as the bank or otherwise, so tiiat the indorsers of this note are never dam-nified ; while other sureties and indorsers are damnified': upon a bill in equity filed by this bank for participation in the trust fund with the sureties and indorsers who had sustained damage. Heed, the bank could only claim to be subrogated to the rights of the indorsers of the note' which it held ; and these haying sustained no damage, and so having no claim to participate in the trust fund themselves, therefore the bank has no claim to participate in it.
    By a deed of trust executed by James Machir on the 3rd July 1820, and duly recorded in the county court of Hardy — reciting-, that John Mullin was surety for Machir in two forthcoming bonds, upon both which executions had been awarded; that Valentine. Simmons was surety for Machir in another forthcoming bond, upon which also execution had been awarded ; that Philip Carth-rae was surety for Machir in an appeal bond upon an appeal to the court of appeals, taken by Machir from a decree of the court of chancery of Winchester against him in favor of the executors of Peter *Higgins; that John Hopewell and James Dailey were indorsers for Ma-chir at The Farmers Bank of Virginia at Winchester for a considerable sum, and Edward M’Carty, William Armstrong and Patrick M’Carty had become indorsers of a note for Machir at The Cumberland Bank of Al-leghany in Maryland, for the sum of 6000 dollars, upon which suit had been brought against Machir in the circuit court of Hardy— and reciting further, that it was the purpose of the deed to secure the above named sureties and indorsers for Machir “from all or any loss or damage which they or either of them might sustain” by reason of their said sure-tyships and indorsements — therefore, Machir conveyed to certain trustees therein named, fifteen slaves and sundry other chattels; upon trust, that in case Mullin should be compelled to pay any money on the two forthcoming bonds in which he was bound as surety for Machir, or executions sued out on those bonds should be levied on Mullin’s property ; or in case Simmons should be compelled to pay any money on the forthcoming bond in which he was bound as surety for Machir, or execution sued out on that bond should be levied on Simmons’s property ; and in case Carthrae should be compelled to pay any money by reason of his suretyship for Machir in the appeal bond, or suit should be brought -on that bond against Machir and Carthrae, and Machir should fail to satisfy the decree of the court of appeals ; and in case Machir should fail to pay the note on which Hopewell and Dailey were his indorsers at The Farmers Bank at Winchester, when the same should be due and demanded of him, so-that, in consequence of such default of Machir, resort should be had by the holder of the note, for paj’ment of the same, or any part thereof, to the indorsers or either of them ; “ and in case the said E. M’Carty, Armstrong and P. M’Carty, indorsers as aforesaid fof the said Machir on a note in the said Cumberland Bank of Alle-ghany, *which Machir failed to pay when demanded, should be called upon for the same, or the amount thereof should be demanded from them as indorsers as aforesaid, in consequence of the said Machir’s failure of payment thereof;” then, in each and every such case, as it should occur, the trustees, or either of them, shou’d, at the request of the sureties and indorsers before named, respectively, proceed to sell the trust subject, or so much as should be sufficient to pay and satisfy so much money as should be demanded as aforesaid of theni, or either of them, and pay the same to the sureties or indorsers respectively ; provided, “ that no one of the persons for whose benefit the deed was made should have priority or pr-eference over another, but the same should be carried into effect as the liability of the several parties should occur in the manner before stated.”
    The note of Machir, upon which Hopewell and Dailey were his indorsers at The Farmers Bank at Winchester, was a note for 2970 dollars bearing interest from the 12th December 1820, upon which several judgments were recovered, against Machir, the maker, in October 1822, and against Hopewell and Dailey, the indorsers, in May 1823. Some part of the debt was made on executions sued out on the judgment against Machir and levied on his property ; but far the greater part of it remained to be paid by the indors-ers.
    The note of’Machir, on which E. M’Carty, Armstrong and P. M’Carty were his indors-ers at The Cumberland Bank of Alleghany, was a note dated the 26th August 1818, for 6000 dollars payable sixty days after date, which came to maturity on the 28th October, and was regularly protested for nonpayment; but it did not appear that any notice of the dishonour of the note was given to the in-dorsers. The bank brought an action on the note, in 1819, against Machir, the maker, and, after a long contest, recovered judgment against *him in May 1825, which proved unavailing, for Machir was then insolvent. The bank also brought an action against each of the three indorsers, but suffered nonsuits in those actions in May 1823. What was the obstacle to the recovery against the indorsers, was not stated, and did not distinctly appear.
