ANALYSIS OF APRIL 18, 2019 SUPREME COURT OPINION
(Posted April 18, 2019) If you enjoy delving into the arcane world of suretyship law, the Robes today hand down an interesting and informative opinion for you. If you aren’t in this select group, the sun is shining and the temperatures are moderate; why don’t you take the afternoon off? You won’t get weather like this in mid-July.
In Callison v. Glick, the court takes up the topic of subsuretyship. Yes, that’s a word, though my computer’s Spell Check feature finds it objectionable. Today’s opinion resolves an incredibly complex fact pattern. To avoid getting bogged down in that, and risking losing your attention, I’ll just say that it involves a loan against property used as an “automobile service center,” though the opinion elsewhere calls it a dealership. You can read about all the facts in the slip opinion; I’m going to jump straight to the holdings.
There are normally three parties in a surety arrangement: The creditor, the debtor, and the surety. A surety promises to make good on the loan if the debtor defaults. Until the debtor defaults, the creditor can’t touch the surety.
This decision defines the boundary between a cosurety and a subsurety. Cosuretyship is where two sureties each agree to protect the creditor – presumably equally, though it’s certainly possible that they could agree to be sureties in different amounts. In that situation, if the debtor doesn’t pay, the creditor can go after either or both cosureties.
A subsurety is different: That’s where the subsurety agrees to step in only after the debtor and the original surety fail to pay what’s due.
Today’s ruling turns on that distinction. The trial court ruled that the appellant here was a cosurety, and the creditor could tag her immediately upon nonpayment. On appeal, she asked the justices to reverse that, but the Supreme Court finds that the trial court didn’t abuse its discretion in its ruling. Finding that “reasonable jurists could differ” as to the conclusion, and that the trial judge didn’t make a mistake of law, the court unanimously affirms today.
This, then, is possibly the latest in a long line of appellate decisions where the standard of review is case-dispositive on appeal. Justice Goodwyn writes today’s opinion, and he makes it clear that the seven justices may or may not have agreed with the trial court’s view of the case. But they don’t second-guess judgment calls like this.
The appellant assigned error to one additional ruling. She had asked the trial court to clarify its ruling, to specify that the judgment was without prejudice to her later right to seek contribution from the original surety and the debtor, but the court refused to do that. Resolving this assignment, the justices cite recent caselaw that excuses trial courts from having to explain their orders. They also note that doing so in this context would amount to rendering an advisory opinion, since the appellant’s contribution claim wouldn’t be ripe until she made good on the obligation. My best guess is that this ruling effectively gives the appellant what she wants; a holding that the claim isn’t ripe almost certainly means that the judgment here isn’t res judicata as to that future claim under Rule 1:6. But that’s a question for another day.