Licio E. Cengarle

The appellant and respondent were co-sureties for a corporate debt.

The appellant's principal unilaterally took control of the business, excluded the respondent, and caused the appellant to pay off the corporate debt without any demand from the bank or notice to the respondent.

The appellant then sought equitable contribution from the respondent.

The trial judge dismissed the action, finding the payment was voluntary and not reasonably necessary for the survival of the business.

The Court of Appeal dismissed the appeal, holding that because the appellant failed to establish that default was imminent, its voluntary payment discharged the debt and released the co-surety.

The plaintiff subcontractor brought an action against the defendant contractor for breach of contract and under the Construction Lien Act for unpaid amounts relating to the supply and installation of structural steel.

The defendant counterclaimed for damages, alleging the plaintiff caused construction delays and failed to complete its work, requiring the defendant to intervene.

The court found that the plaintiff completed its contractual obligations within a reasonable time and that the defendant breached the contract by refusing to pay the balance owing.

The defendant's counterclaim for set-off was largely dismissed for lack of reliable evidence, and the plaintiff was awarded the balance of the contract price.

The plaintiff company, controlled by the defendant's former business partner, voluntarily paid off a bank line of credit owed by their jointly owned business.

The bank had not made a formal demand for payment.

The plaintiff then obtained an assignment of the defendant's personal guarantee from the bank and sued the defendant for his share.

The court dismissed the action, finding that the plaintiff acted as a volunteer and that there was no legal compulsion or reasonable necessity to pay the debt, disentitling the plaintiff from claiming indemnification under the guarantee.