    In the meantime, the decree of the court of chancery in favour of Higgins’s executors against Machir having been affirmed by the court of appeals, Carthrae, the surety of Machir in the appeal bond, became liable for a balance of the debt due by the decree, after applying' the proceeds of sale of a parcel of land, which was subjected to the debt, towards the satisfaction of it; and the creditors under the decree commenced proceedings against Machir and Carthrae, to recover the balance due them.
    Whereupon, Carthrae, in 1822, exhibited a bill in the superior court of chancery of Winchester, against Machir, the trustees named in the deed of trust of July 1820, Hopewell and Hailey, Machir’s indorsers at The Farmers Bank, E. M’Carty, Armstrong and P. M’Carty, Machir’s indorsers at The Cumberland Bank, and the other cestuis que trust named in the deed ; representing, that all of them had been already fully indemnified from all loss by reason of their suretyships and indorsements for Machir (some out of the trust subject, and some out of other property of Machir applied to the purpose), except the plaintiff Carthrae, and E. M’Carty, Armstrong and P. M’Carty, the indorsers at The Cumberland Bank, but that the debt due to that bank was not recoverable from the indorsers ; and praying, that the remaining trust subject should be sold, and the proceeds applied to the indemnification of the plaintiff from his liability as surety of Machir in the appeal bond. Hopewell and Dailey, in their answers to this bill, stated, that the debt due to The Farmers Bank, for which they were bound as Machir’s indorsers, had *not been paid, nor had they been indemnified against loss on that account otherwise than by the deed of trust, and that the bank had brought suit against them for the debt, which was yet pending. EM’Carty, Armstrong and P. M’Carty answered, that suits had been brought by The Cumberland Bank against them as indorsers of Machir on the note for 6000 dollars ; that they were advised, the bank could not recover against them in any of the courts of this state, because that bank was a corporation created by another state, and in consequence of the great indulgence extended by the bank to Machir after the note became cue; but if they should be held liable for the debt, they claimed the benefit of the indemnity provided for them by the deed of trust. As to all the othe.r cestuis que trust in the deed, made defendants to Carthrae’s bill, it appeared by their answers and by an account taken by order of the court in the progress of the cause, that they had sustained no loss by reason of their suretyships for Machir, nor probably would sustain any. And, in May 1823, pending this suit of Carthrae, The Farmers Bank recovered judgment in their suits against Hopewell and Dailey ; and The Cumberland Bank suffered nonsuits in their actions against E. M’Carty, Armstrong and P. M’Carty, so that they no longer claimed for themselves any indemnification under the deed of trust.
    The court ordered a sale of the trust subject by the marshal, which was made accordingly. And the marshal having paid into court the sum of 3266 dollars collected of the proceeds of the sale, the court directed a commissioner to state an account of the claims of the cestuis que trust under the deed of trust, and to apportion the fund rateably among them. The commissioner reported, that the debt due to Hopewell and Dailey for their liability as indorsers for Machir at The Farmers Bank, was 3408 dollars 67 cents, and the debt due to Carthrae on account of his suretyship for Machir in the * appeal bond, was 874 dollars; and that there were no other parlies to be indemnified : that, therefore, the proportion of the fund of 3266 dollars to be paid to Carthrae, was 666 dollars SI cents, and the proportion thereof to be paid to Hopewell and Dailey, 2599 dollars 49 cents.
    Upon the hearing, in 182S, the court, as it appeared that the plaintiff Carthrae, and the defendants Hopewell and Dailey, were the only parties named and provided for in the deed of trust, who had as yet suffered any loss or damage so as to entitle them to demand indemnification out of the trust subject, decreed, therefore, that 666 dollars 51 cents (the rateable proportion of the fund reported to be due to Carthrae) should be paid to Jacob Williamson, the assignee of Carthrae, and 2599 dollars 49 cents (the rateable proportion thereof due to Hopewell and Dailey) should be paid to them, upon Hopewell and Dailey entering into bond to their co-cestuis que trust in the deed, in the penalty of 5000 dollars, with condition to pay them a rateable proportion of the trust fund, in case they should afterwards be compelled to pay any thing as sureties for Machir, as provided by that deed.
