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Mead v. Parker

22 Abb. N. Cas. 129 Court N. Y. Court of Appeals; English

Delivered by Peckham, J.

Contents

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MEAD v. PARKER.
N. Y. Court of Appeals;
November, 1888.

Headnote

. 1. Evidence; oral, to show acquiescence.] Even where by reason of the-statute of frauds it may not be competent to show, by oral evidence, a modification of a contract, oral evidence is nevertheless competent to defeat an action or defense founded on alleged breach of a condition in the contract, by showing acquiescence in non-performance, or waiver of a strict performance.
8. Guaranty of collection; delay to prosecute.] In an action on & guaranty of the collection of an obligation, where the guarantor as defendant relies on the failure of the guarantee to use due dili
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gence, oral evidence of the guarantor’s acquiescence in, dr ratification of, the delay, is competent.
3. Question of law and fact; reasonable diligence.] The question between creditor and surety, whether the former has used reasonable diligence in proceeding against the principal, although a question of law if the facts are undisputed, or such that different inferences could not be drawn therefrom by different minds, is a question of fact to be submitted to the jury under proper instructions, wherever the facts are disputed or if undisputed, are such that reasonable men might differ in regard to the inferences proper to be drawn from them.
Appeal from judgment affirming a judgment on a verdict, and from an order affirming an order denying a motion for a new trial.
. The defendant, who was the owner of a bond, and a mortgage collateral -thereto, executed by Lewis Paddock, sold and transferred them to Cordial S. Jennings, in consideration of the sum of $17,000, paid by the latter to the ■defendant therefor; and by an instrument in writing defendant guaranteed their collection. Jennings transferred the bond and mortgage and the defendant’s guaranty to the plaintiff; and he, having foreclosed the mortgage and obtained a judgment for a deficiency, upon which an execution has been issued and returned unsatisfied, brought this suit upon Tthe guaranty. The suit was defended on the ground that Jhe plaintiff had not been reasonably diligent in his efforts •to collect. There appeared to have been a delay of about two and a-half or three years after the maturity of the bond and mortgage, before the foreclosure was instituted.
At the trial the plaintiff introduced parol evidence for the purpose of showing that the defendant consented to the delay and waived performance of the condition of the guaranty which the law implies, that the assignee of the bond and mortgage should proceed with reasonable diligence to eollect them.
The supreme court held that the reception of parol
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proof tending to show consent and waiver subsequent to the guaranty, was proper.
They also held that the statute of frauds did not require written evidence of the modification of the contract, because in their view the guaranty was not a collateral, but an original undertaking, and not within the statute. Citing Milks v. Rich, 15 Hun, 178 ; aff’d in 80 N. Y. 269 . (Reported in 41 Hun, 577 .)
The defendant appealed.
James R. Cox, for defendant, appellant.
Henry V. Howland, for plaintiff, respondent

This action was commenced to recover the balance due upon a bond and mortgage, the latter of which has been foreclosed and a judgment for deficiency entered against the mortgagor. The liability of the defendant herein rests upon a guaranty which he signed, and by which he guaranteed the collection of the bond to one Cordial S. Jennings, by whom it was assigned to the plaintiff. The defendant, among other things, set up that the plaintiff had extended and put off the time for the payment of the bond and mortgage without the consent of the defendant.

The bond became due and payable by its terms, May 1, 1875. It was assigned by the mortgagee to Charles E. Parker, the defendant, on. May 10, 1872. The defendant •assigned it to Jennings on September 1, 1875, and Jennings assigned it to the plaintiff on April 1, 1876. The action to foreclose the mortgage was commenced in March, 1878,— three years after the mortgage became due, and two years •after the assignment by Jennings to the plaintiff.

Unexplained, the delay of the plaintiff in commencing •suit to foreclose the mortgage, and thereby obtain payment •of the bond, would be a good defense to the surety, for the neglect would be unreasonable; and unreasonable neglect itself discharges a surety from an obligation of this nature.

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Upon the trial of the action, evidence was given tending to show acquiescence of the defendant in the delay, both on the part of Jennings while he was the owner, and on the part of the plaintiff after he became the owner. If competent, we think there was sufficient evidence in the case to go-to the jury upon the question of such acquiescence in or ratification on the part of the defendant of the delay in commencing the suit. The defendant, however, objected to-the evidence in question, on the ground that it was by parol, and incompetent for that reason, as tending to vary the contract of guaranty between the parties, which on the part of the defendant was a contract to answer for the debt, default,, or miscarriage of another, and required by statute to be in writing. The evidence was admitted, and upon it a verdict, was obtained in favor of the plaintiff for the amount of the-deficiency upon the foreclosure sale. Appeal was taken from the judgment entered upon the verdict of the jury to the General Term, where it was affirmed, from which affirmance defendant appeals here.

The learned counsel for the defendant made a most exhaustive argument upon the question of the admissibility of the evidence going to show what he claimed was a new contract, or would have been a new contract if sufficiently proved, varying the terms of the written contract of guaranty made by the defendant. This contract, he claimed, was required to be in writing by the statute of frauds.

Although it may be somewhat difficult to distinguish this case from that of Milks v. Rich[1] ( 80 N. Y. 269 ; aff’g, 15 Hun, 178 ), yet, without pausing to determine definitely

* In Milks v. Rich, 80 N. Y. 269 , it was held that where the holder of a promissory note, ostensibly acting for himself, sells the same for a valuable consideration, and upon the sale, promises orally that the note is good and will be paid at maturity, the promise is not within the statute of frauds, and the promissor is liable thereon in case of non-payment. The promise may be regarded, not as one to answer for the default of the maker, but as one to pay the purchaser for the-money had, in case the maker does not.

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that question, we think there is another view upon which this judgment can and must be sustained.

The defendant guaranteed the collection of the bond and mortgage. That guaranty was simply an undertaking on his part that the debt would be paid if the principal should be prosecuted with reasonable diligence (Craig v. Parkis, 40 N. Y. 181 ; Northern Ins. Co. v. Wright, 76 N. Y. 445 ) If the facts were undisputed, and were such that different inferences could not be- drawn therefrom by •different minds, the question whether reasonable diligence had been exercised in commencing the suit for the collection of the bond would be one of law. But, under the law as it now stands in relation to such matters, if the facts are •disputed, or if undisputed, they are of such a nature that reasonable men might differ in regard to the inferences proper to be drawn from them, then those inferences are to be drawn by a jury, under proper instructions from the court. But, whether a question of fact or of law, it is still a question of whether reasonable diligence has been shown.

In relation to such a question as this, in Thomas v. Woods ( 4 Cow. 173 ), Woodwobth, J., observed : “ Every question of due diligence must be decided by a view of all the facts and circumstances. What would be a lach in one case, might be reasonable diligence in another. It will not be contended that due diligence requires a prosecution to be commenced, in every case, on the day the money is payable. If a party intends that, he will guard his contract, •as in the case before cited, where the plaintiffs covenanted to prosecute ‘ immediately after the several sums of money became due.’ ’’ In Ten Eyck v. Tibbitts ( 1 Cai. 427 ), upon such a guaranty, Thompson, J., says : “ The plaintiffs "were to use all due diligence, and take all legal measures, by prosecution at law, to recover the money from Bennington ; by which I would understand, all ordinary legal measures, prosecuted with good faith.” Certainly, it is a circumstance, and one of the most material and controlling nature, upon the issue as to whether due diligence had been

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used in the prosecution of the claim, to show that failure to prosecute was by reason of the express request of the-defendant himself, or by reason of his acquiescence in or consent thereto, after receiving full information of the-facts from the plaintiff. No man could say, upon an issue of due diligence, that a plaintiff had failed to exercise it by commencing his action against the principal debtor, when, in justification of such failure, he showed a parol request of the surety to refrain from the commencement of the action until a certain time had elapsed, within which he said he had no doubt that the principal debtor would pay.. It certainly is competent evidence as showing the circumstances in existence which rendered the action of the-plaintiff reasonably diligent in prosecuting the suit to foreclose the mortgage, and it did not in any degree alter the contract which was.made by the defendant in writing. In Northern Ins. Co. v. Wright ( 76 N. Y. 445 ; aff’g 13 Hun, 166 ;, it is clear that the parol evidence which was admitted,, was offered on the question of the waiver by the defendant of the strict performance of the contract by the plaintiff.. Chuech, Oh. J., in that case, says : “ Waiver is largely a question of intention, and it seems difficult to impute such an intention to the defendant from the circumstances-proved, after he had in express terms demanded a foreclosure, and disclaimed liability until a deficiency was-ascertained. The evidence is conflicting as to whether he-told the president that he had taken a deed.”

This quotation shows that evidence of that nature was-admissible upon the question of waiver, and that no one supposed that it was rendered inadmissible for that purpose because of the assumed alteration by parol of the contract required to be in writing, by the statute of frauds. The evidence in this case was not of such a nature as could be said to alter the contract. It was simply of such a nature as to show that the defendant waived the strict performance of its original requirements.

Again, it has been frequently held in cases where the

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creditor was bound to diligence in pursuing, by action at law, his debtor, in order to hold the guarantor, that if the creditor indulges the debtor by not enforcing payment of the debt by suit, if such indulgence be with the acquiescence of the guarantor, the guarantor thereby waives his strict right, and cannot afterwards take advantage of the creditor’s indulgence to avoid his own contract (Wright v. Storrs, 6 Bosw. 600 ; Theo. Prin. & Sur. § 165, p. 87; Woodcock v. Railroad Co., 21 Eng. Law & Eq. 285; Cummings v. Arnold, 3 Metc. 486 ; Adams v. Way, 32 Conn. 160 -172).

The General Term in the present case, held that the evidence was properly admitted to prove che waiver and consent on the part of the defendant; and it also held that the' evidence was properly received, because it was not necessary for the validity of the defendant’s guaranty that it should have been in writing; that the guaranty was not, in law, a contract to answer for the debt, default, or miscarriage of another, but that it was an original undertaking to pay his own debt.

As we have said, we do not feel compelled to discuss the latter ground ; and we hold that the evidence was properly admitted as tending to show due vigilance, under all the circumstances, and a waiver by the defendant of strict performance on the part of the plaintiff; and, if believed, there was sufficient evidence in the case to support the verdict. We are concluded by the finding of the jury on that issue, and for these reasons the judgment should be affirmed, with costs,

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