25 N.Y.S. 212 | N.Y. Sup. Ct. | 1893
For some time prior to April, 1885, the notes of Sherman Kingsbury, indorsed by the plaintiff, had been discounted by the banking firm of McKechnie & Co. at Canandaigua, N. Y., composed of James McKechnie, Alfred Denbow, and Jessie McKechnie. Kingsbury made his note of date April 1, 1885, for $15,000, payable to the order of plaintiff, 60 days after its date, at the banking bouse of McKechnie & Co., and, as the evidence tended to prove, the plaintiff, upon the request of Kingsbury, refused to indorse the note, and thereupon the defendant’s testator said to the plaintiff that he wanted him to indorse the note and any renewals of it, or notes that might be necessary in Kingsbury’s business; that, if he would do it, he (the plaintiff) would never have them to pay or any trouble with them; and that he .(McKechnie) would take care of such note or notes. The plaintiff then indorsed the note, which was taken and discounted by that hanking firm, and the proceeds of the note placed to the credit of Kingsbury. In March, 1886, the plaintiff indorsed another note for $8,000, made by Kings-bury, payable at the same place, and it was there taken and discounted for the benefit of Kingsbury, and the proceeds used in his business. This note, by renewals and some addition, was on
The question arises upon the exception to the ruling at the circuit by which the plaintiff was nonsuited, and in support of that result it is contended that the promise of the defendant’s testator was within the provision of the statute
“(1) Oases in which the guaranty or promise is collateral to the principal contract, but is made at the same time, and becomes an essential ground of the credit given to the principal debtor. (2) Oases in which the collateral undertaking is subsequent to the creation of the debt, and was not the inducement to it, though the subsisting liability is the ground of the promise, without any distinct and unconnected inducement. (3) When the promise to pay the debt of another arises out of some new and original consideration of benefit or harm moving between the newly-contracting parties.”
The first two classes were held to be within the statute, the third one not so. In Mallory v. Gillett, 21 N. Y. 412, the promise was made by the defendant to the creditor, and was held to be within
“in all these cases [referring to that class] founded upon a new and original consideration of benefit to the defendant, or harm to the plaintiff, moving to the party making the promise, either from the plaintiff or the original debtor, the subsisting liability of the original debtor is no objection to the recovery.”
He therefore held it necessary to the completeness of the definition of cases coming within the third class before mentioned that the new or original consideration move to the promisor. Among the classes of cases there stated by him as not within the statute was:
“(1) Where there was no original debt to which the auxiliary promise could be collateral; for example, where the promisee was a mere guarantor for the third person to some one else, and the promisor agrees to indemnify him, or where his demand was founded in a pure tort.”
The promise in question in the present case seems to come within that proposition. It also has the support of Chapin v. Merrill, 4 Wend. 657, where the promise of the defendant to indemnify and save harmless the plaintiff from the consequences of his agreement to pay a mercantile firm for goods delivered to another, who was the purchaser, was held to be an original, and not a collateral, undertaking. The views so expressed by the chief judge in Mallory v. Gillett had the approval of the court in Sanders v. Gillespie, 59 N. Y. 250-252, and in Tighe v. Morrison, 116 N. Y. 263, 22 N. E. Rep. 164; and our attention is called to no case in the court of appeals in which the doctrine of Chapin v. Merrill is disapproved. But Kingsley v. Balcome, 4 Barb. 131, and Baker v. Dillman, 21 How. Pr. 444, 12 Abb. Pr. 313, are not in harmony with it. The latter of those two cases adopts and follows the former, and in both Green v. Cresswell, 10 Adol. & E. 453, is cited as authority. The latter case, upon the facts and the principle applied to them, tended to support the conclusion reached in those two cases. The doctrine of that case was afterwards disapproved, and it was overruled, in Reader v. Kingham, 13 C. B. (N. S.) 344, and in Wildes v. Dudlow, L. R. 19 Eq. 198. In Carville v. Crane, 5 Hill, 483, 486, the remark was made that a liberal construction of the statute might be made to embrace the promise in Chapin v. Merrill, but the two cases were plainly distinguishable, and there so treated. The promise of the defendant in the Carville Case was made to the creditor, and was clearly within the statute. In Barry v. Ransom, 12 N. Y. 462, the plaintiff, at the request of the defendant’s intestate, and upon the promise of indemnity, joined with the latter and others as surety in the bond of one Leyden, the principal. The court held that the promise was not within the statute of frauds, and Judge Denio expressed the
“The promise was not within the statute, because it was not collateral to any debt or liability of a third person to the promisee. The third person proposed to contract a debt with fourth parties, and the plaintiff agreed to guaranty the debt, the defendant at the same time agreeing to indemnify him for so doing. The plaintiff might have invoked the statute if his guaranty had not been in writing. But the defendant was his indemnitor merely. It was a contingent liability, of necessity original, because there was nothing to which it could be collateral. There was no debt of the third person to the plaintiff.”
This is a very clear statement of the nature and effect of the promise in the Chapin Case, and the reason why it was an original undertaking of the defendant there, which applies with equal force to the question arising upon the promise in the present case. The chief judge also criticised Kingsley v. Baleóme, and the definition there given of a new original consideration as too narrow; and it may be added that such definition given in the Kingsley Case was applicable to a promise by one person to pay the debt of another. In the present case the promise was not in the nature of a guaranty of the payment or collection of the notes, nor was it a promise which, if in writing, would have been available to the creditor. It was a promise to indemnify the plaintiff against the consequences of the liability which might arise out of the relation of indorser he assumed to the notes referred to. The case of Chapin v. Merrill still stands as authority in this state. Within the doctrine of that case and the principles enunciated in Mallory v. Gillett and in some other cases to which reference has been made, the promise in question was an original undertaking, and the consideration was one of harm to the plaintiff, moving between the parties to it; and, according to the weight of judicial authority, the promise was not collateral in the sense applicable in that relation to the term, because it was not made in behalf of the creditors, nor did its import or purpose permit
“The language shows that the test to be applied to every case is whether the party sought to be charged is the principal debtor, primarily liable, or whether he is only liable in case of the default of a third person; in other words, whether he is the debtor, or whether his relation to the creditor is that of surety to him for the performance by some other person of the obligation of the latter to the creditor.”
There, it may be observed, the test was applied to the promise of a third person to pay an existing debt. The same may be said of Ackley v. Parmenter, 98 Y. Y. 425. There the promise of the defendant was made to the creditor to pay the debt of another to him, and it was held that the undertaking was collateral, and that, “to take the case out of the statute, there must be a consideration moving to the promisor either from the creditor or the debtor. It must be beneficial to the promisor” to impart to it the character of an original undertaking. In the case at bar the promise of the defendant’s testator was not to the creditor or principal debtor. He was by his undertaking placed in no relation to either. It was not therefore collateral to the contract between them representing the existing debt, nor to any debt of a third person to the plaintiff. The promise was that of mere indemnity to the plaintiff alone, founded upon a new and independent consideration of harm to him, moving between him and the promisor and to the latter. These views lead to the conclusion that the promise of the defendant’s testator was an original undertaking, and not within the statute of frauds, and that it had the support of a consideration, and was therefore valid.
. The further defense alleged arises from the fact that the plaintiff, by an instrument under seal to that effect, released and discharged Kingsbury, the maker of the notes, from liability to him which otherwise would exist by reason of his indorsement of the notes. The relation of indemnitor to the plaintiff, assumed by the defendant’s testator, was such that he would become liable
4 Rev. St. (8th Ed.) p. 2590, § 2, subd. 2.