    After the decree in the above mentioned suit of Carthrae against his co-cestuis que trust had been pronounced, the present suit was commenced ; which was a bill exhibited by The Cumberland Bank, in the superior court of chancery of Winchester, against Carthrae and his assignee Williamson, Hopewell and the administrator of Dailey (the in-dorsers for Machir at The Farmers Bank), E. M’Carty, Armstong and P. M’Carty (his indorsers at The Cumberland Bank), and all the other cestuis que trust named and provided for in the deed of trust; setting forth the provisions of that deed ; the proceedings in Carthrae’s suit, the sale of the trust subject by the marshal under the order of the court, and the decree of *the court dividing the proceeds of the sale, ratean bly, between Carthrae and the indorsers Hopewell and Dailey ; the note of Machir for 6000 dollars, indorsed by E- M’Carty, Armstrong, and P. M’Carty, in succession, to The Cumberland Bank, the failure of Machir to pay the same at maturity, the regular protest thereof for nonpaymemt, the suit which had been brought thereon against Machir, the maker, the recovery of judgment against him, and his utter insolvency ; not alleging, however, that notice of the dishonour of the note had been given to the indorsers, or that the bank had so dealt with it as to hold the indorsers liable for the debt ; nor mentioning the suits which had been brought against the indorsers, and the nonsuits which had been suffered therein ; but claiming, upon the strength of the deed of trust, that The Cumberland Bank had a right to participate in the trust subject, for satisfaction pro rato of the debt due upon the note it held ; and praying a decree for a rateable proportion of the trust fund.
    Hopewell and the administrator of Dailey, in their answers, said, thatE. M’Carty, Armstrong' and P. M’Carty had been discharged from all liability as indorsers for Machir of the note held by The Cumberland Bank ; and the deed of trust having only provided for the indemnification of those indorsers from loss by reason of their indorsement of the note, and the indorsers having sustained no loss, and being exempt from liability to any, they denied that the bank had any right to participate in the trust fund.
    It is unneccessary to state the answers of the other defendants.
    The judgments of nonsuit in the three actions of The Cumberland Bank against E. M’Carty, Armstrong and P. M’Carty, were exhibited with the answers.
    Chancellor Browne, declaring that The Cumberland Bank was entitled to participate in the proceeds 'of the trust subject mortgaged by the deed of,trust of July *1820, which by the decree in Carthrae’s suit had been divided between his assignee Williamson, and Hopewell and Dai-ley, ordered, that a commissioner should apportion the* whole proceeds of the trust subject pro rata among The Cumberland Bank, Williamson, and Hopewell and Dai-ley. And a further sum of 315 dollars belonging to the trust fund having been paid into court since the decree in Carthrae’s suit, the court ordered that sum to be paid to The Cumberland Bank, in part of the sum to which, upon the principle of the decree, it was entitled.
    The apportionment was accordingly made and reported by the commissioner; shewing that, under the decree in Carthrae’s suit, Williamson, the assignee of Carthrae, had received 420 dollars more than Carthrae’s pro rata share of the fund, and Hopewell and Dailey 1625 dollars more than their pro rata share; which sums were to be paid to The Cumberland Bank to make up the rateable proportion to which it was entitled.
    Upon the final hearing before chancellor Tucker, he pronounced the following opinion and decree — “The court concurs in the opinion of chancellor Browne, that The Cumberland Bank has title to participate in the fund in question. The court is of opinion, that a deed of trust to indemnify a surety is, in equity, looked upon as a security for the debt, and not as a mere personal favour to the surety ; and hence Machir’s deed of trust of July 1820, for the purpose (among other things) of securing the M’Cartys and Armstrong against their indorsements, enured at once to the benefit of The Cumberland Bank, and the interest thus acquired existed, even though the indorsers became discharged for want of notice of protest, or otherwise, if such was the fact.” Therefore, the court, approving the commissioner’s apportionment of the fund, decreed that Hopewell and Dailey’s administrator should pay The Cumberland Bank 1625 dollars with interest &c. and that Williamson, the *assignee of Carthrae, should pay the bank 420 dollars with interest &c. and that the bank might take out any proper executions for the same.
    From this decree, Hopewell and Dailey’s administrator appealed to this.court.
    Johnson and Eeigh, for the appellants,
    referred to Machir’s deed of trust of July 1820, and shewed that, both in its terms and manifest intent, it merely provided an indemnification for the indorsers of the note for his accommodation at The Cumberland Bank, in case (only in case) they should sustain-loss by reason of their indorsement. They had sustained no such loss, but, on the contrary, had been discharged (it was immaterial how) from all liability. The bank, therefore, could have no claim to participate in the trust subject, unless the principle declared in the chancellor’s decree was correct; namely, that the deed of trust was not merely an indemnification for the indorsers, to the benefit of which the bank, if it had so dealt with the note as to hold them bound, would have been entitled to be subrogated, but it enured to the bank, directly and immediately, as a security for the debt due on Machir’s note; so that, though the indorsers were discharged from liability by the laches of the bank or otherwise, and so never became bound to the bank for the debt, nor ever sustained any loss whatever by reason of their indorsement, the bank was yet entitled, in equity, to the benefit of the deed of trust.
