18 N.Y.S. 685 | N.Y. Sup. Ct. | 1892
Lead Opinion
For the reasons set forth in the opinion of Mr. Justice Tap-pan in the court below the judgment appealed from should be affirmed. In addition to, but in harmony with, the views expressed by the trial court, the following suggestions are made:
It seems to me that it was not necessary for the plaintiff to notify the sureties of the dishonesty of his guardian, in order to hold them to the obligation of their bond. They owed more than a passive duty. They should have seen to it that their principal discharged his duty. If they neglected it, they did so at their peril. Forrester v. State, 41 Md. 161; Gillett v. Wiley, 126 Ill. 310, 327, 328, 19 N. E. Rep. 287. A guardian’s duty does not end as soon as his ward becomes of age. He must then make a settlement with his ward, and honestly,account and pay over what is coming to him; and the sureties are responsible that he does so. I cannot assent to the idea that because, when the ward became of age, he has legal capacity to act for himself, the sureties are no longer responsible for the transactions between himself and his guardian in settling the estate. One of the most important duties the guardian owes to his ward is an honest accounting and settlement with him, and that necessarily cannot take place until he is of age; and, instead of being in any sense released by the transactions of the ward with his guardian, it seems to me it is just the time when, if ever, the sureties owe an active duty to see that their principal acts—as they have bound themselves he would act—as an honest man. In my opinion the defendants are in a somewhat different position from' an indorser upon a note or a guarantor of a bond, or any surety who merely binds himself to pay a sum of money or ful
Honesty and fidelity are the main things guarantied, not pecuniary responsibility. But, even upon the ground of delay, I do not see that the defendants have any sufficient reason to be released. The delay caused by the legal proceedings cannot be considered on the question of loches. Laches «can only be predicated upon the time that elapsed from the discovery of the fraud until the commencement of the suit against the principal. Ho inflexible rule can be laid down as to what constitutes loches. It depends upon the ■circumstances in each particular case. The evidence in this case is not before us, but it is fairly to be inferred from the facts found that there were negotiations between the plaintiff and his guardian, and promises to pay by the guardian, so that the plaintiff was kept in constant hope and expectation of a settlement, and a part payment was made. Plaintiff first became aware of the fraud in Hovember, 1880, and immediately made demands upon his guardian for payment. This was promised, but not fulfilled, in February, 1882, a part payment was made, and, no further payment being made, in October, 1882, he commenced his action against his former guardian. I do ¡not think that the delay, under all the circumstances, constituted loches that would release the defendants. There was no extension of the guardian’s time, or valid release of him, by the plaintiff, by which the plaintiff was prevented from prosecuting him upon his obligation to make an account. The fraud practiced vitiated the whole proceeding and settlement, so that it in no way acted as an extension of time or stay of proceedings. Lowman v. Gates, 37 N. Y. 601. Mere indulgence or delay by the creditor to prosecute the principal debtor will not release the surety. Albany Dutch Church v. Vedder, 14 Wend. 165; Supervisors v. Otis, 62 N. Y. 88; Powers v. Silberstein, 108 N. Y. 169, 15 N. E. Rep. 185; Machine Co. v. Farrington, 82 N. Y. 121-131; Bostwick v. Van Voorhis, 91 N. Y. 353. The judgment should be affirmed, with costs and printing disbursements.
Putnam, J., concurs.
Dissenting Opinion
(dissenting.) This action was brought against Peter Ferris and Bodney Sargent upon a bond executed by them and Gilletta Low, as sureties for Edwin B. Low, upon his appointment as the general guardian of the plaintiff, William O. Douglass, by the surrogate of Essex county. The bond was dated on the 28th of March, 1872, and letters of guardianship were issued to the guardian on the 29th day of March, 1872. The plaintiff . arrived at the age of 21 years on the 26th day of March, 1879. On the 14th of May, 1879, after becoming 21 years of age, the plaintiff and his guardian had a voluntary settlement or accounting, and settled and fixed the amount of the guardian’s liability to the plaintiff on account of such guardianship at the sum of $4,363.10, and the guardian thereupon paid to the plaintiff the sum of $1,163.10, leaving a balance due from the guardian to the plaintiff of the sum of $3,200, and in settlement or payment of that balance the guardian turned out to the plaintiff the promissory note of his insolvent
The first and perhaps most important question raised by the appellants on ■this appeal is whether the sureties upon this bond are not discharged by the settlement of the plaintiff with the guardian after arriving at his majority, and accepting of the guardian, in satisfaction of his claim, the note and mortgage of Charles W. Low, payable nearly two years after the date of such settlement, upon which a decree discharging the guardian was entered by the surrogate. If the plaintiff by this settlement deprived the sureties of any of their legal advantages in protecting themselves from the obligation they assumed as sureties on this bond, to their prejudice, it is difficult to see how he can in this action enforce its obligation against them, for his own protection, and to the prejudice of the sureties. The capacity of the plaintiff to make a settlement with his guardian after becoming of age cannot be doubted, and it can hardly be claimed that the defendants by their bond undertook to protect the plaintiff from the consequences of his improvident dealings with his guardian after he is clothed by law with authority to act for himself, in the
I am inclined to the opinion that this voluntary settlement with the guardian by the plaintiff so far affected the rights, powers, and privileges of the defendants as sureties on this bond as to, release them from all obligations te the plaintiff thereunder. By this settlement the right of the sureties to pay this balance to the plaintiff, and sue the principal, was clearly suspended during the period that this settlement and decree remained unrescinded and in force. This was such an interference with the rights of the defendants, as sureties on this bond, without- their knowledge or notice to them, as to release them from liability to the plaintiff. In Paine v. Jones, 76 N. Y. 278, Danforth, J., in discussing this subject, says: “The holder of the security had notice of the deed and its covenants, and was bound by this relation to do nothing to affect or alter the right of the surety.” In Calvo v. Davies, 8 Hun, 222, the court says: “The rule is absolute that there shall be no transaction with the principal debtor without acquainting the person who has a part interest in it.” In Kane v. Cortesy, 100 N. Y. 132, 2 N. E. Rep. 874, it was held that the defendants, sued upon a guaranty, upon a bond and mortgage, were released from their obligation upon their guaranty by plaintiff’s acceptancé of a chattel mortgage as additional security, and agreeing with the mortgagor, without the consent of the guarantors, to extend the
