City of New York v. Clark

It has been settled by repeated adjudication that contracts of suretyship are to be construed like other contracts so as to give effect to the intention of the parties. As stated by Judge Earl in People v. Backus ( 117 N. Y. 196 ): “In ascertaining that intention we are to read the language used by the parties in the light of the circumstances surrounding the execution of the instrument, and when we have thus ascertained their meaning we are to give it effect. But when the meaning of the language used has been thus ascertained, the responsibility of the surety is not to be extended or enlarged by implication or construction, and is striciissimi juris.” In Page v. Krekey ( 137 N. Y. 307 ) it was said by Judge O’Brien : “ The defendant’s obligation is strictissimi juris, and he is discharged by any alteration of the contract, to which his guaranty applied, whether material or not, and the courts will not inquire whether it is or is not to his injury.” In John Hancock Mutual Life Ins. Co. v. Lowenberg ( 120 N. Y. 44 ) it was said by Judge Haight : “ The rule is that a surety is entitled to a strict construction of the bond under which it is sought to make him liable, and that it cannot be enlarged by implication to cover anything which was not in the contemplation of the parties at the time the bond was executed.” These rules are not controverted, and they furnish the measure of liability which is assumed by the surety. Like many other cases the difficulty does not lie in the statement of the correct rule of law which governs the

The plaintiff relies upon the case of Smith v. Molleson (supra). In that case, however, the contract for which the defendant stood surety was embraced within the terms of the defendant’s bond and it had in no respect been -changed. The most, that was claimed there was that' the parties in its performance had so far departed from its terms as to change the defendant’s condition to her prejudice and to- deprive her of rights and benefits- to which she would otherwise have been entitled. The departures from the' contract were held to be immaterial, and, therefore, not sufficient to discharge the surety from liability, but the court recognized the rule that a material departure from the contract would have the effect of relieving the surety from liability. In the present case there was not only departure from the terms and conditions -of the contract, but a new contract was made respecting the subject-matter for which the defendant was surety, and the burdens imposed upon the principal were very much- increased. The casé, therefore, stands as an authority in support of the contention that these acts discharged the surety. -In addition to this, it appears that after the dock was enlarged Decker paid in expenses and for rent a sum in excess of the amount reserved under the original agreement, which sum, if applied upon the rent reserved therein for the original structure, would have left no sum due under the terms of the original grant; The record, as made up, does not clearly present this question, and no point is made respecting the legal right to have these payments first applied in discharge of the original agreement. The question is not, -therefore, considered or passed upon.

It is sufficient now to say that there was a new agreement respecting the property which was leased, which was entered into and carried out by the parties thereto, which changed their rights and liabilities and imposed burdens upon Depker which the contract of suretyship never contemplated, and that this was-done without the knowledge or consent of defendant, in consequence of which his contract was changed, and,, therefore, became no longer binding.

Patterson and O’Brien, JJ., concurred; Ingraham and McLaughlin, JJ., dissented.

I am unable to see how the new and independent agreement between Decker and the city of New York “imposed new and additional terms and materially increased the burden and liability of Decker in connection with the extended structure,” except so far as the agreement of Decker to pay the additional rent may be said to have impaired his ability to pay the rent for which the defendant was responsible. The fact that a lessor undertook to pay an additional sum of money for improvements upon the leasehold premises has never, so far as I know, been held to discharge a surety who had guaranteed the payment of the rent. If Decker had leased one lot from the city of New York at a specified rental for which the defendant had become responsible, the fact that Decker subsequently leased an adjoining lot from the city for which the defendant was not responsible could not release the surety. Yet, in my view of this case that is the result of the new arrangement between the city of New York and Decker. At Decker’s request the city agreed to extend and enlarge the pier, in consideration of which Decker was to pay to the city an additional sum of money. The original lease, however, remained in full force and effect, and under it Decker was bound to pay to the city the rental reserved, and for that unreserved rental the. defendant had become responsible in the event that Decker failed to pay. The mere fact that at Decker’s request and for his benefit an additional structure was placed upon the leasehold property for which Decker agreed to pay an additional sum of money had no relation to the original lease. It did not in any respect modify it and no additional burden was imposed upon the defendant. The city does not. ask that the defendant should be required to pay the rent for the addition to the dock that Decker agreed to pay. The city has done no act which would relieve Decker from his obligations under the original lease; nor is any right that the defendant would have by way of subrogation discharged or interfered with. The lease contemplates that the department of

I think the plaintiff is entitled to judgment,

McLaughlin, J., concurred.

Judgment, ordered for defendant, with costs.