
    The Assets Realization Company v. American Bonding Company of Baltimore et al.
    
      Co-suretyship does not exist—Where sureties are bound to same principal on separate instruments—Each bond limiting liability proportionately to total loss by obligee—Collateral given to indemnify one surety—Does not inure to benefit of all, when— Distribution of assets among respective sureties—Law of surety-ship and assignment.
    
    1. Where several surety companies are-bound by separate instruments on account of the same principal, and each company, by its bond, limits its liability, in the event of default on the part of the principal, to such proportion of the total loss sustained by the obligee as the penalty named in its bond bears to the total amount of the bonds furnished by the principal to the obligee, the suretyship of each company is a separate and distinct transaction and the relation of co-suretyship among them does not arise, nor does the right of contribution exist.
    2. Where, in such case, collateral or securities are placed by the principal in the hands of one of the companies to indemnify it against any loss it might incur by reason of its obligation on its bond, none of the other companies, in the event of the default •of the principal, is entitled to any part of such collateral or securities to indemnify it against a loss incurred on account of its bond.
    
      3. The principal, indebted at the time to the -obligee on the obligation for which the bonds were required, made an assignment for the benefit of its creditors, and the claim of the obligee against the principal was allowed by the assignee; the several surety companies paid to the obligee the amount of this claim, each company paying the proportionate part of the indebtedness as provided in its bond, and each company taking an assignment from the obligee of its proper fractional share of the claim of the obligee against the principal and its assignee; subsequently a company, other than the surety companies, purchased all the assets, except cash, of the assignor in the hands of the assignee, and agreed to pay the latter an amount which, with the cash in its hands, would enable it, the assignee, to pay a dividend of fifty per cent, on the face amount of all claims of creditors allowed, which agreement, on the part of the purchaser, was approved by the court of insolvency; prior to the assignment of the principal, it had placed in the hands of two of the surety companies separate collateral or securities to indemnify them.
    
      Held-: That the purchaser of the assets of the principal must pay an amount sufficient for a dividend of fifty per cent, on the face amount of the 'claim of the obligee against the principal, as allowed, without any reduction on account of the collateral held by the two secured companies, and that the purchaser of the assets, under its contract of purchase, is entitled to any excess or surplus of collateral remaining after the two secured companies are indemnified thereby.
    (No. 13012
    Decided June 17, 1913.)
    Error to the Circuit Court of Cuyahoga county.
    The American Bonding Company of Baltimore, The United States Fidelity & Guaranty Company and the Fidelity & Casualty Company brought suit in the common pleas court of Cuyahoga county against The Fidelity & Deposit Company of Maryland, the National Surety Company, the Aetna Indemnity Company, The Metropolitan Surety Company, the United Surety Company, the city of Cleveland, The Euclid Avenue- Trust Company, The Cleveland Trust Company and The Assets Realization Company. Plaintiffs, in their petition, asked, among other things, judgment against The Cleveland Trust Company, the assignee of The Euclid Avenue Trust Company, for full dividends upon the proportions of the face value of a certain claim of the city of Cleveland against The Euclid Avenue Trust Company, which proportions were assigned to plaintiffs, and further asked that certain securities or notes and mortgages held by the National Surety Company and The Fidelity & Deposit Company of Maryland be ordered converted into money in such manner as the court might direct, and, after paying costs and expenses,' the same be apportioned among the various bonding or surety companies, plaintiffs and defendants in said action.
    All the defendants, except the city of Cleveland and The Euclid Avenue Trust Company, filed answers and cross-petitions and the cause was submitted to the common pleas court upon the petition of plaintiffs, the various answers and cross-petitions, the replies and the evidence, and the common pleas court rendered judgment practically in accord with the prayer of the plaintiffs and of the cross-petition of the bonding companies other than The Fidelity & Deposit Company of Maryland and the National Surety Company.
    An appeal to the circuit court was taken from the judgment of the common pleas court by the two companies last named, and the circuit court granted the entire relief sought by plantiffs and stated its conclusions of law and its conclusions of fact.
    To understand clearly the relations of the parties, the questions involved and the matters in controversy, it is necessary to recite, at length, the facts found by the circuit court.
    
      This litigation grew out of the failure of The Euclid Avenue Trust Company, a banking institution of the city of Cleveland, which was a depositary of certain funds of that city. It was appointed and designated a depositary of a part of the.public money of the city for a term of three years, beginning July 1, 1907, and ending June 30, 1910, the amount of money on deposit to be at. no time in excess of the sum of $250,000. This appointment was made under the authority of an ordinance of the city creating a Depositary Commission.
    Among the provisions of this ordinance was one which required a bank awarded the use of the public money to tender a good and sufficient bond issued by a surety company, or to furnish good and sufficient security in a sum not less than twenty per cent, in excess of the maximum amount at any time to be deposited in said bank, the maximum amount to be deposited with the depositary in this case being $250,000. The amount of bond or security to be furnished was $300,000. '
    The ordinance further provided that the undertaking should be conditioned for the receipt, safekeeping and payment over of all moneys which might come into the custody of the bank under and by virtue of the ordinance, together with interest at the rate specified in the proposal of the bank, and further conditioned for the faithful performance by the bank or depositary of all duties and obligations imposed by the laws of the state of Ohio.
    The Euclid Avenue Trust Company procured bonds from eight surety companies, the names of the companies and the penalties of their respective bonds being as follows:
    The National Surety Co................$20,000
    The United States Fidelity & Guaranty Co. 35,000
    The American Bonding Co............. 15,000
    The Aetna Indemnity Co............... 50,000
    The Fidelity & Deposit Co.............. 25,000
    The Fidelity & Casualty Co............ 50,000
    The Metropolitan Surety Co........... 20,000
    The United Surety Co................. 10,000
    Aggregating .....................$225,000
    As stated by the circuit court, all these bonds were identical in form, except as to the amounts of the penalties of the bonds, the names of the bonding companies and the dates of the bonds, and. all were executed and placed in the hands of the Depositary Commission of the city of Cleveland at various dates prior to June 29, 1907, on which date all were approved, the form of these bonds, except as to the names of the surety companies, and the amounts, being as follows:
    “American Bonding Company of Baltimore,, Home Office, Baltimore, Md. Know All Men by! These Presents that we, The Euclid Avenue Trust Company, of the City of Cleveland, County of: Cuyahoga, and State of Ohio (hereafter called the Principal) as Principal, and the American Bonding Company of Baltimore, a corporation of the state of Maryland (hereinafter called the Surety) as Surety, are held and firmly bound unto the City, of Cleveland, of the County of Cuyahoga and State of .Ohio, hereinafter called the Obligee, ini the sum of Fifteen Thousand ($15,000) Dollars, for the payment whereof said Principal and said Surety bind themselves, their successors, assigns/ executors, administrators and heirs, firmly by these presents. The condition of the above obligation is such, that whereas, on the 7th day of November, 1906, the Depositary Commission of the City of Cleveland, under and by virtue of the provisions of the laws of the state of Ohio, and of certain ordinance known as Ordinance No. 44,229, passed by the Council of the City of Cleveland on the 2nd day of May, 1904, and as amended by Ordinance No. 3,084, passed by the Council of the city of Cleveland, February 6th, 1906, did award to the Principal above named the custody of a proportionate amount of the public money of the city of Cleveland in the hands of the treasurer thereof, to-wit, fifty eighteeen-hundredths (50/1800), said amount at no time to be in excess of Two Hundred and Fifty Thousand Dollars ($250,000) for a period of three years from the 1st day of July, 1907, to and including the 30th day of June, 1910; said award and said deposit to be subject to all the provisions and requirements of law, as the same are set forth in the laws of the state of Ohio and said ordinance. Now, therefore, if the said Principal shall well and truly receipt for all moneys deposited by the treasurer of the city of Cleveland, with it hereunder, and shall safely keep and pay over the same, as provided by the laws of the state ' of Ohio, and by the terms of said ordinance No. ■44,229, and as amended by ordinance No. 3,084, passed by the council of the city of Cleveland, February 6th, 1906, and shall well and. truly pay all sums deposited, and interest thereon at four and one-twentieth per cent. (4 1/20 per cent.), as specified in its proposal upon which the award herein referred to is made, and shall further faithfully perform all the duties and obligations imposed by the laws of the state of Ohio and said ordinance upon said Principal as depositary of said public money, then this obligation to be void; otherwise to remain in full force and virtue, Provided, however, and upon the following express conditions: First, That in the event of default on the part of the Principal, herein, the Surety shall only be liable hereunder for such proportion of the total loss thereby sustained by the Obligee as the penalty of this bond shall bear to the total amount of bonds, namely, Three Hundred Thousand Dollars ($300,000), which said Principal shall or should furnish in accordance with the provisions of the depositary ordinance of the city of Cleveland; and provided that the Surety shall not, in any event, be liable for an amount in excess of fifteen thousand dollars. Second, That in the event of any default on the part of the Principal, written notice thereof, with a verified statement of the facts showing such default, and the date thereof, shall within ten (10) days after its discovery by the Depositary Commission of the City of Cleveland, be delivered to the .'Surety at the address given above. Third, that the Suret}?- shall not be liable for any deposits made by the treasurer of the City of Cleveland with the Principal herein, after the discovery of any. such default is made known to said treasurer. Signed and' sealed this twenty-hirst day of February, A. D. 1907.
    “The Euclid Avenue Trust Company,
    “By W. H. Crafts, Pres.
    “(Seal) Attest: R. S. Thomas, Sec’y & Treas.
    “American Bonding Company of Baltimore, “By H. H. Stryker, 4th Vice President. “Attest: R. C. Carson, Secretary.”
    On the day. that these bonds were approved, The Euclid Avenue Trust Company entered into a contract with the city, of which contract the surety companies executing the bonds, excepting the Fidelity & Deposit Company, had no notice or knowledge, which contract is as follows:
    “Whereas, The Euclid Avenue Trust Company has been awarded a proportionate part of the public money of the City of Cleveland, in the hands of the treasurer of said city equal to fifty eighteen-hundredths (50/1800) thereof, in no event to exceed the sum of two hundred fifty thousand dollars ($250,000); and Whereas, said The Euclid Avenue' Trust Company is required by law and ordinance to enter into bonds with suitable guaranty, or to make deposit of approved securities with the Depositary Commission of the city of Cleveland in the aggregate sum of not less than three hundred thousand dollars ($300,000), so conditioned as to guarantee and secure the performance of all the things to be done and performed by said The -Euclid A.venue Trust Company as a depositary of the public money of the city of Cleveland; Now, therefore, this agreement witnesseth that- in fulfillment of the obligation above set forth The Euclid Avenue Trust Company has executed and tendered to the city of Cleveland bonds signed, by it and secured by the following surety companies, to-wit:
    “name. AMOUNT.
    National Surety Co...................$20,000
    United Surety Co..................... 10,000
    U. S. Fidelity & Guaranty Co........... 35,000
    American Bonding Co................. 15,000
    Aetna Indemnity Co................... 50,000
    Fidelity & Casualty Co................. 50,000
    Fidelity & Deposit Co. of Maryland .... 25,000
    Metropolitan Surety Co........ 20,000 ■
    “And further, and in addition thereto has this day deposited in the safety deposit box in the vaults of the Cleveland Trust Company the following securities:
    LATEST
    “name. par. QUO. MARKET
    Newburg, O., 4% Water Works Bonds, due April 15, 1926. $43,000 $102.50 $102.50
    Cleveland, O., 5% Street Improvement Bonds, due November 1, 1909. 14,000 102.36 102.36
    Akron, O., 4% Sewer Bonds, due $4,000 Dec. 1, 1908, and ■ $4,000 due Dec. 1, 1909 ............. 8,000 100.25 100.25
    Elyria, O., 4% Water Works Bonds, due 1917............. 10,000 102.00 102.00
    