The appellant also insists that the sureties on this bond are discharged by reason of the loches of the plaintiff in disaffirming and repudiating this settlement, for fraud, after the discovery by him of its existence. If this settlement had not delayed the defendants in enforcing their remedy against the principal, then the defendants could not urge the plaintiff’s loches as an excuse for their failure to respond after the default of their principal. The-bond would then be a continuous obligation, and the sureties would at any time be liable for default of the principal, until barred by some statute of limitation. But when, by the act of the creditor and principal debtor, the sureties are delayed or hindered in their ability to protect themselves from loss, then the loches of the creditors to restore them to their original rights would furnish good grounds for their discharge. In McMurray v. Noyes, 72 N. Y. 523, the guarantor of the mortgage was held to be released by the loches of the holder of the same, in delaying foreclosure for 14 months after the same became due, when at the time of its maturity the property was good security, but before foreclosure it became worthless, by destruction by fire.
If we are right in the above conclusion, then there was no breach of the bond as to the sureties. They had not covenanted to protect the plaintiff against the fraud practiced by Edwin B. Low upon the plaintiff in a transaction between him and Low after he had arrived at full age; and while such fraud might and did restore the liability of Low to the plaintiff, growing out of that fraud, it did not, it seems to us, re-establish the liability of the sureties on his bond, as guardian, under the circumstances of this case', when, as we have seen, the plaintiff, by his own act and loches, had deprived the defendants of rights which they had and could have maintained against their principal but for the obstruction put in their way by the acts of the plaintiff, without their knowledge or consent. They assumed no such obligation in their bond, and cannot be held liable in this action unless, as is insisted by the plaintiff, their liability is established in the action by the plaintiff against the guardian, to which they were not parties, and in which they were in no way before the court, or called upon to defend. In People v. Chalmers, 60 N. Y. 158, Church, C. J., says: “It is a familiar rule that sureties can only be charged when the case is brought within the very lines of the contract, (Birckhead v. Brown, 5 Hill, 635,) and the obligation of sureties is not to be extended by construction to embrace purposes and objects not contemplated by the parties.” It would be going too far, I think, to hold that the sureties, when they signed this bond, had in contemplation the protection of the plaintiff against fraud practiced upon him when he voluntarily undertook to deal with his former guardian after he became of age, and in the eye of the law stood upon an equality with him, especially when for years he carried on a contract with him without their knowledge and authority.
But it is insisted that the defendants cannot now be heard to contest their liability in this action, as the judgment against their principal fixes their liability as sureties on this bond. The general doctrine is that a decree against the principal liquidates and fixes the amount of his liability, and affords prima facie evidence of the correctness of that amount in an action against the sureties; but I find no case which goes to the length of holding that the liability of the surety is so fixed that he cannot defend, where he has a good and valid defense to his liability upon the bond, especially where he is not a party to the action or proceeding in which the amount of the liability of the principal is settled. In Annett v. Terry, 35 N. Y. 256, the court says: “It is true that the decree is prima facie evidence of the' amount due from Ken,- and its recovery on his admission, arising from his default, binds the sureties, in the absence of fraud or collusion.” But this case does not hold that the sureties are bound as to their liability on the bond, and concluded from making a defense to the same, if they have a valid defense thereto. In Harrison v. Clark, 87 N. Y. 575, the court says: “The sureties are bound because by their contract they are privy to the proceedings against the principal; and, when the principal is concluded, they in the absence of fraud or collusion, are concluded also. ” But that case did not arise when the sureties interposed an independent defense to the bond upon the merits. It can hardly be claimed that the defense of forgery of the names of the sureties, or their release by their principal, could not be set up by the persons sued as sureties on the bond, when the liability of the principal to the bond had been established in a separate action against him. In the interlocutory judgment in the action by the plaintiff against his guardian, these defendants were not before the court, and none of the questions raised by them on this trial were,- or could have been, raised on the trial of that demurreri The effect of over-'
I am therefore clearly of the opinion that the judgment in the action against the guardian in this case does not conclude the defendants in this action, if* as we have seen, they were discharged from their liability to the plaintiff by his voluntary acts or omissions after he arrived at his majority. That action* does not assume, in terms, to adjudicate the liability of these defendants as sureties, and while, as we have seen, it could, under certain circumstances* be prima facie evidence of the extent of the liability of the sureties on the bond, I do not think that it is binding upon them in this case. There are other questions in the case, raised by the appellant, one of which is as to the extent of the liability of the defendant Ferris, and of Prouty as the personal representative of Sargent, if the defendants are liable in this action. But, from the view I have taken, these questions need not be discussed here.
For the reason above stated, I think there should a new trial.