    They said, the right or a creditor to claim the benefit of counter or collateral security obtained by a surety from the principal debtor, was founded in plain equity, and was not to be controverted ; yet the authority to the precise point was very scant. They had found none but the obiter dictum of sir W. Grant in Wright v. Morley, 11 Ves. 22, and the short note of the case of Maure v. Harrison, 1 Eq. Ca. Abr. 93, pi. 5, and the researches *of judge Carr, who stated the proposition, arguendo, in M’Mahon v. Fawcett, 5 Rand. 529, and of judge Story, who also stated it in his treatise on Equity, § 502, p. 481, had, in truth, discovered no other, as would be seen on an examination of their references. They apprehended, that the principle qn which this equity of a creditor in such a case was founded, .was quite obvious ; but they were not aware, that it had been any where judicially explained.
    Eet the doctrine as stated in Maure v. Harrison, be taken according to the letter, without regard to the principle on which it was founded — “A bond creditor shall, in this court, have the benefit of all counter bonds or collateral security given by the principal to the surety ; as if A. owes B. money, and he and C. are bound for it, and A. gives C. a mortgage or bond to indemnify him, B. shall have the benefit of it to recover his debt.” The proposition, as they understood it, was, that where there was a surety for a principal debtor, bound for or with him; absolutely bound and continuing so bound, if the surety should obtain counter or collateral security for his indemnification from the principal debtor, equity, in such case, would give the creditor the benefit of such counter or collateral security. But put the case, that one not actually bound for or with a debtor as surety for the debt, but only apprehending1 that he might become so bound, should obtain a mortgage from the debtor to indemnify him from the apprehended danger, but, in the event, should never become bound as surety for the debt; could equity, in such case, give the creditor the benefit of such a counter security, which, as to the party who obtained it, was certainly a mere nullity ? This, they said, was, in effect, the present case. For the indorsers of the note for Machir’s accommodation at The Cumberland Bank, did not contract the obligation of sureties for the debt to the bank : their undertaking was collateral, conditional, ex-ecutory — that if *the bank should use due diligence to get payment of the note from the maker at its maturity, and failing with such diligence to get payment from him, should give the indorsers due notice of dishonour ; then they would pay the debt; then they would stand absolutely bound as sureties for it to the bank; else, they should not be bound for it at all. Such being the contract of the indorsers with the bank, they obtained a mortgage from the maker, to avail them for their indemnification, in case the bank had so dealt with the note as to hold them eventually liable for its contents. It was, on their part, a mere measure of precaution. The bank had neglected to take the proper measures to hold them bound : they never became sureties for the debt : they were discharged from the liability against which they were indemnified, and never incurred any loss. The mortgage, therefore, so far as the indorsers were concerned, and to the utmost extent of the purpose for which it was designed, was no longer a subsisting security. Equity could not give it a force and effect beyond its purpose, for the benefit of the creditor by whose own neglect its purpose had been annulled, when the parties for whose benefit it was designed could claim nothing under it for themselves. If, indeed, there had been a special agreement between the bank, Machir the maker, and the indors-ers, that Machir should give the bank a security for the debt in the form of an indemnification to the indorsers, that might have given the bank a distinct ground of equity to stand on ; though it would still have been very doubtful, whether such a ground was tenable, as against the other cestuis que trust provided for by the deed of trust, if they were no parties to such special agreement. But there was nothing of the kind in the case.
    However, they said, the court must ascertain the reason, the principle, on which this equity of a creditor to claim the benefit of counter securities given by the principal debtor to the surety was founded, in order to ^ascertain whether The Cumberland Bank had just claim to the relief which the decree gave it. They insisted, that it was, and could be, no other than the equitable principle of subrogation. The decree declared a distinct principle of equity : that securities given by a principal debtor to his sureties for their indemnification, enured, directly and immediately, to the benefit of the creditor as a security for the debt ; and therefore, Machir’s deed of trust enured at once to the benefit of the bank, and the interest it thus acquired existed, even though the indorsers were discharged from liability by the laches of the bank.
