Harlan F. Stone

“ Wherever equitable principles are called in play, as they pre-eminently are in determining the rights and liabilities or sureties and in the distribution of insolvents' estates, they likewise forbid the surety to secure by independent contract with the debtor indemnity at the expense of the creditor whose claim he has undertaken to secure. ”

“ The bank's undertaking was to indemnify respondent for liability which it might 'sustain or incur' by reason of its having given its surety bond, which was conditioned on the bank's keeping its deposits 'subject at all times to the check and order of the treasurer.' So long as the bank remained solvent respondent would have been entitled to immediate indemnity from the bank, even though that payment neither satisfied the treasurer's claim nor exhausted the surety's own liability. ”

“ Similar reasoning underlies the requirement of equity that the surety who holds the security of an insolvent debtor must give the benefit of it to the creditor for whom he is surety, until the debt is fully paid. ”