155 N.Y. 185 | NY | 1898
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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *192 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *194 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *196 We have stated the facts with great fullness, so that the effect of our decision can be seen, but we shall be brief in announcing our conclusions and in giving our reasons, because the most of the questions have been so fully discussed, both by the General Term and by the referee, as to leave little to be said by us.
The referee found, in accordance with the contention of the defendants, that eleven of the notes in question were accommodation paper, and, as the plaintiff neither excepted nor appealed, both parties must accept that conclusion as unassailable on this review. The twelfth note, however, was not accommodation paper, because it was not held like the others as a memorandum or security, and there was a complete exchange of notes for the purpose of raising money. (Newman v. Frost,
The plaintiff owed the defendants the duty of dealing in good faith with its judgment, which it held not simply for its own security, but for the indemnity of the sureties also, and to do no act to impair such security to the prejudice of their rights. Under the circumstances, this duty was not an active, but a negative duty, as the bank was simply bound not to cancel, waste or impair its security. (Board of Supervisors v. Otis,
The admitted insolvency of the principal debtors, and the sale of all their property, met the burden of proof that the law cast upon the plaintiff of showing that the judgment assigned to Simpson was worthless. The inclusion of the personal property, in which the bank had no interest, in the agreement, gave the sureties an advantage that they did not have before. As the effect of the release of collaterals is measured by the injury done to the surety, a substitution of one security for another, when made in good faith and apparently for the benefit of all concerned, should be governed by the same rule.
In view of the opinions below, we think that no further expression of consideration by us is called for, and that the judgment should be affirmed, with costs.
BARTLETT, HAIGHT and MARTIN, JJ., concur; PARKER, Ch. J., not sitting; O'BRIEN, J., not voting; GRAY, J., absent.
Judgment affirmed.