    They said, this principle declared in the decree was peculiar, and, they thought, wholly new. They could find no colour of authority for it, or, at most, only colour of authority. It might be thought, perhaps, that the reasoning of judge CarrinM’Mahon v. Fawcett, 5 Rand. 529, 533, gave countenance to it : but an examination of the judge’s opinion in that case would shew, that he did not intend to affirm any such principle ; that he had no thought of ‘any principle distinct from the equitable principle of sub-rogation, which it was his purpose to explain, and to shew its application to the case before him. If any vague expressions escaped him, that seemed to indicate the principle declared by the chancellor in this case, such expressions, on a point which it was nowise necessary he should decide, ought not to be made the foundation of a new and distinct principle of equity. Certainly, no such principle was indicated in the few authorities that had been cited for the equitable claim of a creditor to the benefit of counter securities given by the principal debtor to the surety. The note of the case of Maure v, Harrison merely affirmed this equity of the creditor, without indicating the reason on which it was founded. But sir W. Grant, in Wright v. Morley, plainly considered it as belonging to the doctrine of subrogation : he said, “ I conceive, *that as the creditor is entitled to the benefit of all the securities the principal debtor has given to his surety, the surety has full as good an equity to the benefit of all securities the principal gives to the creditor thus placing the equity of the surety, in the one case, and that of the creditor, in the other, on the same ground : and then he proceeded to shew, that the equity of the surety was founded on the principle of subrogation ; that “ the surety had precisely the same right that the creditor had, and was to stand in his place that he “ had no direct contract or engagement ” — “ but only a claim through the medium of the creditor, and was entitled only to stand in his place.”
    They asked the court to look to the consequences of the principle declared by the chancellor. For instance, if the indorsers, in consideration of value paid them by their co-cestuis que trust, and of another security given them by Machir for their indemnification. had actually released their rights under the deed, and then the bank had by its own laches discharged the indorsers from liability to it, the bank, upon the principle of this decree, would still have had a right to the benefit not only of the second security, but of this mortgage also, though the bank had contracted for no security but the engagement of the indorsers, and though the bank had released the indorsers from their liability, and the indorsers had released this mortgage. For, if this deed enured, directly and immediately, as a security to the bank, the indorsers’ release of it could not have divested the rights of the bank under it; and the bank’s release of the indorsers from personal liability would have left their rights under the deed unimpaired. A nd if the bank having discharged the indorsers from their liability, had neglected to sue Machir upon the note till the statute of limitations had barred their action; still, supposing the bank entitled to claim under the mortgage directly as a mortgagee, it might, at any time within twenty years, come into a court of equity to foreclose.
    *Then, considering The Cumberland Bank as claiming participation in the trust subject mortgaged by the deed of trust for the benefit of Machir’s sureties and in-dorsers therein mentioned, on the equitable principle of subrogation, they said, it was clear that the bank could not be entitled to such relief. A creditor holding the obligation of principal debtor and surety, and having existing right and remedy against both, was entitled, in equity, to be subro-gated to the benefit of all counter securities given by • the principal to the surety, of which the surety could avail himself for his indemnification ; to be subrogated, namely, to the rights and remedies of the surety, who was answerable to the creditor, against the principal, who was answerable not only to him but to the surety also in case he should be charged. In such a .case, subrogation only avoided circuity of action. But subro-gation could only have place, when the creditor had right or remedy against the surety, for which he could be subrogated to him, and the surety had right or remedy against the principal, to which the creditor could be subrogated. The Cumberland Bank had no right or remedy against the indorsers; and the indorsers, consequently, had no right to participate in the trust fund. Having suffered no loss, and being relieved from all danger of loss, they could claim no indem-n ification. There were no rights or remedies belonging to either party on which subrogation could operate. It was true that subro-gation was not the result of express contract between the parties, but of equity acting upon their relative rights ; yet the rights on which equity so acted, must be rights resulting from contract.
    Few as the authorities were upon the precise question of subrogation presented in this case, the adjudications on the principle of subrogation, in analogous cases, were very numerous. And, they said, it would be found, that no one could be subro-gated to another *who had himself no right or remedy, and against whom the party seeking subrogation had not and never had any right or remedies: right or remedy actually subsisting : or right or remedy, which, though extinguished at law, was yet subsisting by intendment of equity ; as if one bound for a debt with or for another who ought to pay it, should pay the debt, equity regarded the rights and remedies of the creditor ag-ainst the principal debtor as still subsisting for the benefit of the surety ; for there, the creditor once had right and remedy against the principal debtor, and though these were extinguished at law by the surety’s payment of the debt, yet, in the view of equity, he extinguished them only for himself, and for his benefit they should be reg-arded as still subsisting. By the civil law, the surety, in such cases, had a right to demand of the creditor an actual cession of all his actions against the principal ; and the equitable doctrine of subrogation is founded on the same principal, though moulded in a different form. They cited and examined West v. Belches, 5 Munf. 187 ; Hathcher’s adm’r v. Hatcher’s ex’or, 1 Rand. S3; Tompkins v. Mitchell, 2 Rand. 428; M’Mahon v. Fawcett, Id. 514; Enders v. Bruñe, 4 Rand. 438; Wright v. Morley, 11 Ves. 12, 22; Parsons v. Briddick, 2 Vern. 608 ; Eppes v. Randolph, 2 Call 238 ; Tinsley v. Anderson, 3 Call 329 ; Kinney’s ex’or v. Harvey, 2 Eeigh 70 ; Ex parte Rushworth, 10 Ves. 414; Robinson v. Wilson, 2 Madd. C. R. 434; Lidderdale v. Robinson, 12 Wheat. S94; Cheeseborough v. Millard, 1 Johns. Ch. Rep. 409.
