121 N.J. Eq. 135 | N.J. Ct. of Ch. | 1936
The decision of this case is complicated by the fact that none of the witnesses for either side impressed me favorably, save Mr. Samuel Avidan and his brother, Alexander. The suit is brought to stay an action on a bond executed by complainant, Harry Burack, and his brother, Ephraim, to Edward Mayers, since deceased, on the ground that Harry is only a surety and was released by acts of the obligee. By indenture dated January 24th, 1928, and recorded the next day, Ephraim Burack mortgaged property on Renner avenue, Newark, to Edward Mayers for $4,500, payable in two years. The mortgage recites that Ephraim is justly indebted to Mayers in the sum mentioned, secured to be paid by his bond, and the mortgage contains his covenant to pay the same sum of money and interest. The bond, which all parties agree is the one referred to in the mortgage, was originally drawn as the bond of Ephraim Burack, but before execution the name of Harry Burack as co-obligor was inserted and in some places, though not throughout the bond, "he" was changed to "they" and similar alterations made. The instrument contains this clause: "This bond is given subject to the same terms and conditions as set forth in the mortgage between the parties hereto of even date herewith." This is the bond on which the action at law is pending against Harry. *137
A bond and mortgage given at the same time in a single transaction must be construed together in the endeavor to ascertain the actual contract; the terms of each are qualified by applicable provisions of the other. Security Trust, c., Co. v.Paper Board Co.,
Ephraim Burack testified that he alone borrowed the money and used it in his jewelry business; that during his negotiations with Mayers, the latter insisted that he get Harry to go on the bond and this was done; that, when Mayer's attorney, Maurice S. Maurer, had drawn the bond and mortgage, he (Ephraim) went alone to Maurer's office and executed them. He did not get the money at that time, for Harry had not yet signed the bond. The next day Mayers called at the office of the two brothers and gave Ephraim the check for $4,500. Ephraim has been adjudged a bankrupt and cannot respond to the bond. The value of his testimony is materially lessened by two contradictory affidavits to which he swore, relating to the title to the mortgaged property. Though they do not bear directly on the present controversy, they indicate a willingness on his part to swear to whatever appears advantageous at the moment.
Harry Burack, the complainant, testified that he signed the bond at Ephraim's request and that he received none of the loan. He was prohibited from going further into the matter by objection based on section 4 of the Evidence act.
The principal witness for the defendant executrix was Mr. Maurer, who had drawn the bond and mortgage for Mayers. He testified that his client with Harry Burack called and that they told him that Mayers was making a loan to Harry to be secured by property owned by Ephraim A few days later Harry brought the title papers, and still later, when the bond and mortgage had been prepared, he took them to be looked over by his lawyer. The next day he returned with his *138 brother Ephraim and his lawyer, Samuel Avidan. The papers were then executed. Mayers produced a blank check which he asked Harry to fill out. Harry did so, and Mayers signed it, and handed it back to Harry.
There are circumstances which adversely affect Maurer's testimony. The certificate of acknowledgment on the mortgage and the jurat on the certificate of title are both dated January 24th, 1928. Maurer said that he actually took the acknowledgment and the affidavit January 25th, but that, because of oversight or for some other reason, he did not make the date correspond to the fact. It is also satisfactorily shown that Mr. Avidan was not present when the papers were executed, was not consulted about the transaction, and had nothing whatever to do with it. I should point out, however, that neither the date of the acknowledgment and affidavit, nor the presence of Mr. Avidan, were vital parts of Maurer's story.
It is a fact that the body of the check was written by Harry Burack. The check may have been filled out, signed, and delivered at Maurer's office in accordance with his testimony, or this may have occurred at the Burack office, provided Harry was present. Note that Ephraim, while testifying that the check was handed him at this office, said nothing about Harry being present or filling out the check. Perhaps he had forgotten.
Mr. Alexander Avidan had a conversation with Maurer about the bond and mortgage in January, 1936. Avidan told Maurer that, in his opinion, Harry, as surety, had been discharged from liability. Maurer did not deny the suretyship.
Where two or more persons join in an obligation, any of them may allege and show that he is only a surety without claiming fraud or mistake, or asking for a reformation of the instrument.50 C.J. 64. Therefore the great certainty of proof required in reformation cases is not requisite and suretyship may be established by a mere preponderance of evidence. On the whole case, I am satisfied that complainant was a surety.
He claims to have been discharged by an agreement between Mayers and Ephraim made without his knowledge or consent, extending the mortgage two years. Mere delay in enforcing *139
the debt does not discharge the surety. Discharge results only from a binding agreement extending the time for payment. Grier
v. Flitcraft,
Generally, where there are two considerations, one of which is good and the other void, the good consideration will support the promise. But, where the consideration in part is not merely void but is illegal, the whole agreement falls. This, I take to be the basis of the decisions just cited and it so appears more readily in United States Agency v. Handler,
Complainant also asserts discharge on another ground. Mayers' mortgage, at its inception, was subsequent to a mortgage held by the Alliance Building and Loan Association securing bond of Jacob Burack and wife in the principal sum of $18,000. In July, 1933, there was due on this mortgage and for unpaid taxes $19,628. The association held, as collateral security for its debt, shares of its stock with a withdrawal value of $10,942, which, as against the second mortgagee *140
Mayers, it must credit on its debt before proceeding against the property. Schaefer v. Metzger,
When the contract, which the surety guarantees, is changed without the surety's consent, he is discharged. But that rule is not here involved, since there was no alteration of the contract between Ephraim Burack and Mayers. The pertinent principle is this: A surety is entitled to the benefit of all the securities which the creditor holds as indemnity against loss by reason of his suretyship. Philadelphia and Reading Railroad Co. v.Little,
The bill will be dismissed.