      “All of which bonds and securities so deposited have been examined and approved by the Depositary Commission of the City of Cleveland and are deposited by the said The Euclid Avenue Trust Company in said safety deposit box, whereto the said The Euclid Avenue Trust Company and the said the Depositary Commission of the City of Cleveland each have keys under and subject to the following conditions and stipulations:
    “1. The securities so deposited by the said The Euclid Avenue Trust Company shall be held to all effects and purposes to guarantee that the said Euclid Avenue Trust Company will well and truly receipt for all moneys deposited by the treasurer of •the city of Cleveland with it under and by virtue of the award made to the said The Euclid Avenue Trust Company on the 7th day of November, 1906, for three years, beginning July 1st, 1907, to and including the 30th day of June, 1910, and that the said The Euclid Avenue Trust Company shall safely keep and pay over the same as provided by the laws of the state of Ohio, and by the terms of ordinance No. 44,229, and as amended by ordinance 3,084, passed by the council of the City of Cleveland February 6th, 1906, and shall well and truly pay all the sums deposited, and interest thereon at the rate of 4.05 per cent., as specified in its proposal upon which the award herein referred to is made and shall further faithfully perform all the duties and obligations imposed by the laws of the state of Ohio and by said ordinances upon the said Euclid Avenue Trust Company as a depositary of said public money.
    
      
      “2. In the event of any default on the part of the said The Euclid Avenue Trust Company in the performance of the things by it to be performed by virtue of the award herein referred to, then the city of Cleveland, acting by and through its depositary commission, shall have the first claim-of any other creditor of the said The Euclid Avenue Trust Company, and the said city of Cleveland, acting by and through its depositary commission, shall have the right to sell and dispose of the securities so deposited, or any securities substituted •therefor, until any such default has been made good to the City of Cleveland.
    “3. The Euclid Avenue Trust Company reserves the right from time to time to withdraw the securities deposited hereunder and substitute in their place other securities of a character and amount acceptable to the Depositary Commission, such substitution being likewise permissible to be ■made by surety bonds at the option of the said The Euclid Avenue Trust Company.
    '■ “4. The city of Cleveland reserves the right at any time to demand and TheiEuclid Avenue Trust Company agrees to supply upon such demand, such •additional security for the deposits to be made under and by virtue of said award as may to the opinion of said Commission be just and reasonable.
    “5. The securities deposited as herein referred to-shall remain deposited in the safety deposit box -and no access shall be had thereto by either party hereto-except in the presence of a representative of the other, party, and the Depositary Commissiofi agrees upon request of The Euclid Avenue Trust Company to. send a representative to be present /to permit the withdrawal of the securities' so deposited for the taking of the coupons, thereirom or to carry out any other order with regard,thereto which has been submitted to and approved by the Depositary Commission. Witness our hands this day of June 29th, A. D. 1907.
    “The Euclid Avenue Trust Company,
    “By R. S. Thomas, Sec’y & Treas.
    “The Depositary Commission,
    “By Tom L. Johnson, Pres.
    
