Hyperlawhypertext legal database Alger v. Alger 83 A.D. 168

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Alger v. Alger

83 A.D. 168 Court N.Y. App. Div. English

Delivered by Jenks, J.:

Contents

Majority

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Stewart C. Alger, Respondent, v. Henry C. Alger, Appellant, Impleaded with Tjark J. Houtman and Others.

Headnote

Guaranty that a mortgage, given to secure payment of a note, will be paid within six years — effect of an extension of the time of payment of the note to a date within such six years—burden of proof that the contract of guaranty was enla/rged thereby.
February 4, 1887, one Houtman and his wife executed a bond and mortgage to Henry 0. Alger to secure the latter against liability as indorser upon Houtman’s note for §2,000, bearing date that day. June 17, 1890, Henry O. Alger, whose liability as indorser had then been reduced to §1,500, assigned the bond
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and mortgage to William G-. Alger, the guardian of an infant, and executed the following agreement: “ I, Henry C. Alger, hereby guarantee to Wm. G-. Alger, guardian, in consideration of Fifteen hundred dollars to me in hand paid, the receipt of which is hereby acknowledged, the payment of the amount for security of which the foregoing mortgage was given by Laura A. Houtman & Tjark J. Houtman, said Fifteen hundred dollars security (to) be paid by the bond of Tjark J. Houtman and that the said sum with interest from date of this guaranty shall be paid within six years from to-day.”
July 11, 1890, William G-. Alger, as guardian, and Houtman agreed in writing that the time of payment of the mortgage should be extended to May 13, 1893.
June 16, 1903, William G-. Alger’s ward, who had received an assignment of the bond and mortgage, brought an action to foreclose the mortgage.
Held, that Henry 0. Alger was liable on his guaranty for any deficiency arising on the sale of the mortgaged premises up to $1,500;
That, as the guaranty provided that the sum of $1,500, with interest, should be paid within six years from June 17, 1890, the six years’ Statute of Limitations (Code Civ. Proc. § 393) did not begin to run against an action on the guaranty until June 17, 1896;
That the guarantor was not discharged by the extension of the time of payment of the bond and mortgage granted July 11, 1890, as the right of action upon the guaranty did not accrue until after the expiration of the extension;
That, in any event, the burden was upon the guarantor to show that the extension in some way varied or enlarged his contract.
Appeal by the defendant, Henry C. Alger, from that part of a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 26th day of Hovember, 1902, upon the decision of the court, rendered after a trial at the Kings County Special Term, which adjudges that the defendant, Henry C. Alger, pay to the plaintiff any deficiency arising on the foreclosure of one of the mortgages described in the complaint.
Sidney H. Stuart, for the appellant.
George Lawyer, for the respondent.

The action is to foreclose two mortgages. The defendant, Henry O. Alger, appeals from a part of the judgment upon the second of the said obligations. On February 4, 1887, Tjark J. Houtman and

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his wife executed their bond and mortgage, without time named therein for maturity, for $2,000, by reason of Mr. Alger’s liability as indorser on Mr. Houtman’s note for $2,000 bearing date that day. It does not appear when the note matured or whether it was ever extended. On June 17, 1890, Henry C. Alger, whose liability had been reduced to $1,500, assigned the bond and mortgage to William G. Alger, guardian, and also executed the following: “ I, Henry C. Alger, hereby guarantee to Wm. G. Alger, guardian, in consideration of Fifteen hundred dollars to me in hand paid, the receipt of which is hereby acknowledged, the payment of the amount for security of which the foregoing mortgage was given by Laura A. Houtman & Tjark J. Houtman, said Fifteen hundred dollars security (to) be paid by the bond of Tjark J. Houtman and that the said sum with interest from date of this guaranty shall be paid within six years from to-day.” It is admitted that at that time Henry O. Alger received the $1,500 from the guardian. On July 11, 1890, William G. Alger as guardian and Houtman agreed in writing to extend the payment of $1,500, the principal of said bond and mortgage, to May 13, 1892, with interest at five per cent. On May 9, 1896, William G. Alger as guardian assigned the said bond and mortgage to the plaintiff, his ward. The sole question presented on this appeal is whether the Special Term correctly determined that Henry O. Alger was to be liable for any deficiency on the said mortgage up to $1,500.

The guaranty followed the assignment of the bond and mortgage to the plaintiff. (Stillman v. Northrup, 109 N. Y. 473 , 480 et seq.) The guarantor was not discharged by the delay of the plaintiff. The guaranty provides that the said sum of $1,500, with interest, shall be paid within six years from June 17, 1890. Therefore, the statute of six years limitation (Code Civ. Proc. § 382) did not begin to run until June 17,1896, while the guarantor was served with the summons and complaint on June 16, 1902.

It is insisted that the guarantor was discharged by the extension of July 11, 1890. I think that the principle expressed by Andrews, Ch. J., in Newcomb v. Hale ( 90 N. Y. 326 ) applies: “ The guaranty of the defendant was not entered into for the benefit of the original debtor, but for his own benefit, subsequent to the original transaction, and upon a new and independent consideration moving from

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the plaintiff. The engagement was collateral in form, but it was in substance an original undertaking, and an immediate right of action accrued thereon to the plaintiff, on the mortgage debt becoming due. (Cardell v. McNiel, 21 N. Y. 336 .) ” (See, too, Thomas Mort. [2d ed.] § 225; Brandt Surety. & Guar. [2d ed.] § 349; Moore v. Paine. 12 Wend. 123 .) In McElroy v. Mumford ( 128 N. Y. 303 ) the head note reads: “ The rule which restricts the liability of sureties to the strict terms of their contract and forbids an extension thereof by inference or implication, does not apply to a case where the instrument shows a clear intention on the part of the sureties to come under a more enlarged obligation.” In Ulster County Savings Inst. v. Young ( 161 N. Y. 23 , 30), Martin, J., says: “ The liability of a surety is measured by his agreement, and is not to be extended by construction. His contract, however, is to be interpreted by the same rules which are applicable to the construction of other contracts. The extent of his obligation must be determined from the language employed when read in the light of the circumstances surrounding the transaction. Hence, where the question is as to the interpretation and meaning of the language by which a party has bound himself, there is no difference between the contract of a surety and that of a principal or other party sustaining a different relation.”

Moreover, this contention loses sight of thé fact that about three weeks before the agreement of July eleventh, when Henry 0. Alger obtained $1,500 of the plaintiff’s guardian for the assignment of the bond and mortgage, his guaranty was that the bond, and, consequently, the mortgage, would be paid within six years from that time, a period longer by four years than that effected by the extension of July eleventh. It is only on non-payment of the note that the bond and mortgage made by Mr. Houtman to Mr. Alger became due. This disposes of the possible contention that the bond and mortgage without date were presently due. It may well be that the time fixed for the maturity by the agreement of July eleventh was relative to the maturity of the note. In any event, the guaranty was for payment within six years, and the burden was upon the defendant to show that the “ extension ” in some way varied or enlarged his contract. Even if the bond and mortgage became due before the expiry of that period, the guarantor was not answerable

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under his contract for the payment until the expiration of six years.

The judgment should be affirmed, with costs.

Goodrich, P. J., Bartlett, Hirschbbrg and Hooker, JJ.,. concurred.

Judgment affirmed, with costs.

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