76 N.Y.S. 335 | N.Y. App. Div. | 1902
This action was brought to recover the sum of $25,000 and interest, the amount of a bond duly executed by the defendant and one Lewis Hay, against whom the complaint was dismissed, it appearing that he had become a bankrupt since the commencement of this action.
There are practically no disputed questions of fact, defendant calling no witnesses. The bond in suit arose out of a contract of sale entered into between the parties on July 1, 1897, by the terms of which plaintiffs agreed to sell and Hay to buy certain premisés situated on Broadway, in the city of New York. The purchase price
The point in controversy seems to be the construction of the contract of suretyship given by the defendant and the measure of damages to be applied, if it be found that there has been a breach of its conditions. A contract of suretyship is to be construed in accordance with the same rule that applies to the interpretation of any other written instrument. The limitation of liability is not upon the interpretation but in application of the contract after interpretation when the rule of strictissimi juris applies. (Smith v. Molleson, 148 N. Y. 241.) ' If there be ambiguity in the contract, it is construed in favor of the person who has accepted it and expects to take benefit under it. (Gamble v. Cuneo, 21 App. Div. 413 ; affd., 162 N. Y. 634.) In arriving at the correct construction of such a contract it is always permissible to take into consideration the circumstances and surroundings of the parties at the time when the contract was made, and such construction will be given to it as will carry out the evident intent of the parties to the instrument.
In the present case it seeúis clear that the parties to the contract of purchase and sale contemplated that the erection of a building of the character described in the contract upon the lands so purchased and sold would so far increase the value of the whole property that it would furnish an abundant security for the mortgages thereon and also for the sum to be advanced in the erection, of the building. It is also evident that unless a building was constructed upon the premises the land itself was an inadequate security for the payment of the mortgages, and as it was vacant property, no revenue would be derived therefrom sufficient to meet the fixed charges resting upon it on the consummation of the sale. It seems fairly infer-able, therefore, that what the plaintiffs desired was security for the faithful performance of the contract in the erection of the building, as by such course only could plaintiffs’ purchase-money mortgage be adequately secured. This, therefore, it seems to us 'was the main purpose in procuring the bond of the defendant.
We agree with the contention of the appellant that the bond was not given to secure the payment of the purchase price of
The learned trial court took the view that the measure of damages became fixed upon the failure to construct the building, that the proximate result flowing therefrom was the impairment of the purchase-money mortgage taken by the plaintiffs, and inasmuch
The purchase price of the property was $190,000. Its actual value seems to have been but $160,000, and the plaintiffs by virtue of their contract were entitled to receive a profit of $30,000. Assuming that the contract has been carried out with" fidelity, it appears that the whole amount of incumbrances thereon would have. been $290,000. This sum includes the mortgages, the purchase price and the $100,000 building loan. It is quite possible that to this sum there might have been added architect’s fees and other expenses, which would make a grand total approximating $300,000.
The plaintiffs offered to prove upon the trial that if the building had been erected upon the premises in accordance with the terms of the contract, the property would have been worth $400,000 at the time of completion and at least that sum ever since. The defendant objected to this testimony, and upon its objection the court excluded it. Had it been received it would have shown beyond peradventure that the plaintiffs would not only have secured their profit of $30,000, but would have suffered no additional loss upon their purchase-money mortgage. Thus they would have reaped the full benefit of the contract which they made and to which they were entitled, but for the breach of the contract, for performance of which this bond stood sponsor. Under such circumstances the loss occasioned would furnish the measure of damage within the principle laid down in Kidd v. McCormick (83 N. Y. 391).
In making disposition of this case we are authorized to assume that it would have been established, had this evidence been received, that the contract, if fulfilled, would have produced a property worth at least $400,000. This would furnish an equity over and above all incumbrances and expenses of $100,000 which would have belonged either to Hay or Jackson, or both. .The defendant,
The defendant insists that it only stood' a surety for Hay’s performance of the contract, and that by reason of his assignment to Jackson and the consent thereto by the plaintiffs, the defendant, became released. There are two answers to this contention: First, no such defense was pleaded ; and, second, the obligation assumed by Hay was not personal, but could be performed by any one else for him. The contract contemplated that it might be assigned and was so in fact, but by such assignment Hay was not released from performance; on the contrary, he was held to the terms of the contract which lie- assumed. There are, therefore, no facts upon which a release could be predicated.
. The court awarded a recovery of-interest upon the sums secured by the bond. In this, we think, it was in error. ■ The condition of this bond was for the performance of an act, and not the payment of money. Under such circumstances a recovery is limited to the amount of the penalty, and interest only runs from the judgment. (Polhemus Printing Co. v. Hallenbeck, 46 App. Div. 563.) Sloan v. Baird (162 N. Y. 327) has no application. That was an executory contract for the sale of land. The bond in the present case is subject to the provisions of section 1915 of the O'pde of Civil Procedure, and furnishes the rule respecting the award of interest in contracts of this character.
It follows that the exceptions should be overruled and judgment directed in favor of the plaintiff for the amount of the penalty of the bond, without interest prior to the direction of the verdict. No costs.in this court awarded to either party.
O’Brien, Ingraham and McLaughlin, JJ., concurred.
Exceptions overruled and judgment ordered for plaintiff as directed in opinion, without costs to either party in this court.