      “C. H. Nau, Sec’y.”
    On the same day—June 29, 1907—in pursuance of the foregoing contract, The Euclid Avenue Trust Company deposited with the Depositary Commission securities of the face-value of $75,000, being the securities mentioned in the contract, and, ■thereupon, the eight surety company bonds, aggregating $225,000, and the collateral contract, with the securities referred to, were approved by the city, and said depositary contract became effective.
    . In the month of July, 1907, under, an arrangement between the city and the depositary, the Elyria water works bonds ($10,000) were withdrawn from the possession of the city- of Cleveland and street improvement bonds of Cleveland, in the same amount, substituted therefor, and there were then with the city $24,000 Cleveland' improvement ■bonds.
    On the 21st day of October, 1907,-.by virtue of the provisions of Section 3 of the contract .of June 29, 1907, between the city and The Euclid: Avenue Trust Company, $22,000 of the Newburg bonds, all the Cleveland improvement bonds ($24,000) and the Akron sewer bonds ($8,000) were withdrawn by the depositary from the possession of the city, and a surety bond in the penal sum of $54,000, executed by The Fidelity & Deposit Company of Maryland, as surety, was given to and accepted by the city, this bond being the same form and in the same language, except as to dates, parties and amounts, as the other surety companies’ bonds approved by the Depositary Commission on June 29, 1907. So that, on the 21st day of October, 1907, the city had as security for the deposit -with the depositary the eight bonds aggregating in amount $225,000, the $54,000 bond of The Fidelity & Deposit Company of Maryland and the remainder of the Newburg bonds ($21,000)—in all $300,000. On said date the securities aggregating $54,000, which had been withdrawn by the depositary, were sold. The amount realized thereon—$54,000—was loaned to a concern known as The Avenue Apartment Company, which loan was secured by a mortgage on the property of this company, executed on said 21st day of October, 1907. This mortgage was on that date deposited with the Fidelity & Deposit Company as collateral security for its bond of $54,000 given to the city, which bond was accepted by the city as a substitute for the securities withdrawn.
    . The circhit court found that this was done pursuant to an arrangement among the city, the depositary, the apartment company and The Fidelity & Deposit Company of Maryland, the surety on the $54,000 bond, and further found that the latter company had collected and held in its possession one year’s interest upon the mortgage in the sum of $3,240.00, and had expended and incurred liabilities in the collection of interest upon the mortgage the sum of $250.00.
    On the 18th day of November, 1907, the National Surety Company, one of the companies whose bonds were accepted on June 29, 1907, demanded and received from the depositary certain promissory notes aggregating $12,975.00, secured by mortgage on real estate. This was done in pursuance of certain stipulations contained in the application which the depositary had made to the National Surety Company, on the basis of which it wrote its bond, which stipulation was in substance that the depositary would at all times indemnify and keep indemnified the National Surety Company and save it harmless from and against all claims, demands, etc.
    The circuit court found that the National Surety Company had expended and incurred liability in the collection of the notes and mortgages in its possession in the sum of $1,200.00.
    Deposits had been made from time to time with the depositary, and on the 8th day of May, 1908, there was due the city from it, in its capacity as city depositary, the sum of $174,361.99, on which day said depositary, The Euclid Avenue Trust Company, made an assignment for the benefit of its creditors to The Cleveland Trust Company.
    On said date the city had in its possession property of the depositary—being the remainder of the Newburg water works bonds—of the face value of $21,000, which were shortly afterwards sold by the city and the proceeds thereof—$21,025.95—applied to. its claim of $174,369.99, leaving- due a balance of .$153,336.04, which, on the 22d day of May, 1909, was allowed by the assignee as a vlaid claim in favor of the city.
    The city, after the assignment of the depositary, demanded of the surety companies payment upon their bonds, and the circuit court found the net amounts paid by each surety company to be as follows: •
    “The National Surety Go...........$10,991.83
    TheTJ. S.-Fidelity & Guaranty Co.. . 19,235.70
    American' Bonding Co............. 8,243.88
    The-'Aetna-Indemnity Co.......... 27,479.58
    ■ The Fidelity & Deposit Co., on its ■ ' $25,000 bond ............... 13,739.77
    The Fidelity & Deposit Co., on its v $54,000 bond ................ 29,677.96
    The Fidelity & Casualty Co........27,479.57
    The Metropolitan Surety Co....... 10,991.83
    The United Surety Co............ 5,495.92
    “Aggregating ..............$153,336.04”
    These payments having been made by the several surety companies, the city assigned separately to each of the companies a pro rata fractional share of its claim against the depositary.
    :...On the 2nd day of May, 1909, plaintiff in error herein, The Assets Realization Company, a corporation organized under the laws of the state of New Jersey, purchased, all the assets and'property, .both- personal and real, except cash, 'in the hands of the. assignee of The Euclid Avenue Trust Company, as of the date of the close of business on the 7th day of April, 1909, and agreed to pay the sum of $200,000 in cash and all the unpaid costs, fees and expenses of the administration of said estate; also all’ expenses and cash disbursements of the assignee and court costs and attorney fees in the closing of the assignment, all to be in such amount as might be fixed by the court having jurisdiction of said assignment in case said company did not agree with the assignee in reference. thereto.
    The Assets Realization Company further agreed to pay to the assignee on demand such additional sum as would be necessary to enable the assignee to pay a dividend of fifty per cent, on .the face amount of all claims of general creditors theretofore presented and allowed.
    On the 11th day of June, 1909, The Cleveland Trust Company, assignee, executed and delivered to The Assets Realization Company a conveyance of all the assets of The Euclid Avenue Trust Company, and in pursuance of the terms of said sale The Assets Realization Company paid the sum of $200,000, and, in addition thereto, the sum of $18,473.91, which, with other funds in the hands of the assignee available for the payment of dividends, amounted to $19,600.00, which, with interest computed to January 1, 1911, amounted to $20,709.98.
    The court of insolvency of Cuyahoga county, in which court the assignment, was pending, ordered the assignee of The Euclid Avenue.Trust Company to pay said sum of $20,709.98 to the several surety companies to apply on dividends which might be found due them upon the determination of the cause, and by said order such payment to the surety companies and the expenses thereof were to be without prejudice to the claims or rights of any of the parties to the cause as the same might be finally determined. .
    The amount ordered to be paid was paid to the surety companies, except the sum of $4,007.59, applicable to the $54,000 bond of The Fidelity & Deposit Company of Maryland. The court of insolvency in April, 1909, ordered a payment of a dividend of twenty per cent, to the general creditors of the assignor, and on the same date made an order finding that certain claims had been presented for allowance and that the same had been allowed, but that the payment was to a certain extent secured, and to cover any liability to said secured creditors, after the exhausting of their collateral, there should be reserved an amount sufficient to pay a like dividend on valid claims to the amount of $98,000. This amount was the amount then estimated by the assignee as the amount of the claim of the city of Cleveland arising upon its deposits with the depositary after deducting the value of the collateral held by the National Surety Company and The Fidelity & Deposit Company of Maryland.
    In July, 1909, ah order for the payment of a dividend of thirty per cent, was made by the court of insolvency to the general creditors, which order did not include the claim of the city of Cleveland or its assigns. The circuit court found that all of the dividends ordered to be paid to the general creditors had been paid by the assignee.
    
      The circuit court found that on the 11th day of June, 1909, the date of the transfer and delivery to The Assets Realization Company of the assets of The Euclid Avenue Trust Company, the face amount of the claim of the city, as allowed by the assignee, was $153,336.04, that a fifty per cent, dividend upon said claim without applying the collateral in the hands of the National Surety Company and The Fidelity & Deposit Company of Maryland in reduction of said claim, amounted to $76,668.02 and that the funds in the hands of the assignee available for the payment of said dividend amounted to $19,600.00, and that the amount necessary to be paid by The Assets Realization Company to The Cleveland Trust ¡Company, as assignee, to enable the assignee to pay the fifty per cent, dividend, amounted to $57,068.02.
    The circuit court found, as its conclusions of law, as follows:
    “1.. There is due from The Assets Realization Company, under the terms of its contract to purchase, to the several surety companies, parties herein, as assignees of the city of Cleveland, in proportion to the amount of their respective bonds, the sum of $57,068.02, with interest from June 11, 1909, which said sum, with interest to January 16, 1911, amounts to $62,489.48, for which said amount, with interest from January 16, 1911, judgment is rendered against The Assets Realization Company in favor of each of the said surety companies, as follows:
    “National Surety Co.................$4,479.55
    U. S. Fidelity & Guaranty Co......... 7,839.12
    
      American Bonding Co................ 3,359.65
    The Aetna Indemnity Co.............11,198.85
    Fidelity & Deposit Co................17,694.15
    Fidelity & Casualty Co...............11,198.85
    John F. Yawger, receiver of The Metropolitan Surety Co................ 4,479.55
    United Surety Co..................... 2,239.76
    “Total ........................$62,489.48
    “2. The court further finds that said eig'ht original surety companies, whose bonds were accepted by said city on June 29, 1907, were and should be held to be co-sureties; and that upon the execution of its $54,000.00 bond, given on or about October 21, 1907, The Fidelity & Deposit Company became and should be held to be a co-surety upon said bond with said eight original bonds. And all the collateral and security of every kind and nature, placed in the hands of or pledged with the National Surety Company and The Fidelity & Deposit Company of Maryland, or either of them, as indemnity for loss which they, or either of them, might suffer by reason of the execution of said bonds, should be and is held by them for the benefit of all said surety companies so found to be co-sureties, and should be collected andi the proceeds thereof distributed among the said surety companies pro rata, in proportion to the amounts of their respective bonds.
    “3. It is ordered and decreed that Frank' M. Chandler, upon his qualifying and giving bond in the sum of $75,000.00 with sureties to the approval of the clerk of this court, be, and hereby is, appointed receiver to take charge of and collect all of the said collateral or the proceeds of said collateral in the hands of the National Surety-Company and The Fidelity & Deposit Company. And the National Surety Company is hereby ordered to turn over to said receiver the proceeds of all collateral collected by it, less the sum of $1,200.00, its charges and expenses, which is hereby allowed, and less the amount hereby ordered to be paid to it, and to turn over all uncollected collateral in its hands. And The Fidelity '& Deposit Company is hereby allowed to retain the money collected by it as interest upon said collateral to apply upon the amount hereby adjudged to it and upon its charges in the sum of $250.00, which is hereby allowed, and is hereby ordered to turn over to said receiver all uncollected collateral held by it as indemnity for its bonds. And the said receiver is hereby ordered to forthwith collect, foreclose, or sell, subject to the approval of this court, all of said uncollected collateral hereby ordered to be turned over to him, and to distribute and pay said moneys so turned over to and to be collected by him as follows: (1) To pay the costs of this action so far as-they have now accrued, including therein the sum of $7,500 to the plaintiff’s counsel for services rendered herein in behalf of all surety companies. (2) To pay all the balance of the said moneys so coming into his hands forthwith to the surety companies, parties herein, distributing the same pro rata according to the amount of their respective bonds.
    
      
      “4. It is ordered and decreed, that the defendant, The Assets Realization Company, at its option, may take any of said uncollected collateral by paying to the receiver the face value thereof, with accumulated interest due thereon.
    “5. It is further ordered and decreed that, in the event that the net amount collected by the receiver applicable to the payment of the surety companies, in accordance with the terms of this decree, together with the amounts paid to the surety companies by The Assets Realization Company and The Cleveland Trust Company, assignee, under the terms of this decree, shall exceed the net amount paid the city of Cleveland by said surety companies, as herein found, ' including interest from the date of payment to the city of Cleveland, that such excess shall be paid to the defendant, The Assets Realization Company.”
    Plaintiff in error, The Assets Realization Company, in its petition in error in this court, is asking that the judgment of the circuit court be reversed. The Fidelity & Deposit Company of Maryland and the National Surety Company, in their cross-petitions in error, are asking that the judgment of the circuit court, against them, be reversed.
    
