4 N.Y. 315 | NY | 1850
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *318 When the plea of the defendant, Maltby Strong, setting up the agreement of the 12th of August, 1839, in bar to the relief sought by the bill, was first brought before the chancellor, it was objected against by the plaintiffs, both in respect to form and substance; but was relied on by the defendant *320 as containing matter which went to his complete discharge from the judgment which it was the object of the bill to enforce. The chancellor, in his opinion, discussed the merits of the plea, and came to the conclusion that, if it was true, Maltby Strong was discharged from the judgment. But the plea was accompanied by an answer covering some part of the relief and discovery embraced by the former, which operated technically to overrule it; and it was therefore ordered to stand for an answer, with liberty to the plaintiffs to except. On appeal from this order by the plaintiffs to the court for the correction of errors, they again contended that the matter of the plea did not constitute a defence. And this appears to have been the only question made in that court. It was, however, determined that the rights and obligations of the parties were so materially affected and changed by the agreement set up in the plea, as that the defendant Maltby Strong, standing in the relation of surety to Joseph Strong, was discharged, and hence that the matter of the plea was a substantial defence. The order of the chancellor was therefore affirmed. (See 10 Paige, 11; 7 Hill, 250.)
In my judgment this was a conclusive determination of the main question presented on the present argument. The merits of the plea were necessarily involved in these decisions. If it had not stated good matter of defence it would have been absolutely overruled, and not ordered to stand for an answer. This order of itself implied, what the opinions delivered in support of it maintained; that the plea contained a substantial answer to the relief sought by the bill. The defect which deprived it of efficacy as a plea, was purely of a technical character. The matter of the plea was approved, while the manner of it only was condemned; and by ordering it to stand with the effect of an answer, its merits were as directly and conclusively passed upon by the court, as if it had been allowed as a plea. Whether, taken in connection with the answer which accompanied it, it was full and sufficient, could only have been determined upon exception. But no question of that sort arises here. We must, therefore, hold that the order of the chancellor, which was affirmed *321 on appeal, was a conclusive determination between these parties, that the matter of the plea, if true, was a good defence. (Mitf.Ch. Pl. 302, 304; Orcutt v. Orms, 3 Paige, 459; 1 Barb. Ch. Pr. 122.)
The agreement set forth in the plea being proved, the suit, so far as the plea extends, is barred, unless there is something in the other grounds relied on by the learned counsel for the appellants, which must be held to qualify the operation of the agreement, or to deprive it of legal effect. We might find enough in the evidence to warrant us in holding that the agreement was made with the knowledge and approbation of Maltby Strong, if it were not for the very explicit denials of this fact contained in the plea and answer. These are verified by the oath of the defendant, and are responsive to the bill, and at the utmost cannot be considered as contradicted by more than the testimony of one witness. The defendant's statement must therefore be taken as the truth of the case.
I find no evidence of any representation on the part of Joseph Strong that Maltby had authorized or consented to the making of the agreement. The witness, Abner Pratt, was interrogated on this point, but he did not feel assured that any such representation was made. He stated, however, that it was his understanding at the time of the agreement, that Joseph Strong was entering into in behalf of himself and Maltby Strong. Whether he derived this impression from the fitness of the thing, from the recital in the agreement, or from Joseph Strong's going out, as he supposed, to consult his brother, the witness did not state, nor is it very material; for, unless Joseph Strong, or some one who was instrumental in procuring the agreement, gave out in some manner, and so as to induce Allcott to believe that Maltby Strong consented to it, the mere impressions of the witness, as stated by him, can have no influence in the determination of this question. He states no fact from which the court can infer that Joseph Strong made the representation referred to.
It was urged, however, that the agreement on its face affords evidence of such a representation, by reciting that it was made *322 "in behalf of the respective parties;" i.e. the plaintiffs and the defendants Joseph and Maltby Strong. Taking these words as the language of Joseph Strong, they do not fairly import more than that he assumed to act for the benefit of himself and Maltby Strong, leaving it in doubt whether he acted by express authority or not. As to that the writing is silent. That he might thus have assumed to act without misleading Allcott in respect to his authority or the consent of Maltby Strong, is obvious from the circumstances of the case. Allcott knew that Joseph Strong was the principal debtor, who ought in conscience to satisfy the judgment. It was his right and his duty to arrange for its payment. In doing so he was discharging his own proper obligation, and also relieving his surety from the burthen of a debt. He was thus in a sense acting in behalf of that surety. If Allcott had desired the express consent or authority of the latter, it is reasonable to suppose that he would have made a point of it, and that the language employed by the parties in the course of their negotiation, would have shown that he had done so. But this does not appear from the evidence. The only witness who was present, could not state that any verbal representation was made on the subject; and as the language of the recital cannot be held fairly to import that Joseph Strong represented himself as acting with the authority or consent of his brother, the objection to the agreement, based on the assumption of such a false representation, cannot be sustained.
In the absence of all fraud, it was competent for Joseph Strong to agree for the payment and discharge of the judgment, without the authority or consent of Maltby Strong; and I perceive nothing in the case which should prevent the agreement in question from taking full effect.
I am of the opinion that the decree of the chancellor should be affirmed.
All the judges concurred.
