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Equitable Contribution: Promissory Notes, Contracts, Guarantees

Contribution is an equitable remedy that often arises between co-debtors. While contribution may generally applies where one or more individuals shares a common burden, the focus here is on a common between co-debtors/co-guarantors. Missouri District Telegraph Co. v. Southwestern Bell Telephone Co., 93 S.W.2d 19, 23 (Mo. 1935).

Contribution is grounded in case precedent. Commercial Union Insurance Co. of New York v. Farmers Mutual Fire Insurance Co. of St. Louis County, 457 S.W.2d 224, 226 (Mo. Ct. App. 1970). It is applicable when one is compelled to pay more than his/her share of a common obligation that several persons are obligated to discharge. State ex rel. McCubbin v. McIllian, 349 S.W.2d 453, 460 (Mo. Ct. App. 1961). It exists for a surety, guarantor or debtor who discharges more than his/her proportionate share of a common debt and then seeks contribution from fellow sureties, guarantors or co-debtors. In re Estate of Wray, 842 S.W.2d 211, 214 (Mo. Ct. App. 1992). Therefore, if three (3) individuals are jointly and severally responsible for a promissory note, but one individual pays all of it, a court may order that the other two (2) individuals reimburse the third to divide the obligation evenly.  And because it is an equitable remedy, a trial court has flexibility to apply it and may focus on the parties conduct and the facts of the specific case in making its discretionary judgment.

Contribution, therefore, may be applicable in cases involving breach of contracts, breach of leases, breach of promissory notes, breach of guarantees or other liabilities that are shared. Contact us with questions