      Messrs. Blandin, Rice & Ginn, for plaintiff in error.
    1. Under their contracts the various bonding companies, defendants in error herein, are not co-sureties, and therefore the rules of equity applicable to the relation of co-suretyship should not control the disposition of the collateral deposited with the National Surety Company and The Fidelity & Deposit Company of Maryland.
    We claim this is true, because:
    (a) The liability on each bond was limited by contract, and such liability was not affected by the payment or non-payment of the share of loss covered by any other bond or security. Leggett v. McClelland, 39 Ohio St., 626; 4 Pomeroy on Equity Juris. (3 ed.), Sec. 1418; Stearns on Suretyship, Sec. 280; Coope v. Twynam, 1 Turn. & R., 426; Pendlebury v. Walker, 4 Y. & C. Exch., 424; Moore v. Isley, 2 Dev. & B. Eq. (22 N. Car.), 372: 1 Brandt on Suretyship (3 ed.), Sec. 285; In re Kelly, 9 Irish Ch., 87; American Surety Co. v. Boyle, 65 Ohio St., 493; Robinson v. Boyd, 60 Ohio St., 57; Smith v. Folsom, 80 Ohio St., 219.
    (b) Companies acting as sureties for hire cannot claim equities prevailing between gratuitous sureties. Richards on Insurance Law (3 ed.), Sec. 469; Frost on Guaranty Insurance (2 ed.), Sec. 4; Supreme Council Catholic K. of A. v. Fidelity & Casualty Co., 63 Fed. Rep., 48; Mechanics Sav. Bank & Trust Co. v. Guarantee Co. of N. A., 68 Fed. Rep., 459, 80 Fed. Rep., 766, 26 C. C. A., 146; Atlantic Trust & Deposit Co. v. Town of Laurinburg, 163 Fed. Rep., 691.
    (c) Collateral in the hands of the National Surety Company and The Fidelity & Deposit Company of Maryland in excess of amount necessary to fully indemnify said companies, should be awarded to the plaintiff in error.
    2. Collateral pledged by the principal with one or more sureties is primarily applicable to reduce the creditor’s claim.
    
      
      (a) Collateral deposited as indemnity for one surety should not be considered as indemnity for all other sureties, but as a trust fund for the better security of the debt and to be applied thereto. State Natl. Bank v. Esterly, 69 Ohio St., 24; 1 Story on Equity Juris. (2 ed.), Secs. 499, 502, 638; Chamberlain v. St. Paul & S. C. Rd. Co., 92 U. S., 306; Penderly v. Allen, 50 Ohio St., 130; 6 Pomeroy on Equity Juris. (3 ed.), Sec. 922, p. 1504; Green v. Dodge, 6 Ohio, 80; New Bedford Inst. for Sav. v. Fairhaven Bank, 9 Allen (Mass.), 178; Kelly, Guardian, v. Herrick, 131 Mass., 373; Paris v. Hulett, 26 Vt., 308; Heath v. Hand, 1 Paige (N. Y.), 329; Leggett v. McClelland, 39 Ohio St., 626.
    ' (b) Under the statutes of Ohio, creditors must account for property of principal deposited for better security of debt before participating in distribution of general funds of. an insolvent estate. Chemical Natl. Bank v. Armstrong, 59 Fed. Rep., 372, 8 C. C. A., 155, 28 L. R. A., 231; State Natl. Bank v. Esterly, 69 Ohio St., 37; Mannix, Assignee, v. Purcell, 46 Ohio St., 135; Barret v. Reed, Wright, 700; In re Spence, Assignor, 7 O. D., 386, 4 N. P., 439; Searle v. Brumback, 2 O. D., 653.
    (c) General creditors are those who hold no security of any kind deposited by the principal, and to them alone are dividends due and payable. Searle v. Brumback, supra; In re Spence, Assignor, supra.
    
    (d) The bond of $54,000, the second bond ■given by The Fidelity & Deposit Company of Maryland, being a substitution under the terms of the depositary contract, the collateral deposited therewith must be applied to the claim of the city. Collum v. Emanuel & Gaines, 1 Ala., 29; American Surety Co. v. Boyle, 65 Ohio St., 493.
    3. The circuit court erred in allowing plaintiffs’ counsel attorneys’ fees as a part of the costs of the case. Hopple v. Hopple, 14 Dec., 285; 3 Am. & Eng. Ency. Law (2 ed.), 459; B. & O. Rd. Co. v. Brown, 79 Md., 442; Commonwealth v. Mechanics Mutl. Fire Ins. Co., 122 Mass., 421; Reed v. Terhune, 22 O. C. C., 544; Richter v. Schoenfeldt, 1 W. L. B., 133, 7 Dec. R., 120; McLain v. Simington, 37 Ohio St., 660; Shaw v. Fifth Ward Bldg. Assn., 6 O. C. C., 46, 3 Cir. Dec., 340; Ingham v. Lindemann, 37 Ohio St., 218.
    4. The circuit court erred in awarding judgment against the plaintiff in error for the payment of dividends.
    The court of insolvency has jurisdiction of the funds of the estate of The Euclid Avenue Trust Company, and to it alone is jurisdiction given to make orders for the payment of dividends out of such funds. Owens v. Ramsdell. 33 Ohio St., 441; Clapp v. Huron County Banking Co.. 50 Ohio St., 528; Lindemann v. Ingham, 36 Ohio St., 12; Emmitt v. Brophy, 42 Ohio St., 82; Bagaley & Co. v. Waters, 7 Ohio St., 359; Thompson v. Thompson, 4 Ohio St., 333; Crumbaugh v. Kugler, 3 Ohio St., 544.
    
      Messrs. Hoyt, Dustin, Kelley, McKeehan & Andrews, for The Fidelity &• Deposit Company of Maryland, defendant in error.
    
      This controversy, so far as it relates to the claims of The Fidelity & Deposit Company, is confined solely to the security held by it as indemnity in connection with its $54,000 substitution bond.
    The Fidelity & Deposit Company denies that the $54,000 substitution bond ever became or stood in the relation of a co-surety with the eight original bonds. We claim: (1) That even if the court is able to find that the eight original bonding companies were among themselves co-sureties on their eight separate and independent bonds, yet as to this $54,000 substitution bond, the relation of co-surety with the other bonds never was assumed and did not exist; (2) that even if the $54,000 bond had become a co-surety with the original eight bonds, yet the circumstances were such that it should not be required to prorate its indemnity with the other bonds; and (3) that the rights and equities of the parties in connection with the property here in question did not depend upon co-suretyship at all, but should be governed by the equitable situation created by the fact that the city received collateral security when the original agreement was made; and also by the express contract made at the time when the city received the collateral security, and later, when the $54,000 substitution bond was given.
    1. The $54,000 substitution bond did not become a co-surety. Cook v. Tullis, 18 Wall., 332, 21 L. Ed., 933; Sawyer v. Turpin. 91 U. S., 120, 23 L. Ed., 235; Stewart v. Platt, 101 U. S., 742, 25 L. Ed., 816; Clark, Assignee, v. Iselin, 21 Wall., 360, 22 L. Ed., 568; Stearns on Suretyship, Sec. 281, p. 517, Sec. 295; Oldham v. Broom, 28 Ohio St., 41; 1 Brandt on Suretyship and Guaranty (3 ed.), Sec. 287.
    2. The substitution bond should not be required to prorate its indemnity, even if it had become a co-surety. Leggett v. McClelland, 39 Ohio St., 624; American Surety Co. v. Boyle, 65 Ohio St., 486.
    3. As to the equities of the parties and their rights in the collateral securities, the city, to the extent that it held collateral in which the eight surety companies might be interested, became in equity a trustee, holding a trust fund. Stearns on Suretyship, Secs. 98, 267, 274; Day v. Ramey & Co., 40 Ohio St., 446; Leggett v. McClelland, supra, 625; Pendery v. Allen, 50 Ohio St., 130; Henderson-Achert Litho. Co. v. John Shillito Co., 64 Ohio St., 250.
    The eight original surety companies were not parties to this collateral contract, so that their rights in the collateral securities could not arise directly from the agreement itself. They could acquire rights therein only in equity, by being subrogated to the rights of the city, by reason of paying its loss. 6 Pomeroy on Equity Juris. (3 ed.), Sec. 922, p. 1504; 27 Am. & Eng. Ency. Law (2 ed.), 226; Stearns on Suretyship, Sec. 273; Advance Thresher Co. v. Hogan, 74 Ohio St., 314.
    When the collateral contract and securities were originally pledged by the bank with the city, they constituted a. trust fund charged with the payment of the bank’s debt and to secure the same. Any person taking, this property from the city, with knowledge of the trust, took the securities subject to the terms of that trust and the rights of all the sureties. Stearns on Suretyship, Secs. 98, 267, 272, 274; 32 Cyc., 216; Day v. Ramey & Co., supra; 6 Pomeroy on Equity Juris. (3 ed.), Sec. 923; Atwood v. Vincent, 17 Conn., 575.
    4. As to allowance of attorneys’ fees to plaintiffs’ counsel, we contend that where a fund is brought into court, out of which numerous parties receive a benefit, it is proper and usual to allow to the plaintiff producing such fund his counsel fees while acting for the common benefit. We inr sist, however, that even in such an action, the defendant against whom the judgment is entered, should not be compelled to join in making such payment.
    
