176 Misc. 580 | N.Y. Sup. Ct. | 1941
The contention that plaintiffs were discharged from liability upon the note by the discharge of Brandt, despite the bank’s reservation of its rights against all other parties to the instrument, is based upon subdivision 3 of section 201 of the Negotiable Instruments Law. Under the prov.sions of a subsequent statute, however, the obligee’s release or discharge of one or more of several obligors does not discharge co-obligors against whom the obligee, in writing, as part of the same transaction as the release or discharge, expressly reserves his rights. (Debtor and Creditor Law, § 234.) All the parties to the note were “ several obligors ” within the meaning of section 234 (supra), for section 231 of the Debtor and Creditor Law defines “ several obligors ” as “ obligors severally bound for the same performance ” and all the parties to the note were severally bound for its performance by payment. That section 234 (supra) supersedes section 3 of section 201 of the Negotiable Instruments Law, to the extent that it is inconsistent therewith, seems to be clear from the language of section 240 of the Debtor and Creditoi Law, which reads as follows:
“ All acts or parts of acts inconsistent with this article are hereby repealed; but nothing in this article shall be construed as repealing any of the provisions of the Civil Practice Act or the Partnership Law.”
Assuming, therefore, that under subdivision 3 of section 201 of the Negotiable Instruments Law plaintiffs would have been discharged by the bank’s release of Brandt, notwithstanding the bank’s reservation of its rights against all other persons liable on the note, the effect of section 234 of the Debtor' and Creditor Law was to preserve the bank’s rights against plaintiffs. It follows that the payment made by the latter to the bank was not a gratuity but rather a payment for which it was liable to the bank. A fortiori, the bank’s release of Satenstein did not extinguish plaintiffs’ liability to the bank. This is so under section 234 of the Debtor and Creditor Law, and also under subdivision 5 of section 201 of the Negotiable Instruments Law, which expressly states that the release of the principal debtor does not discharge a person secondarily hable on the instrument if the holder’s right of recourse against the party secondarily liable is expressly reserved.
It is argued by defendants that the note itself became merged in the judgments upon the note which the bank obtained against Brandt and Satenstein, respectively, and that the bank’s assign-
Under these circumstances, the opinion as to the law of New York expressed by the Appellate Division, the highest court which has indicated its views on the subject, must be accepted as controlling in the instant case. The assignment of the bank’s judgment to Brandt’s nominee transfers all the bank’s right, title and interest in and to the judgment “ as against Harry Brandt only.”
The order of compromise approved by this court expressly directed that all rights of the bank against other parties were to be reserved and the general release executed and delivered as part of the same transaction contained such an express reservation. The correspondence between the bank and Brandt’s attorney also indicates that it was one of the essential terms of the compromise and of the assignment of the judgment that the bank’s rights against all other parties to the instrument be reserved.
The effect of the reservation of the bank’s rights against other parties to the instrument was to preserve the right of subrogation of subsequent parties who might pay the instrument, a right which would have been destroyed in the absence of the reservation. Thus, in National Park Bank v. Koehler (204 N. Y. 174) the Court of Appeals pointed out (at pp. 179, 180) that the reservation of a creditor’s rights against an indorser put the latter in a position to pay immediately and proceed against the principal debtor, despite an extension agreement entered into by the creditor with the principal debtor. So here, the effect of the reservation was to place plaintiffs in a position on paying the bank to proceed against Brandt and Satenstein, notwithstanding the bank’s having released them. Nor was plaintiffs’ right to be subrogated to the bank’s rights against Brandt affected or impaired by the satisfaction of the judgment against Brandt after the bank had assigned it to Ms nominee. Brandt had, as part of the settlement with the bank, agreed, in effect, that the rights of plaintiffs would not be
The court accordingly holds that neither the releases nor the assignment of the judgment to Brandt nor the satisfaction of the judgments against Brandt and Santenstein discharged plaintiffs’ liability to the bank. The payment made by plaintiffs to the bank was, therefore, a payment wMch they were obligated to make.
There remains for consideration the question of the Statute of Limitations. The proof failed to establish plaintiffs’ claim that their testator was an accommodation indorser and the court accordingly holds that plaintiffs' testator was an indorser for value.
Defendants contend that the statute began to run not at the time plaintiffs made payment to the bank, but rather at the maturity date of the note, March 1,1931, relying upon Blanchard v. Blanchard (201 N. Y. 134) and Woodruff v. Moore (8 Barb. 171). The cited cases, however, relate to the runmng of the Statute of Limitations in favor of the maker of a note. They do not decide the question of when the statute begins to run in favor of a prior indorser in an action by a subsequent indorser. It would seem that the statute does not start running in favor of an indorser as against Ms indorsee until payment is actually made by the latter. (Butler v. Wright, 2 Wend. 369; 17 R. C. L. 775, § 143.) The present action was oommenced less than six years after plaintiffs made payment to the bank and, therefore, the defendant Brandt may not successfully interpose the defense of the Statute of Limitations.
Even if the view be taken, however, that the statute commenced to run in favor of both Brandt and Satenstein at the maturity date of the note, March 1, 1931, the court is of the opinion that the action is not barred by the statute. It is true that the part payments made by Brandt and Satenstein to the bank did not have the effect, of tolling the statute, since they were made in full
For the reasons indicated, the court is of the opinion that the plaintiffs are entitled to prevail in this action. Judgment is accordingly directed in their favor for the amount sued for, together with interest and costs and disbursements of the action.