Coykendall v. Constable — 1 N.Y.S. 9

Majority

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Coykendall v. Constable et al.

(Supreme Court, General Term, Third Department.

May, 1888.)

Headnote

Principal and Surety—Liability oe Surety—Demand to Proceed against Principal—What is.

The direction of the sureties on a note to the holder’s attorney that they “would urge the collection of the note” from the maker is not sufficiently explicit, as a demand to proceed against the maker, to remove or diminish their liability to plaintiff, the purchaser of the note, whose delay they claim has rendered collection from the maker impossible.

Appeal from judgment upon report of referee.

Appeal from a judgment in favor of the plaintiff, Samuel D. Coykendall, entered in Ulster county upon the report of a referee. The action was upon a joint and several promissory note, dated January 20, 1874, for the payment of SI,000, with interest, to Carl Peters or bearer, one day after date, signed by the defendants. The defendant De Garmo was the principal debtor, and the other defendants his sureties. The case has been twice tried. Upon the former trial the question was whether the plaintiff bought the note or paid it. The facts bearing upon that issue are stated in the report of the case upon appeal. 99 H. T. 309, 1 H. E. Rep. 884. The question upon this trial was whether the sureties had been discharged by the delay to prosecute the maker after sufficient notice from the sureties.

John J. Linson and <7. G. & J. B. Keeler, for appellants. 8. L. 8tebbins, for respondent.

That the note was transferred to the plaintiff, and not paid by him, was held by the court of appeals. 99 H. Y. 309, 1 N. E. Rep. 884 . The facts touching that question have not been changed upon this trial.

It is now claimed by the appellants that the sureties, before the note was transferred to the plaintiff, directed its former owner to collect it of the maker; that its collection might then have been enforced, and that the plaintiff acquired the note subject to the equities of the sureties and the rights acquired by them by such notice; that the plaintiff delayed prosecution until the maker became hopelessly insolvent; that the sureties, in consequence of the manner in which the note was transferred, supposed it was paid, and were therefore deterred from taking any steps to protect themselves. The difficulty with the case on the part of the sureties is, they did not give Peters, the holder of the note, clear and explicit notice that they required him to proceed with the prosecution of the note. The notice, as found by the referee, was as follows: “Derby, one of the sureties, at the request of Constable and Terwilliger, the other sureties, went to Mr. Lyon, the attorney of Peters, the then owner of the note, and, ascertaining that he had the note for collection, asked, ‘ Have you notifiedDe Garmo? ’ (the maker.) Lyon answered, ‘Yes.’ Derby asked, ' Have you heard from him? ’ Lyon answered ‘ Yes; he says he will pay it. He wants a little time.’ Derby then said, ‘ By request of Mr. Constable and Mr. Terwilliger, I came here, and would urge the collection of the note. ’ ” When it is considered that the effect claimed to result from such a notice is to require the holder of the note to proceed with reasonable diligence to enforce by suit his remedy against the maker, under penalty of a discharge of the sureties if delay prove injurious to them, it must be admitted that such a conversation is a mild form of notification of the severe penalty to which the sureties purpose to expose the holder. They do not ask him even to sue the maker. They seem to be afraid or unwilling to speak of compulsory measures. They would urge its collection; but how, they refrain from stating. Within the authorities, the notice had no legal effect upon the rights of the holder of the note. Maier v. Canavan, 8 Daly, 272 ; Hunt v. Purdy, 82 N. Y. 486 ; 5 Wait, Act. & Def. 235; Denick v. Hubbard, 27 Hun, 347 . Colgrove v. Tallman, 67 N. Y. 95 , is cited in support of the notice here given. He point is made in the court of appeals upon the form of the notice. Beferring to the ease in this court, ( 5 Hun, 103 ,) we learn that Tallman and Barnes as partners gave their firm note to the plaintiff, and soon after dissolved their partnership, Barnes assuming the payment of all the debts. Tallman thereupon wrote the plaintiff, informing him of the dissolution, the sale of his interest to Barnes, and that Barnes had assumed to pay the debts of the firm, and requested the plaintiff to proceed to collect his note immediately. Such a written request admits of but one meaning. “To proceed to collect immediately” means a resort to legal remedies. This notice was given to the attorney, and not to the owner of the note. If the owner was thereby placed in peril, it does not appear that he ever knew it. He had no occasion to urge his attorney to diligence. It is said in Hunt v. Purdy that the doctrine that the surety may give the creditor notice to proceed against the principal, and if the latter refuses, to the damage of the surety, the obligation of the surety is-discharged or diminished, is not a favorite in the law. Cases are cited in 5 Wait, Act. & Def. 236, to the effect that notice to the attorney is not sufficient. Such a rule seems to be in consonance with sound principles. Terwilliger, one of the sureties, said to Peters, after the latter had placed the note in the attorney’s hands for collection: “I have already got notice informing me of it. That is all right,"—collect it. If he” (meaning the maker) “don’t pay it, then I will pay it. ” Peters, the holder, certainly would be justified in supposing that Terwilliger did not mean to try to escape liability as surety.

The sureties complain of the finding of the referee that no legal injury was done them by the failure to prosecute the maker after request to collect. In

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the view we take of the case they are not in a position to diminish the amount of their liability by the amount of the pecuniary injury they may have suffered. The other objections urged do not strike us as of sufficient force tore-quire discussion. Judgment affirmed, with costs.

Learned, P. J., and Ingalls, J., concur.

Cases cited

Hunt v. Purdy 82 N. Y. 486 N.Y. 1880-11-09 p. 9
Colgrove v. