18 Barb. 123 | N.Y. Sup. Ct. | 1854
The defendants’ points state that they may concede that if the bond and mortgage mentioned in this case had been assigned in good faith, by Mumford, to the Rochester City Bank, as security for the debt which he owed to the bank, the bank might (with the consent of Mumford) have assigned the bond and mortgage to another and guarantied the payment. But that a distinction is manifest between the right of the bank to guaranty choses in action, belonging to it, and its right to guaranty those belonging to another.
The concession is right: and a bank may certainly assign or convey any property held by it, and may enter into the common covenants of guaranty or warranty, on making such assignment or conveyance. This right is a matter of substance and not of form. As a formal contrivance, complying in all outward respects with the requirements of the rule, would be a nullity if it was in fact a mere contrivance, and the substance of the transaction were contrary to the rule, so if the case before the court is in substance within the rule, and only needs a formality to bring it in all respects within it, the omission of the form should be disregarded and the substance alone looked to. For it is not a question whether the bank has used the requisite forms or not, but whether it had any power or capacity to do the thing which
The counsel for the plaintiff accordingly insists that the transaction in question was in effect, as well as in form, a guaranty by the bank, of securities in which it had an interest. This requires an examination of the arrangements made between the parties, as shown by the complaint.
On the 1st of August, 1838, Mumford was indebted to the bank in a large sum of money, and the bank was desirous of obtaining payment. Mumford, in order to procure the means of payment—and it is to be inferred, in compliance with this desire— assigned to the American Life Insurance and Trust' Company the first six installments (amounting to $14,250) of a bond and mortgage which he held, from one Ingersoll. It was made a condition of the purchase that the bank should guaranty the final collection of these installments and of the interest to become due thereon, and the bank did accordingly execute to the Trust Company its guaranty, which was delivered to the Trust Company at the same time and place that Mumford assigned to the company the bond and mortgage. Mumford received the consideration money for the assignment and guaranty, and applied the proceeds to the payment of his indebtedness to the bank. His negotiation of the note (as is admitted by the pleadings) was with the knowledge and assent of the bank, and for the mutual benefit of himself and of the bank.
The guaranty executed by the bank recites that Mumford, being indebted to the bank, had proposed (as is to be inferred, to the bank) to sell the bond and mortgage for the purpose of
The mortgaged premises were sold, on foreclosure, and on a final sale, on the 24th of November, 1851, only realized $5150, which was their fair value on the last mentioned day. Ingersoll was insolvent and removed from the state, and nothing could be collected from him. The bank is called upon to fulfill its guaranty, and insists that it had no legal capacity to make such a guaranty, and that it is not therefore liable on it. From this statement it is plain that Mumford held the bond and mortgage and arranged with the bank to convert it into money, for the benefit of the hank, and to apply the money to be received to pay his debt to the bank, and that in pursuance of this arrangement, communicated to the Trust Company, he assigned the bond and mortgage to the company, and the bank at the same time guarantied to the company the payment of the bond and mortgage or of the six first installments on it, and that Mumford received the money from the Trust Company and applied the proceeds to the payment of his debt to the bank. If Mumford had asigned the bond and mortgage to the bank and the bank had assigned them to the company, and guarantied the payment as it did, it is conceded that the bank would have been liable. The only difference is that the one transfer from Mumford to the bank, that would have been necessary in that case, was omitted, and Mumford, to simplify the transaction, assigned directly to
The judgment appealed from should be affirmed, with costs.
Mitchell, Roosevelt and Clerke, Justices.]