      Messrs. Kline, Tolies & Morley, for the National Surety Company, defendant in error.
    1. The several bonding companies, defendants in error, are not co-sureties. Deering v. Earl of Winchelsea, 2 Bos. & Pul., 270; Swain v. Wall, 1 Ch. Rep., 150; Coope v. Twynam, 1 Turn. & R., 425; Stearns on Suretyship, Sec. 280, p. 515; Wells v. Miller, 66 N. Y., 265; Robinson v. Boyd, 60 Ohio St., 57; Agnew v. Bell, 4 Watts (Pa.), 32; Russell v. Failor, 1 Ohio St., 327; 4 Pomeroy’s Equity Juris. (3 ed.), Sec. 1418; Oldham v. Broom, 28 Ohio St., 41; Farmers Natl. Bank v. Teeters, 31 Ohio St., 36; Pendery v. Allen, 50 Ohio St., 121; Steel v. Dixon, 17 Ch. Div., 825; Miller v. Sawyer, 30 Vt., 412; Leggett v. McClelland, 39 Ohio St., 625.
    
      2. The bonding companies are entitled- to receive full dividends on the city’s claims - against The Euclid Avenue Trust Company, without deduction for the collateral securities pledged with the National Surety Company and The Fidelity & Deposit Company. Chemical Natl. Bank v. Armstrong, 59 Fed. Rep. 372, 6 C. C. A., 155, 28 L. R. A., 231; Merrill v. Natl. Bank of Jacksonville, 173 U. S., 131, 43 L. Ed., 640; People v. Remington, 121 N. Y., 328; In re Miller’s Appeal, 35 Pa. St., 481; Levy v. Chicago Natl. Bank, 158 Ill., 88, 30 L. R. A., 380.
    3. The status of The Fidelity & Deposit Company of Maryland is no different from that of the National Surety Company, and if the court should find that the National Surety Company is a co-surety with the other bonding companies, then the same must be true of The Fidelity & Deposit Company of Maryland, and its security should be apportioned among all.
    The fact that the bond was given at a later date than the bonds does not alter the situation,.- or make the. latter surety company any the less a co-surety, if the terms of the bond itself admit of this relationship. Deering v. Earl of Winchelsea, supra.
    
    
      4. The circuit court- erred in allowing attorneys’ fees to counsel for the three bonding companies, plaintiffs in the action below, payable out of the proceeds of the collateral securities deposited with The Fidelity & Deposit- Company and this cross-petitioner in error. 11 Cyc., 96; B. & O. Rd. Co. v. Brown, 79 Md., 442.
    
      
      .Messrs. Stearns, Chamberlain & Royon; Messrs. M. B. & H. H. Johnson and Mr. T. H. Hogsett, for the American Bonding Company of Baltimore, The United States Fidelity & Guaranty Company, the Fidelity & Casualty Company and John F. Yawger, receiver of the Metropolitan Insurance Company, defendants in error.
    1. All of the surety companies are co-sureties, and are entitled to share, in proportion to the amount of their respective risks at the time of the failure of The Euclid Avenue Trust Company, in the collateral held by The Fidelity & Deposit Company of Maryland and the National Surety Company.
    
      (a) The relation of co-suretyship existed among the surety companies executing the eight original bonds. Childs’ Suretyship and Guaranty, 321; 7 Am. & Eng. Ency. Law (2 ed.), 334; Armitage v. Pulver, 37 N. Y., 494; Farmers Natl. Bank v. Teeters, 31 Ohio St., 36; American Surety Co. v. Boyle, 65 Ohio St., 486; Swisher v. McWhinney, 64 Ohio St., 343; Deering v. Earl of Winchelsea, 2 Bos. & Pul., 270.
    
      (b) The second bond in the penal sum of $54,000, executed by The Fidelity & Deposit Company of Maryland, stands on the same footing as the eight original bonds, and the collateral given to secure this bond should be shared ratably by all of the bonding companies.
    2. The surety companies are entitled to receive from The Assets Realization Company a dividend of fifty per cent, on the claim of the city allowed by the assignee, together with interest thereon from June 11, 1909, less certain sums heretofore paid in.
    
      (a) The city of Cleveland was entitled to receive from the assignee a dividend of fifty per cent, on its claim as allowed.
    It is the law in most jurisdictions, that where a creditor himself has collateral security for his claim against an insolvent debtor, such creditor may collect his dividend upon the entire claim and apply his collateral to the payment of the balance. 3 Am. & Eng. Ency. Law (2 ed.), 341; Chemical Natl. Bank v. Armstrong, 59 Fed. Rep., 376, 8 C. C. A., 155.
    This honorable court, however, has within certain limits held contrary to the great body of authority above referred to, and has ruled that where collateral held by a creditor has been reduced to money and actually applied on the debt before a dividend is declared from the estate of the insolvent debtor, the creditor is entitled only to a dividend on the balance. State Natl. Bank v. Esterly, 69 Ohio St., 24.
    The rule laid down in the Esterly case has no application to the present case. The collateral in the present case was not realized upon before the dividend was declared.
    The Assets Realization Company does not represent the creditors of the insolvent estate, and the payment of full dividends to the surety companies will not reduce the amounts received by the general creditors.
    In the present case it is the surety and not the creditor who holds the collateral. Meed v. Nelson, 9 Gray (Mass.), 55; Provident Inst. for Sav. v. 
      Stetson, 12 Gray (Mass.), 27; Hale v. Leatherbee, 175 Mass., 547; Viles v. Harris, 130 Mass., 300.
    
      (b) The surety companies are entitled to receive from the assignee a fifty per cent, dividend on the claim of the city of Cleveland as allowed.
    The surety companies have the same rights to dividends which the city had.
    The right of the surety companies to receive dividends is not affected by the fact that they held collateral given them by the principal debtor to indemnify them against loss on their respective bonds, '
    The city of Cleveland had no property right in the collateral in question and no trust in its favor was . created. Prior to insolvency a surety to whom security has been given may, without the. knowledge or consent of the creditor, release or assign the security given him. Jones v. Quinnipiack Bank, 29 Conn., 25; Ames Cases on Suretyship, 647; Ohio Life Ins. & Trust Co. v. Reeder et al., 18 Ohio, 35; Henderson-Achert Litho. Co. v. John Shillito Co., 64 Ohio St., 236; Curry v. McCauley, 11 Fed. Rep., 365; Merchants Natl. Bank v. Comstock, 55 N. Y., 24.
    
      (c) The surety companies are entitled to receive from The Assets Realization Company a fifty per cent, dividend on the city’s claim as allowed, together with interest.
    The Assets Realization Company, by its contract of purchase, agreed to pay this amount.
    The courts below had jurisdiction to order The Assets Realization Company to pay the dividends to the surety companies. Touche v. Met. Ry. Warehousing Co., L. R., 6 Ch., 671; Gandy v. 
      Gandy, 30 Ch. Div., 57; Houghton v. Milburn, 54 Wis., 554; Rothwell v. Skinker, 84 Mo. App., 169; Town of Gastonia v. McEntee-Peterson Engineering Co., 131 N. Car., 363; Lyman v. City of Lincoln, 38 Neb., 794; King v. Downey, 24 Ind. App., 262; Glencoe Lime & Cement Co. v. Wind, 86 Mo. App., 163; Knight & Jillson Co. v. Castle, 172 Ind., 97, 27 L. R. A., N. S., 573; Johannes v. Phoenix Ins. Co., 66 Wis., 50; Vandenbark v. Mattingly et al., 62 Ohio St., 25.
    
      ‘(d) The court below did not err in ordering interest to be paid on the dividends found to be due the surety companies. Champion Ice Mfg., etc., Co. v. Pennsylvania Iron Works Co., 68 Ohio St., 234.
    (e) Plaintiffs below were entitled to have their attorneys’ fees paid out of the fund which they brought into court for distribution. Trustees v. Greenough, 105 U. S., 527; Central Rd. & Banking Co. v. Pettus, 113 U. S., 116; In re Weed’s Estate, 163 Pa. St., 595; Anniston Loan & Trust Co. v. Ward, 108 Ala., 85.
    
