Joint and Several Liability

Liability of more than one person for which each person is liable to pay back the entire amount of a debt or damages.

Osborne's Concise Law Dictionary:

"An obligation entered into by two or more persons, so that each is liable severally, and all liable jointly, and a creditor or obligee may sue one or more severally, or all jointly, at his option."

In US v Scop, Justice Cummings wrote:

"By definition, being jointly and severally liable means that each individual remains responsible for payment of the entire liability, so long as any part is unpaid."

Stripped of legalese, it means together (jointly) or separately (severally), permitting a creditor to collect or exact from any of the joint and several debtors the total payment due or full performance.

If three friends, A and B (two persons with few assets), and C, who is wealthy, borrow $10,000 from Z and agree to be joint and severally liable for the full amount, and they then default on the loan, Z can sue and collect the full amount against all three or against C only, not having to worry about collecting from A and B (that would then be C's problem in private actions for contribution from A and B).

In S.E.C. v Barclay, Justice Smith of the US Court of Appeals, 3rd Circuit, adopted these words:

"A liability is joint and several when the creditor can sue one or more of the parties to such liability separately, or al of them together, at his (or her) option....

"An assertion of joint and several liability is an assertion that each defendant is liable for the entire amount, although the plaintiff only recovers the entire amount once.

"Joint and several liability can arise in many different contexts ... various torts ... statutory damages ... (or) co-obligors under a contract."

REFERENCES:

• S.E.C. v Barclay & Co. 442 F. 3d 834 (2006)
• US v Scop 920 F. 2d 1004 (1991)
• Woodley, M, ed., Osborne's Concise Law Dictionary, 10th Ed. (London: Sweet & Maxwell, 2005), page 228