4 N.Y.S. 232 | N.Y. Sup. Ct. | 1889
The plaintiff is the maker of a promissory note for the payment of the sum of S3,893, in five months after the 4th of June, 1887. This note was made to the order of Mr. Shaleck, and delivered to George K. Chase, for his use and accommodation. He transferred the note to the Farmers’ & Drovers’ national Bank of Somers, as further security for an indebtedness contracted by him, and existing against him, in favor of the bank. Preceding transactions had taken place between the parties, but they do not essentially affect their rights or obligations, and therefore require no notice or examination for the decision of the appeal. The plaintiff brought this action to secure the application of collaterals deposited by Chase with the bank, or their proceeds, to the payment of the note, and for his exoneration from liability thereby. It proceeded upon the theory that he had become in this manner a surety for Chase, who afterwards departed this life, and was at the time of his decease insolvent. It appeared from the complaint and the affidavits that other persons had incurred similar obligations for Chase to the bank, who claimed to be protected and indemnified by means of these collaterals, and one of the objects of the action was to settle the rights of these contesting parties, and to determine the amount or proportion of the collaterals which might be applied to the payment of this indebtedness. Shortly after this suit was commenced the bank brought an action upon the note against the plaintiff in this suit, and an application was then made, upon affidavits as well as the complaint, for an injunction restraining the prosecution of that action until the hearing and decision of this ease. The order containing the injunction clause was afterwards vacated, with liberty to the plaintiff to apply for a stay of proceedings in the action brought by the bank, and an order for that object was obtained, requiring the bank to show cause why further proceedings in its action should not be stayed until the disposition of this case. Upon the hearing of the application under that order, the order from which the appeal was taken was made, denying the application upon the bank stipulating to
It is true that the plaintiff, as the accommodation maker of the note, was entitled to the benefit of the collaterals in the hands of the bank, received from the principal debtor, so far as they or their proceeds could equitably be ¡made applicable to the payment of this indebtedness. But that did not entitle the plaintiff either to an injunction restraining its suit on ttie note, orto . a stay of proceedings in that action. The bank had the right to prosecute the maker of the note, and recover its debt of him, leaving him to avail himself of the protection which could be afforded by the application of the collaterals or their proceeds to his reimbursement, after the dispute between himself and the others should be settled, neither the authorities referred to on behalf of the plaintiff, nor any others which have been found, sustain any greater right on the part of the plaintiff than this, under the circumstances here presented. The case of Irick v. Black, 17 N. J. Eq. 189, and Thomson v. Taylor, 11 Hun, 274, and Railroad Co. v. Little, 7 Atl. Rep. 356, were sustained upon the ground of special equities vested in the surety, and subordinated to no preceding controversy of the description of that disclosed in this proceeding; and it may be, where the collaterals are readily available to the creditor, and can be applied by him, without the settlement of any dispute, to the payment of the indebtedness in exoneration of the surety, with the same facility and certainty as a proceeding against the surety himself, that the court would direct that disposition to be made of the securities in a case w'here the principal debtor is himself insolvent. The law was so considered in McConnell v. Scott, 15 Ohio, 401. It was there said, in the course of the opinion, that ■“there is no adequate remedy at law, when the principal debtor is insolvent, by which his effects and credits in the hands of others can be made to be applied for the benefit of the surety. Certainly not, as we have already said, without the surety first pays the debt. And such payment may be attended with great inconvenience and severe sacrifice of property,—burdens which surely ought not to be imposed if they can with propriety and justice be avoided.” Id. 403. And this rule was followed in Wilcox v. Todd, 64 Mo. 388, and Wooten v. Buchanan, 49 Miss. 386. It was held in the last case that the remedy the surety has when his property, as well as that of the principal, has been levied upon, is to force his creditor first to exhaust the remedy against the principal debtor before a sale of his own property under the judgment. If the principal had other property, that also could be indicated as a primary fund to satisfy the debt. He has also the clear right to point out other property of the principal debtor, if he can, and compel his judgment