    The cause was argued by Stanard for the appellees, with great earnestness and with his usual ability; but the reporter, having opened the case for the appellant, was compelled to be absent during mr. S.’s argument, and no note of it was preserved, that would enable him to do justice to it, or even to state the grounds on which he endeav-oured to maintain the correctness of the ¿gcree.
    
      
      He decided the cause in the court of chancery.
    
    
      
       Subrogation — Rights of Indorsers of Negotiable Note — Effect Where Indorsers Are Not Damnified,— The principal case is cited in Hauser v. King, 76 Va. 734 ; Barton v. Brent, 87 Va. 389, 13 S. E. Rep. 29.
      It was said in Hauser v. King, 76 Va. 735. that the whole opinion of Judge Parker in the principal case proceeds on the implied concession, that if the liability of the endorsers had been fixed and they had not been discharged, the indemnity provided by the deed would have enured to the benefit of the bank.
      Same — Liability of Surety Contingent upon Conditions Not Common to Co-surety. — in Hampton v. Phipps, 108 U. S. 260. 2 Snp. Ct. Rep. 625, the court said: “There may be, indeed, cases in which it would not be inequitable for the debtor himself to make specific pledges of his own property, limited to the personal indemnity of a single surety, without benefit of participation or subrogation : as, when the liability of the surety was contingent upon conditions not common to his co-sureties, and wliicfi may never become absolute. Hopewell v. Bank of Cumberland, 10 Leigh 206.”
      Same — Creditor—Rights of Surety. — The creditor may be subrogated to the surety’s Indemnity. To this point the principal case is cited in Moore v. Johnson, 34 W. Va. 678, 12 S. E. Rep. 920; washington, O. & W. R. R. Co. v. Cazenove, 83 Va. 744, 3 S. E. Rep. 433.
      The principal case is followed in Bank of Virginia v. Boisseau, 12 Leigh 387. See monographic note on “Subrogation” appended to Janney v. Stephen, 2 Pat. & H. 11, and monographic note on “Bills, Notes and Checks" appended to Archer v. Ward, 9 Gratt. 622.
    
   *PARKER, J.

This case, although very elaborately argued and with great ability, seems to me to lie within a narrow compass.

There can be no question of the right of a creditor to be substituted to any counter bonds or other securities given by the principal debtor to those bound with him as his sureties. The only case I have met with directly deciding that principle is'that of Maure v. Harrison. The same principle, however, is asserted in several other cases, as one perfectly well established, and is referred to by the elementary writers as not at all questionable. The case of Wright v. Morley was one of a surety seeking to avail himself of a specific fund assigned by the principal debtor for the payment of an annuity, and sir W. Grant said “ that as the creditor is entitled to the benefits of all the securities the principal debtor has given to his sureties, the surety has full as good an equity to the benefit of all the securities the principal gives to the creditor;” thus reasoning from the first proposition, as a postulate requiring no support from authority. Nor has the doctrine been denied in the argument of the case at bar; it is conceded, that if a surety is bound for the debt, and is indemnified by the principal debtor, the creditor may pursue the indemnity, in exoneration of the liability of the surety. And this arises not from any notion of mutual contract between the parties, that in providing for the surety, the creditor shall be equally provided for, but from a principle of natural equity independent of contract; namely, that to prevent the surety from being first harassed for the debt or liability, and then turning him round to seek redress from the collateral security given by the principal, a court of equity will authorize, and even encourage, the creditor to claim through the medium of the surety, all the rights he has thus acquired, to be exercised for his benefit, and in discharge of his obligations. The claim of the creditor, therefore, is as much founded *on the well known doctrine of substitution, as the claim of the surety to stand in the place of the creditor who has received collateral security from the debtor; and, in my opinion, it has no other foundation. For when the principal debtor conveys property to his surety, not specifically bound to the creditor, he has no intention of giving any lien to the creditor, or to pledge the property to him for the debt; and as he has a right to dispose of his property' as he pleases, provided he commits no fraud, the court will not construe the instrument giving the lien beyond the intent; although it will, to effect the exoneration of innocent sureties, permit their substitution to the creditor’s rights, or his substitution to theirs. By the civil law, this principle of natural justice was carried into effect by an actual cession of the action or debt ; and this serves to mark the extent and nature of this doctrine, which we have evidently derived from that source. I cannot, therefore, agree that the deed of July 1820, to secure the M’Cartys and Armstrong against their in-dorsements, enured at once to The Cumberland Bank, as if it had been specially named as one of the cestuis que trust in the conveyance ; and that the interest thus acquired existed even if the indorsers became discharged for want of notice of protest or otherwise. The obligation of Machir to the bank was not increased, or intended to be increased, by this transaction considered in itself ; nor can it be construed into any new promise or acknowledgment of indebtedness on the part of the indorsers, supera dded to the liability they had already incurred by their indorsement. The whole object of Machir was to secure his indorsers against their contingent liability, by giving them a specific lien on property, whilst they remained at full liberty to contest the right of the creditor to hold them responsible upon their indorsements. Considering the transaction in the light of a contract, it had this effect and no more ; and if the bank has any ’;!'claim, it must be derived through the sureties. on the principle of substitution.