      Mr. David H. Scott, for the Aetna Indemnity Company, defendant in error.
    1. The sureties are co-sureties and entitled to all the equities of that relation. Deering v. Earl of Winchelsea, 2 Bos. & Pul., 270, 1 Cox, 318; Pendlebury v. Walker, 4 Y. & C. Exch., 424; 1 White & Tudor’s Leading Equity Cases, 124.
    In the case at bar the eight bonding companies were- sureties for the common principal, and all were liable for their pro rata of any loss, whether the same be great or small, one' dollar or one hundred and fifty-four thousand odd dollars, as happened to be the amount of the loss here. DeColyar’s Law of Guaranties, Principal and Surety (1875), 355; Frost on Guaranty Insurance (2 ed.), Sec. 284; Stearns on Suretyship, 447.
    2. The collateral pledged with the National Surety Company inured to the benefit of all the surety companies.
    Once having obtained indemnity from The Euclid Avenue Trust Company, the right of the National Surety Company and its co-sureties to such indemnity was superior to the rights of the assignee of the principal or the purchaser of the assets. In re Reynolds, 20 Fed. Cas., No. 11724; Abbey v. Van Campen, Freem. Ch. (Miss.), 273; Battle v. Hart, 17 N. Car., 31; Craighead v. Swartz, 219 Pa. St., 149; Atkinson v. Tomlinson, 1 Ohio St., 237; Simmons Hardware Co. v. Thomas, 147 Ind., 313; Constant v. Matteson, 22 Ill., 546; 32 Cyc., 246, 251; West v. Bank of Rutland, 19 Vt, 403.
    •3. The collateral taken under the second bond of The Fidelity & Deposit Company inured to the benefit of the surety companies the same as the collateral taken under the bond of the National Surety Company.
    4. Counsel for plaintiffs below are not entitled to attorneys’ fees out of the pro rata of collateral coming to the Aetna Indemnity Company. Worther v. Ruehrwein, 8 O. N. P., 495; Hopple v. Hopple, 14 O. D., 285.
    5. The circuit court had jurisdiction to do full equity among the parties. Emmitt v. Brophy, 42 Ohio St., 88; 1 Chitty on Pleading (1876), 5; Hellebush v. Richter, 37 Ohio St., 222,
   Newman, J.

Plaintiff in error and defendants in error, the National Surety Company and The Fidelity & Deposit Company of Maryland, insist that the circuit court erred in holding that the unsecured bonding companies were entitled to an interest in the security held by the two secured companies.

Counsel filed elaborate briefs, most helpful to the court in reaching its conclusion. The principles of co-suretyship are ably and exhaustively considered and discussed, and the leading cases on the subject cited and analyzed.

Counsel for the unsecured bonding companies recognize the fact that each company executed a separate bond to the city of Cleveland and limited its liability, but submit that the execution of the separate obligations and the limitation in no way impaired the right of all the companies to share in the collateral held by two of them, They suggest that every test of the co-surety relation is present in this case—the bonds in question cover the same debt, are on behalf of the same debtor and the several bonds are dependent, the liability upon each being fixed by the aggregate of the bonds. The only right which is curtailed, they say, is the right of the obligee—the city of Cleveland—to recover the entire debt from any one surety; that all other rights, those so far as the obligee and the sureties are concerned and those among the several sureties, exist. They refer to the limitation of liability as a custom growing out of the change of conditions; that formerly all sureties were personal sureties and each was acquainted with the financial condition of the other and no restriction was necessary, but, at the present time, when bonds are written by bonding companies whose financial standing is unknown to each other, it has become necessary, “as a matter of wise protection,” to restrict the amount of recovery. The reason for the limitation, so far as the rights of the parties here are concerned, seems wholly immaterial, and we might say in passing that the fact that the bonds in question are contracts of suretyship for hire, and not gratuitous, is wholly unimportant, as this is not a case for the construction of the language of bonds as between the bonding companies and the obligee, but one for the determination of the rights of the sureties among themselves, all of whom are paid sureties.

While admitting that there was a curtailment of one of the rights or incidents growing out of the relation of co-suretyship, yet counsel for the unsecured companies contend that the right to share in the collateral or securities given two of their number, being unaffected by any special agreement, stands unimpaired, and they seek to enforce that right in this action. They treat the proviso in the bonds limiting the liability of each company to that proportion of the entire loss which the penal sum mentioned in the bond bears to the total amount of the bonds and securities furnished by the depositary, namely, $300,000, as merely a contract arrangement between the companies and the obligee, and the arrangement effected was that all the companies standing together should assume the burden of the entire obligation, and not that each company should assume a separate and distinct part of the obligation, independent of each other.

In this we think counsel are in error. The several bonding companies were not obligated to pay the same debt—they each agreed to pay an aliquot part—a fractional part of the total loss due to the default of the depositary. If one of these companies failed to pay its portion, such failure, in no way, affected the liability of the other companies. No duty, legal or equitable, was owing by one company to the other.

The form of bond executed by the several companies is set out in full in the statement of facts, and the language, we think, is plain and unequivocal and can bear but one construction.

The defendant in error, The Fidelity & Deposit Company of Maryland, executed its $54,000.00 bond at a time subsequent to the execution oí the eight original bonds, but, in our opinion, it bears the same relation to the original bonds as if it had been executed at the same time.

It is well settled that where one of two or more sureties for the same obligation has paid more than his share of the debt, he is entitled to contribution from his co-sureties to reimburse him for the excess paid over, his share in order to equalize the common burden.

Numerous authorities have been cited in support of this proposition, but it is to be observed that they speak of a common burden, and it is where parties are bound to discharge a common obligation that they are treated as co-sureties. It is uniformly held, as we understand it, that the relation of co-suretyship exists only where there is a right of contribution.

In the case under consideration, this right is wanting. Not one of the bonding companies was bound to equalize the loss with the others in case of default. When one company paid its portion of the loss—the portion fixed by its bond—no claim arose in its favor against any of the other companies and no further demand could be made against it. Its obligation was fully discharged and the liability terminated.

Our attention has been directed to many cases and we shall refer briefly to a few of them bearing upon the question under consideration.

The third proposition in the syllabus in Robinson v. Boyd, 60 Ohio St., 57, is as follows: “To give rise to the application of the doctrine of contribution between sureties, it is not necessary that there should be privity of contract between the parties, nor that the liability of each should have been incurred at the same time; all that is required is, that the debt or burthen should be common to the parties, and primarily that of the same person.”

In Hartwell v. Smith, 15 Ohio St., 203, the court say: “The other right to which we have referred, is that of contribution, which arises in the case of co-sureties, and which each may claim as against the others who are bound with him in a common liability. Whenever several sureties stand in the relation to each other of co-sureties, by being bound for the same person, and for the same debt or engagement, so that they have a common interest, or a common burden to bear, if one of them be compelled to bear the whole or a part of the burden alone, he may call upon his co-sureties to equalize the burden by contribution.”

In B. & O. Rd. Co. v. Walker, 45 Ohio St., 588, the court quotes from 2 Wait’s Actions and Def., 288, as follows: “The doctrine of contribution rests upon the broad principle of justice, that where one has discharged a debt or obligation which others were equally bound with him to discharge, and thus removed a common burden, the others who have received a benefit ought in conscience to refund to him a ratable proportion. It depends rather upon principles of equity thán upon contract.”

It seems then that the test of co-suretyship is, as stated by counsel, common liability upon the same obligation. In the case at hand there was no common liability. Each surety, by its bond, obligated itself for a fixed portion of the debt. The authorities uniformly hold that the doctrine of contribution has its origin in the relation of co-sureties and is not founded upon the contract of suretyship; that it is an equity which springs up at the time the relation of co-sureties is entered into and ripens into a cause of action when one surety pays more than his portion of the debt. It equalizes burdens and recognizes and enforces the reasonable expectations of co-sureties, because it is just and right in good morals, and not because of any supposed promise between them. This equity having once arisen between co-sureties, this reasonable expectation that each will bear his share of the burden is, as it were, a vested right in each, and remains for his protection until he is released of all his liability in excess of his •ratable share of the burden. Camp et al. v. Bostwick, 20 Ohio St., 346.

The court, in Russell v. Failor, 1 Ohio St., 327, say: “The right of contribution among sureties, is founded not in the contracts of suretyship, but is the result of a general equity which equalizes burdens and benefits.”

And again in Robinson v. Boyd, supra, the court says that the doctrine of contribution “is not founded on contract, but arises from the equitable consideration that persons subject to a common duty or debt, should contribute equally to the discharge of the duty or debt; and so where one performs the whole duty or pays the debt, or more than his aliquot part, each of the others should contribute to him, so as to equalize the discharge of what was a common burthen.”

