149 N.Y. 360 | NY | 1896
The facts briefly are that on the 18th day of March, 1893, one John L. Cumings indorsed the note of one Joseph Cumings for his accommodation, dated on that day, for the sum of $2,000, payable to the order of John L. Cumings three months after date, at the plaintiff's bank, where it was discounted. Contemporaneously with the indorsement, and to induce John L. Cumings to indorse the same, Joseph Cumings made his certain other note of the same date and amount, and payable at the same time and place as the former note, to his own order, and thereupon indorsed his own name thereon and procured it to be indorsed also by the defendant. Over the indorsement on the second note was this statement: "This note is given to and to be held by John L. Cumings as collateral security for his indorsement on my note, same tenor, date and amount, favor of said John *364 L. Cumings, which I have given to said John L. Cumings to be by him indorsed and delivered to the Merchants and Manufacturers' National Bank of Middletown, N.Y., for the purpose of renewing my note due at said bank Mch. 18th, 1893. Protest hereof and notice thereof hereby waived." This second note was thereupon delivered to John L. Cumings, who then indorsed the note first mentioned. The note discounted by the bank was not paid at maturity and was duly protested, and is still held by the bank, and is unpaid, and so far as appears no proceedings to collect it have been taken. On May 20th, 1893, before the maturity of either note, John L. Cumings, by formal written assignment, transferred to the bank the second note with all his "right, title and interest" therein. This note was also protested at maturity, and not having been paid, this action was brought thereon against the indorsers. Ira T. Cumings alone defends.
The plaintiff, among other things, relies upon the established rule in equity that a creditor is entitled to the benefit of all collateral securities or counter bonds which a principal debtor has given to a surety or a person standing in the position of a surety for his indemnity. (Moses v. Murgatroyd, 1 Jo. Ch. 119; Vail v. Foster,
It is not always easy to determine the nature of the indemnity into which a surety enters. In the present case we have the fact that John L. Cumings refused to assume liability as indorser on the first note until the second note was given. There is the further fact, which appears in the statement on the back of the second note, that it was given as collateral security for his indorsement of the first note. There is the further significant fact that the second note was payable at a day certain, which was coincident with the day of the maturity of the first note. John L. Cumings became indorser of the first note at the request of the defendant, for such is the legal effect of the transaction. Under the circumstances is it not a reasonable construction that the security was given to protect him against the liability which he assumed, and that as between the parties the intention was to place upon the defendant and his co-indorser the burden of looking after and providing for the payment of the first note at its maturity, and, failing to do this, to create an immediate liability to John L. Cumings, by enforcing which he could, in case the bank would defer proceeding against him on his indorsement, realize the means for the payment of the original note.
In Russell v. La Roque (
The question is not free from doubt and the decisions are not altogether harmonious. (See Osgood v. Osgood,
The judgment should be affirmed.
O'BRIEN, HAIGHT and VANN, JJ., concur; GRAY, BARTLETT and MARTIN, JJ., dissent.
Judgment affirmed. *367