What then was the claim which the sureties had under the deed of July 1820 ? They had entered into a conditional engagement for Machir, which might bind them absolutely, in certain contingencies. If the paper they indorsed was common law paper, their undertaking was to pay after due diligence used by the creditor to obtain payment from the obligor, and a return of nulla bona, unless sufficient excuse was shewn for not pursuing the debtor: if the i>aper is treated as mercantile paper, (as I think it ought to be) their engagement was, that it should be duly honoured; and if not, that they, the indors-ers, would on the default of the drawer or maker, and due notice given to them of such default, pay the amount. This was the extent and limit of their implied contract; and when the deed of July 1820 was made, it is not shewn that such contract had become an absolute and unconditional one. That deed merely recites the fact that the M’Cartys and Armstrong had become in-dorsers for Machir on a note for 6000 dollars in The Cumberland Bank, upon which suit had been brought against Machir, and that he was willing to secure them against all loss or damage in consequence of thus becoming his indorsers. It contains no intimation, in any part of it, that the indorsers were fixed for the debt, or that the bank had taken the proper steps to make then liable. If the deed, however, had been made for their indemnification only, and there had been no other cestuis que trust, it is very possible, that opposition to the claim of the creditor might be ineffectual; for the M’Car-tys and Armstrong would have no interest to make it, and the principal debtor could scarcely object, in a court of equity, to the application of any portion of his property in discharge of a just debt. On that point, it is not necessary to give an opinion ; for here, the deed was made for the indemnification of other sureties of Machir, who have been made responsible *for more than the whole trust subject has been sold for ; and they, I think, have a right to raise the question of the title of other sureties to participate in the fund. The deed was unquestionably made for the benefit of all the sureties, and no one of them was to have priority over the other. It was made to protect them against loss or damage incurred or threatened, arising out of liability ; audit was the evident intention of the grantor, that all should be completely secured ; and, as a consequence, that if some were discharged from their obligations or were never bound, the benefit designed should enure to the rest, to the full extent of their engagements for him. This would be quite plain if the creditor had not interposed between them ; and if he claims by substitution, and his right is subordinate to that of the sureties and derived through them (as I think it is) he can stand in no better situation than if a surety were applying to the court for protection against loss or danger. In such case, the other sureties, being directly interested in throwing the burden off the fund, for their own complete exoneration, would have a right to require the applicant to make out a case of liability for the principal debtor, bringing him within the terms and intention of the deed of trust. The bill in this case does not charge, that the M’Cartys and Armstrong were ever liable for the debt. It does not even charge, that a demand had ever been made upon them for it. It makes, indeed, the proceedings in Carthrae’s suit a part of the record in this case ; and in their answers to Carthrae’s bill, the M’Cartys and Armstrong do state that a suit had been brought against them ; but they also allege, that they are advised the bank cannot recover against them in any of the courts of this state, because it is a corporation created in another state, and in consequence of the great indulgence extended to Machir by the bank; yet they are unwilling to relinquish any right under the deed of trust until they are finally exonerated. Carthrae also alleges that *the M’Cartys and Armstrong; are released ; and shortly after their answers were filed, the bank suffered non-suits in the actions it had brought against them. Suppose, then, the M’Cartys and Armstrong were plaintiffs asking for participation in this fund, and stating all the facts which appear in the bill filed by the bank, and in their own answers to Carthrae’s bill, together with the additional fact that in May 1823, three years before the commencement of their suit, the bank had abandoned its claim against them ; and the other sureties had resisted that prayer of their bill: would the court have been justified in taking away from such other sureties, a portion of the fund already insufficient to indemnify them for actual losses sustained, and in decreeing its payment to the M’Cartys and Armstrong, or impounding it for their benefit? X think not ; and, therefore, I think the decree is erroneous in directing the payment to a plaintiff standing in their place. It is the more objectionable, because, in my opinion, the proceeding in the cause, as well as the absence of any proof, or even of any allegation, that the steps necessary to charge the indorsers had been taken by the bank, authorize us to conclude, that they never were liable for this debt.