The bonding companies in this case, did not obligate themselves to discharge the whole debt of the depositary in case of default, but an aliquot part thereof. There was no common burden to discharge. Therefore, there was no such thing as equalizing the discharge. There was no such thing as one of the sureties performing the duty of all the companies or the payment of the whole debt, but, to repeat, when one of the companies paid its portion, that was a termination of its liability, and no right arose in its favor against any of the other companies.

The case of Deering v. The Earl of Winchelsea, 2 Bos. & Pul., 270, an English case decided in 1787, seems to be the leading case on the doctrine of contribution among sureties. It is cited in support of the holding of the circuit court. In this case the principal had entered into three bonds, each in the penalty of 4,000 pounds, with condition for the duly accounting of moneys coming into his hands as receiver. Deering, the plaintiff, had joined as surety in one of these bonds, and the defendants, the Earl of Winchelsea and one Rous, had each executed a bond with the principal.. The latter defaulted and there was owing the obligee approximately 3,883 pounds, an amount less than the penalty of each of the bonds. A .judgment in this amount having been obtained against Deering as one of the sureties, he filed a bill demanding contribution from the other parties who had signed the bonds. The real point in that case was whether there should be contribution by sureties on distinct obligations. The court held that they were bound as effectually quoad contribution as if bound in one instrument, with this difference only, that the sums in each instrument ascertain the proportions, whereas,' if they were all joined in the same engagement, they must all contribute equally, and the court uses this language: “In the particular case of sureties, it is admitted that one surety may compel another to contribute to the debt for which they are jointly bound. On what principle? Can it be because they are jointly bound? What if they are jointly and severally bound ? What if severally bound- by the same or different instruments ? In every one of those cases sureties have a common interest and a common burden.” The decree of the court was that the plaintiff and the two defendants should contribute in equal shares to the payment of the loss—each should pay approximately 1,294 pounds. But in this case each surety was liable for the entire loss, provided the same did not exceed the penalty of the bond, while in the case at bar the securities were limited to a fixed proportion of the loss.

In the Deering case, in the event of default for less than 4,000 pounds, the failure of any one of the sureties to pay his share, would require the other sureties to pay more than they were equitably entitled to pay. In the case at bar, whatever the loss might be, no surety could be required to pay more than the proportion stipulated in the bond.

From our analysis of the Deering case, the. relation of co-stiretyship existed there because the burden was a common one, regardless of the fact that separate instruments were executed. “The bottom of contribution,” the court says, “is a fixed principle of justice, and is not founded in contract. Contract, indeed, may qualify it.”

Reference is made in the above case to Swain v. Wall, 1 Ch. Rep., 149, decided as early as 1642, where three sureties were bound for a principal, and agreed, if the principal failed, to pay their respective parts. Two of the sureties proved insolvent. The third paid the money, and one of the others becoming solvent, he was compelled to pay a third part, and not a moiety.

The Swain case is similar to the case at bar. In both cases the sureties bound themselves for a fixed portion of the debt only, and if the right of contribution did not arise in the former case, it does not exist in the case at bar.

We have examined and undertaken to analyze many of the cases cited, and counsel who challenge the holding the circuit court have correctly, we think, placed the cases cited by opposing counsel in' two classes—one where sureties have become obligated for the same debt, but by different instruments, and the other where sureties obligated themselves for the same debt, but in stated and fixed amounts thereof, as where four sureties obligated themselves upon a general debt, which might reach $2,000. But each agreed, in the event of default, they would pay $500.00 thereof. In case of default for less than the entire amount, the failure of any one surety to pay his share would leave a larger burden upon the other sureties than they should, in equity, be compelled to bear. For example, if the entire default amounted to $500.00 only, each surety should, in equity, pay $125.00 thereof. Should all but one fail to pay their shares, the obligation of the full $500.00 would fall upon one surety.

But the case at bar does not fall within either of these two classes, because there is a limitation of liability by contract, and the nonpayment of the portion of loss covered by the bond of any other company does not affect such liability.

We conclude then that, each of the companies being liable for a fractional part only of the entire loss and none of them being entitled to any conr tribution from the others, there being no common burden, the circuit court erred in holding that the several bonding companies, including The Fidelity & Deposit Company of Maryland on its $54,000 bond, were co-sureties, and it follows that the unsecured bonding companies are not entitled to share in the collateral held by the two secured companies, for, as expressed by counsel, the -shaN ing of indemnity , is • merely another method of enforcing contribution or making each pay ratably on the loss based on the same rule of equity that equality is equity—from such rights the sureties have divorced themselves by-contract. '• ;

- The circuit court found that there was due from The Assets Realization Company, plaintiff in error, in pursuance of its contract of purchase,, to the several surety companies . holding an assignment of the claim of the city of Cleveland, the sum of $57,068.02, with interest from June 11, 1909, and judgment was rendered against plaintiff in error in favor of each of the said surety companies in proportion to the amount of their respective bonds.

In arriving at this amount, the court found the claim of the city of Cleveland, as allowed, to be $153,336.04, a fifty per cent, dividend thereon amounting to $76,668.02; the funds in the hands of the assignee, The Cleveland Trust Company, on .the 11th day of June, 1909, was $19,600—the difference: between these two amounts being the amount, ordered to be paid. ■

Plaintiff in error excepts to this order, and one of its contentions is that the collateral in the hands of the National Surety .Company and The Fidelity & Deposit Company of Maryland should be applied to the claim of the city assigned to the surety companies in reduction of this claim and before the computation of dividends thereon. In support of this contention, our attention is called to the rule announced by -this court in thé cáse of State National Bank v. Esterly, 69 Ohio St., 24.

At the time -of the failure of the depositary,- The Euclid Avenue Trust Company, there-,were in the hands of the city, of Cleveland certain- securities,, a part of the original $75,000 of securities,. Iwhich were reduced to money, the proceeds. ;of which •amounted to $21,025.95, and the same' were' pf;opr erly applied in .reduction of the city’s claim before presentation to the assignee for allowance—this /in accordance with the rule announced in the .Esterly •case. --i

The other collateral which the plaintiff in error would have applied in reduction of the city’s-claim was not in the hands of the city, but • was'held by the two secured companies. The city;-as.-we view it, had the right to present its. claim to the-assignee for allowance and could have collected from the assignee all dividends thereon ■ before' taking! .any step to enforce its claim on the several bonds, ,and we do not think that the rule in the Esterly - case is applicable to the- collateral in .'question,, and ,the circuit court was correct in making the order for the payment of a dividend on the amount of , the claim of the city, as allowed, without applying -the .collateral in the hands of the two companies in reduction thereof.

No question is or can be raised to the jurisdiction of the circuit court to determine the rights of the various parties interested in the collateral held by the two companies, but, plaintiff in error does challenge the right of that- court to fix the ...amount payable b}^ it on the, claim of the city. This, it contends, should be determined by the •court of insolvency. .It suggests, that-the,decision of the circuit court, as to the distribution and application of the collateral, would, no doubt, control the court .of insolvency in its orders as to the payment of dividends on the city’s claim, but it submits that it is important that the insolvency court retain its jurisdiction for the reason, it urges, that, if it does, the proper order as to the application of the collaterals and the payment of dividends would be maintained.

We do not think there is any merit in this contention and it cannot be adopted. Under its contract of purchase, plaintiff in error agreed to pay to the assignee of the depositary an amount sufficient to pay a dividend of fifty per cent, on the face amount of all allowed claims, and this, in effect, was an obligation to pay the assignee, for and on behalf of the bonding companies, the holders of the allowed claim of the city, and the other general creditors:—the contract was one for the benefit of these parties—and the bonding companies, as such beneficiaries, were in position to enforce their rights under this contract in this action, and this relief is sought by them in their pleadings. The cases cited by counsel—Touche v. Metropolitan Ry., etc., Co., L. R., 6 Ch., 671; Gandy v. Gandy, 30 Ch. Div., 57; Houghton v. Milburn, 54 Wis., 554, and Rothwell v. Skinker, 84 Mo. App., 169—seem to be authority for the rule which would give to beneficiaries, under a contract like the one in the case at bar, the right to recover thereunder.

Plaintiff in error was madé a party defendant in the common pleas court, and filed its answer and cross-petition setting up its interests' and praying for general relief, and was a party to the appeal taken to the circuit court.

All the parties having an interest in the subject-matter were before the court, and, the court of insolvency having approved the contract of purchase, the circuit court had jurisdiction to make the order it did make against plaintiff in error and there is no reason, in our opinion, for remanding the case to the court of insolvency.

After applying the proceeds of the collateral held by the two secured companies in full indemnification of the loss sustained by them on their bonds, there will be an excess, and we are called upon to decide as to the disposition to be made of the same.