Concurrence Opinion
The question as to the effect of the agreement between J. Strong and the plaintiff upon the liability of Maltby *323 Strong was adjudicated by the chancellor in this case, (10Paige, 16,) and by the court for the correction of errors, in 7Hill, 250. Although no question was then made upon any supposed distinction in relation to the effect, upon the liability of a surety, of an agreement to extend the time of payment before or after judgment, yet the precise question in this case was necessarily passed upon by the courts in that case; and the question is therefore res adjudicata as between the parties to this suit. But if it may be considered an open question, the decision was clearly right. The recovery of a judgment against the surety does not merge or destroy his character as such, or the relation which he sustains to his principal. Its only effect is to change the form of the security as between him and the debtor. Merging the contract between the creditor and the principal debtor or surety can not affect the relation between the principal and surety. This relation is not necessarily created by the contract to which the creditor is a party, but may be created even without his knowledge. Joint debtors may, by an independent arrangement between themselves, change their relations to each other as such, and create the relation of principal and surety to each other without the knowledge of the principal. So long as he is ignorant of the change he would not be affected by it, but as soon as he receives notice of the relation, the rights of the surety are the same, as against him, as they would have been if the relation had been created by the original contract.
That the character of the surety, as such, is not merged or destroyed by the recovery of a judgment against him, is evident from the numerous cases where both courts of law and equity admit testimony dehors the record to establish his character of surety. If he should pay the judgment, courts of law would sustain the action of assumpsit to recover back the money from his principal, or contribution from his co-surety. No embarrassment would be felt in admitting parol evidence to establish the fact of suretiship. So if the creditor has in his possession collateral securities belonging to the principal debtor, the surety, on paying the judgment, may apply to a court of equity for an *324 assignment to him of those securities. Has it ever been doubted that parol testimony, in such cases, is admissible to establish the relation of principal and surety? This right of subrogation is one of the clearest and most well established principles of equity jurisdiction. It has been said "that it is scarcely possible to place this right of substitution too high;" (Hodgson v. Shaw, 3 Myl. Keene, 183;) and that "it does not rest upon contract, but upon the broader and deeper foundations of natural justice and moral obligation." (Aiken v.Matthews, 1 Comst. 600.) If the right of subrogation does not rest upon contract, it is clear that the recovery of a judgment can not affect this right.
But if the right of subrogation is so high and so sacred, resting upon the sacred principles of natural justice and moral obligation, is it possible that the creditor would be allowed, in a court of equity, to interfere with or destroy this right with impunity? That for the purpose of enforcing it where it had not been impaired, a court of equity would recognize the relation of principal and surety even after judgment, but would refuse to recognize the relation when the complaint was against the creditor that he had impaired the right? If the court will trace the relation, notwithstanding the judgment, for the purpose of enabling the surety to sustain his action for money paid against his principal, or for contribution against his co-surety, or for subrogation against the creditor, why should its powers be paralyzed in this solitary case, especially a case so intimately connected with this right of subrogation? I insist that no satisfactory answer has been given, in any case where the distinction has been recognized. The plaintiff's counsel insisted upon the argument that the discharge of the surety was based upon a change of the contract without his consent — that when the time of payment was extended, or any other stipulation entered into between the creditor and principal debtor, changing the conditions of the contract, the surety had a right to say nonveni in foedera, and he cited several authorities to support that position. (Burge on Suretiship, 214 to 217; 4 Wash.C.C.R. 28; 9 Wheat. 703.) Doubtless there are cases where the discharge of the surety might well be put upon this ground, but generally his liability *325 is discharged upon entirely different principles. It no more changes a contract as to a surety than it does as to a joint debtor; and yet it is clear that an extension of the time of payment to one joint debtor without the consent of his co-debtor, would not discharge the latter. The true ground upon which the liability of the surety is discharged, is that his rights against his principal are impaired or at least affected. It was upon this ground that Chief Justice Bronson placed his discharge when this case was before the court for the correction of errors. He said there that it interfered with his right of subrogation; that upon payment of the debt he was entitled to be "substituted in the creditor's place as to all securities and means of enforcing payment which appertained to such creditor."
In this case, previous to the arrangement between the plaintiffs and J. Strong, Maltby Strong had the right to pay up the judgment, and to be substituted in the place of the plaintiffs as to all the means of enforcing payment against the principal debtor. But by the arrangement his condition was materially changed. Upon payment of the judgment he would not only have found himself delayed in enforcing payment as to time, but the debtor had the right by that arrangement to pay in land. His rights against his principal were thus materially changed without his consent. The court therefore will not stop to inquire into the extent of the injury which he may have sustained, but will hold him entirely discharged from his liability. In the language of the civilians, they will hold such agreements between the creditor and principal debtor conclusive evidence of an intention to vacate the debt and discharge the surety. (Story'sEq. Juris. 325, 833.)
Whether courts of law will follow the same rule as courts of equity, it is not necessary to inquire. All the remedies to which sureties are now entitled, either against their principals, the creditor or co-sureties, originated in courts of equity, and whenever courts of law have taken cognizance of the same matter, they have simply extended their jurisdiction to matters over which courts of equity had already undoubted jurisdiction. I see no reason why courts of law, within the principles upon which they *326 have long acted, would not hold an agreement of this kind a defence to an action, on the judgment especially, as it is now well settled that an arrangement of the same character would discharge the surety upon precisely the same principles before judgment; but whether they would or not, it can not affect the question in a court of equity, where the whole doctrine in relation to rights and privileges of sureties originated. The judgment of the supreme court should be affirmed. (Samuel v.Hawarth, 3 Meriv. 271; Spiner, Eq. Jur. 637; C.C. CooperApp. 515, all the cases collected.)
Decree affirmed.
