52 N.Y.S. 404 | N.Y. App. Div. | 1898
Lucy Adaline Hall and her husband, now deceased, in 1883 executed and delivered a bond to the plaintiff and as collateral thereto executed and delivered a mortgage upon.the premises which are the subject of this action. Thereafter, and in 1887, Mrs. Hall conveyed the premises to one Hanaman; the latter covenanted to pay the mortgage and the plaintiff thereupon released Mrs. Hall, by an instrument in writing sufficient for that purpose, from all liability for any deficiency which might arise if the land did not produce sufficient to pay the mortgage debt. Hanaman subsequently conveyed the land to one Lansdell; he gave to Mrs. Parker a second mortgage upon the land, which was thereafter foreclosed, and the defendant Parker bid in the same at the foreclosure sale, subject to the lien of the prior mortgage to plaintiff. By an agreement thereafter made between the plaintiff and tire defendant Parker, the interest upon its mortgage was reduced from six to five per cent; the time of payment of its mortgage was extended, and Parker gave to the plaintiff a collateral bond, so called, agreeing to pay the principal sum secured by the mortgage. This instrument is, in all respects, sufficient to create a primary liability, and is of such effect unless the recital: “ (this instrument being collateral to the bond and mortgage of Lucy A. Hall and John B. Hall held by the above-named company to secure the payment of the sum of fifteen thousand dol
If he be not a surety, then he has no defense, and the judgment below is right. Ordinarily when we speak of a collateral undertaking, we understand it to be secondary to a primary obligation, and in the nature of a security for the performance of the duty for which the principal obligation provides. I apprehend, however, that it may be in a sense collateral and yet be also primary, dependent upon the circumstances and character of the consideration moving to the obligor therein. If the promise be made for the obligor’s benefit, and he alone becomes the recipient and sole beneficiary in the matters arising therefrom, he may well become primarily liable, although his engagement be denominated collateral, unless the agreement, either in terms or by necessary implication, forbids such construction. Under such circumstances we are to consider whether in fact the bond is collateral in the sense of suretyship, or additional and also primary. It is said by Judge Cooley : “ Now a surety, as we understand it, is a person who, being liable to pay a debt or perform an obligation, is entitled, if it is enforced against him, to be indemnified by some other person, who ought himself to have made payment or performed before the surety was compelled to do so. It is immaterial in what form the relation of principal and surety is established, or whether the creditor is or is not contracted with in the two capacities, as is often the case when notes are given or bonds taken ; the relation is fixed by the arrangement and equities between the debtors or obligors.” (Smith v. Sheldon, 35 Mich. 42.)
“ Where the primary debt subsists and was antecedently contracted, the promise to pay it is original when it is founded on a new consideration moving to the promisor and beneficial to him, and such that the promisor thereby comes under an independent duty of payment irrespective of the liability of the principal debtor.” ( White v. Rintoul, 108 N. Y. 222; Raabe v. Squier, 148 id. 81.)
The judgment should be affirmed.
All concurred, except Woodward, J., not sitting.
Judgment affirmed, with costs.