In arriving at a solution of this matter, it is important to keep in mind the proviso in the eight original bonds and in the $54,000 substitution bond of The Fidelity & Deposit Company of Maryland. The bonds are identical in form, differing only in the name of the company, the penalty and the date. The proviso in the bond of the American Bonding Company of Baltimore is as follows;

“Provided, however, and upon the following express conditions: First, That in the event of default on the part of the Principal herein, the surety shall only be liable hereunder for such proportion of the total loss thereby sustained by the obligee as the penalty of this bond shall bear to the total amount of bonds, namely, Three Hundred Thousand Dollars ($300,000), which said principal shall or should furnish in accordance with the provisions of the depositary ordinance of the city of Cleveland:;* .and provided that the Surety shall not,, in any event, be liable for an amount in excess of fifteen ■ thousand dollars. Second, * *

The suretyship of each company was a separate transaction. ■ Each obligated itself to pay a fixed proportion • of the loss. In these bonds reference is ,had to the - fact that the city of Cleveland-awarded The Euclid Avenue Trust Company the custody of a certain portion of the public money, not to.exceed $250,000, subject to the provisions and requirements of law and the depositary ordinance ,pf the city of Cleveland, This ordinance required, the tendering of a good and sufficient bond,¡.issued by a surety cortipany, or the furnishing of good and sufficient security in the aggregate §um; of not,less than twenty per cent, in excess of this, $250,000, and it was to be presumed that the depositary would furnish bonds or securities, or both, .aggregating in amount the sum of $300,000. It was wholly immaterial, so far as the several companies executing the bonds were concerned, whether the balance of the $300,000 would consist of securities i or additional bonds, and none of these companies had reason for complaint whatever plan-the-depositary might see fit. to adopt.

■¡As if happened, it placed in the hands of the city of Cleveland’ $75,000 in securities. These securities were not placed there irrevocably set apart for. the payment of the debt owing to the city., j, They did not constitute a “trust fund.”: Under the ..provisions of the contract entered into between the city and the. depositary, the latter had the right to withdraw them and substitute in their place:Pthe'r securities,'or.to furnish'bonds therefor; The depositary, exercising its right under this contract, withdrew from the custody ” of the city of Cleveland $54,000 of securities and substituted in their place the $54,000 bond of The Fidelity & Deposit Company of Maryland. This bond was accepted by the city and the city released all claim to the securities withdrawn. The depositary repossessed itself of these securities, converted the same into money and made a loan to The Avenue Apartment Company, secured by mortgage on its property. The city had no claim to or interest in this mortgage—the depositary had full' dominion over it. It placed it, as it had a right to do, in the hands of The Fidelity & Deposit Company of Maryland to indemnify it against any loss it might sustain on its $54,000 bond.

Counsel for plaintiffs below correctly state what was done in this connection and the effect thereof:

“It is incorrect to state that the municipal bonds deposited with the city were set aside by The Euclid Avenue Trust Company for the payment of its debt to the city. No property of The Euclid Avenue Trust Company was ever at any time irrevocably dedicated to the payment of this debt. But by the very terms of its contract with the city, it had the right to take down the property deposited with the city and put up in its stead a personal surety bond. It had the further right to do whatsoever it pleased with the municipal bonds which were for some time in the possession of the city. It did exercise its right to withdraw the bonds from the custody of the city, and in the exercise of its plenary power over those bonds it had the same sold and the proceeds thereof indirectly transferred to The Fidelity & Deposit Company to indemnify that company against loss on its fifty-four thousand dollar bond. * * * The agreement by which the municipal bonds were originally deposited with the city provided that The Euclid Avenue Trust Company should have the right at any time to take down those bonds’ and substitute in its [their] place a surety bond, and it certainly seems reasonable to suggest that the rights which the various surety companies had in the municipal bonds deposited as collateral were such only as the city had, and that the city having granted to the depositary the right to substitute a surety bond, the other surety companies could not object thereto.”

Counsel for the National Surety Company, one of the secured companies fully indemnified under our ruling as to its collateral, and not being personally interested in the disposition of the surplus, suggest that, after that company and the other secured company are fully indemnified, the other bonding companies, under the doctrine of subrogation through the rights of a creditor, would be entitled to have such surplus or excess applied in reduction of the principal’s debt.

We recognize the rule that if a surety holds property of the principal as indemnity against loss by reason of his suretyship, the creditor may resort to such property and subject it to the payment of his debt, but a creditor can have no greater right in the property than the surety himself.

In Childs’ Suretyship and Guaranty, at page 276, it is laid down as a rule that a creditor is entitled to the benefit of any security given by the principal to the surety for the indemnity of the latter as to the particular debt. In referring to this right, the author, on page 289, says: “We have been discussing, thus far, the right of a surety to be subrogated to the rights of the creditor. The creditor, after his claim is due, has a right of subrogation to securities held by the surety, provided they have, been given to the surety by the principal. * * * It is essential that the security be given for the identical indebtedness due; and the creditor cannot obtain any greater rights than those possessed by the surety.”

As we understand the rule then, the creditor, at most, is entitled to such benefit in the securities as the surety to whom the same are given would have. What is the result when the rule is applied to the collateral in the case at bar? The city of Cleveland, the creditor, if the two surety companies had not responded to their liability on their bonds, could have asserted in the collateral held by these two companies the same rights as could have been asserted by the companies themselves, and no more.

This collateral was placed by the depositary in the hands of these two companies, impressed with a pledge to the extent that the same might be required to indemnify them against loss under the liability on their bonds. Had the two surety companies not paid their proportion of the loss to the city, it would have had the right to resort to this collateral to that extent only, but the two companies did pay to the city all they obligated themselves to pay, and are entitled to so much of the collateral as may be required to indemnify them. This is the full measure of the rights of the holders of this collateral, and when they exercise this right and apply the collateral to the extent that the same may be required to indemnify them, they have no further rights, of any kind or description, in the excess, and it follows that there are no rights to which subrogation can be had, either on the part of the city or the other bonding companies which paid their proportion of the debt. This collateral then having answered the purpose for which it was pledged, any surplus or excess would be the property of the pledgor—the depositary.

The' plaintiff in error, The Assets Realization Company, having purchased all the property of the depositary, would, therefore, be entitled to this ■surplus.

The two secured surety companies, the National Surety Company and The Fidelity & Deposit Company, on its $54,000 bond, are to be indemnified out of the collateral held by them, and there will be no loss to them on account of their suretyship. There was due from The Assets Realization Company, on account of the claim of the city of Cleveland, an amount sufficient for a dividend of fifty per cent. The unsecured companies alone, we think, are entitled to the benefit of this dividend of fifty per cent, on the face amount of the claim of the city of Cleveland, for the reason that they, having incurred a loss on account of their bonds growing out of the indebtedness, are entitled to avail themselves of all the rights the city had in this dividend.

It appears from the record, that there was paid to the National Surety Company on account of the amount paid by it to the city, the sum of $1,484.71, out of the $19,600 in the hands Of the assignee at the time of the purchase of the assets by The Assets Realization Company. The Fidelity & Deposit Company was paid no part of this $19,600 on account of the amount paid by it to the city upon.its $54,000 bond, but the sum of $4,007.59 was retained by. the assignee for that purpose.

We are of the opinion that the amotint received by the National Surety Company and the amount retained by the assignee, as well as the sum of $57,068.02, and interest, the amount ordered to be paid by The Assets Realization Company,should be paid to the unsecured companies, including The Fidelity & Deposit Company of Maryland on its $25,000 bond, in proportion to the amount of their respective bonds.

The circuit court ordered the receiver appointed by it to sell the collateral and out of the proceeds to pay, first, the costs of the action, including a fee to counsel for plaintiffs below for services “rendered herein in behalf of all surety companies.”

It is not disclosed by ■ the record just what services were intended to be covered by this allowance, and we are not advised upon what theory the circuit court acted. Counsel to whom this allowance was made presume that the order was premised upon the conclusions at which the circuit court had arrived with respect to' the rights of the parties already determined by that court. They say that the two secured companies did wrong in withholding its collateral from those properly entitled to its benefit, and to right this wrong the plaintiffs below began the action for the benefit of all parties in interest, prosecuted the suit to a successful conclusion through two courts and procured the benefit of the collateral, not simply for themselves, but for all others as well. This reason, if it were a reason, for an allowance does not exist under our ruling as to the collateral held by the two secured companies, and, no benefit having been derived therefrom through the efforts of counsel, an allowance of a counsel fee would be improper upon that theory.

If their claim is based, in part, upon the judgment obtained against The Assets Realization Company, we can see no reason for making the allowance on that account, because all the companies employed their own counsel and sought this same relief, and it cannot be said that this judgment was obtained entirely through the efforts of counsel for plaintiffs below, and there is no reason, as we see it, why the other companies should be compelled to contribute to the fee of counsel for plaintiffs.

We conclude then that the judgment of the circuit court should be modified in accordance with the views herein expressed, and it will be so ordered.

Judgment modiñed.

Johnson, Donahue, Wanamaker and Wilkin, JJ., concur.  