It is not necessary to notice, particularly, the numerous cases cited, illustrative of the doctrine of subrogation, since all of them are cases of rights and remedies actually existing ; and the expressions sometimes used by the judges to explain the right of a creditor or surety to resort to a lien, as that “it is the property of the principal debtor pledged for the debt ” (though not to the creditor or surety), must be taken in reference to the subject matter under discussion, and to the facts appearing in the case. Thus considered, there is nothing in the case of M’Ma-hon v. Fawcett, or in any other referred to, which is inconsistent with this opinion. No more is meant, than that if the property is pledged to '^either the creditor or the surety, though not to the person seeking to charge it, it may be reached by substitution in a court of equity, without regard to the intention of the contracting parties. But still the party who seeks to be subrogated, must shew that the person, to whom the property is pledged or any other counter security is given, has or would have had a right, in the contemplation of a court of equity, to claim the benefit of the indemnification, by being one liable for the debt or obligation, or entitled to charge the fund pledged ; and that the plaintiff has a subsisting equity to enforce the lien, or the counter security, in the same manner as if there were an actual cession of the action.

The result of this view of the case is, that the decree must be reversed, and the bill dismissed.

CABEEE, J.

Concurring in the general views expressed by judge Parker, I deem• it necessary to say a word only. The Cumberland Bank is no party to the deed, the benefit of which it now seeks. The property is not conveyed to the bank, nor for its benefit. The declared object of the deed is to secure the indorsers from all or any loss or damage which they or either of them may sustain in consequence of their indorsement. There is no provision for effecting this indemnification by any payment directly to the bank, which might render a resort to the indorsers unnecessary ; for the deed does not purport to give the bank a right, under any circumstances whatever, to call for a sale of the property, or an application of the proceeds. The deed prescribes a different mode for effecting its object, the indemnification of the indorsers. The indorsers are to be “called upon,” or the amount of the note “demanded from them, as indorsers, in consequence of the failure of Machir” to pay the same. They are to request the sale of the property, and the proceeds of the sale are directed to be paid, directly, to them. If the *bank, then, is to be let in to any benefit from this deed, it cannot be on the ground of any contract between the grantor and the bank, or on the ground of any direction or intention, express or implied, on the part of the grantor, in its favour : it can only be on the well known principle of subrogation ; the right of a creditor to stand in the place of the surety. But this right must be unavailing to the bank, in this case, if, in fact, the indorsers themselves have not now, and never had, any right to call for the application of these funds. It is true that the indorsers incurred a contingent liability, by the mere act of indorsement ; a liability depending on the condition that the note should be duly proceeded with, that Machir should fail to pay it at maturity, that the note should be protested, and that due notice thereof should be given to the indorsers. But if this condition was not complied with, the indorsers were as much discharged from liability, as if they never had indorsed. How stands the fact in this case? The bill filed •by the bank does not allege that any notice was given to the indorsers ; and there is no proof of the fact. The other defendants in the cause were deeply interested in the question, and had a right to demand proof of notice to the indorsers (so as to fix their liability) before the indorsers, or those claiming under them, should be allowed to participate in the fund. Notice not being proved, we must regard it as not having been given. The indorsers, therefore, never were liable for the payment of this note; and, consequently, never had a right to call for the application of funds to its payment. And if they never had such right, I cannot perceive how the bank, claiming only through them, can have such right.

I am of opinion that the decree be reversed and the bill dismissed.

BROOKE, J-, concurred.

Decree reversed, and bill dismissed.  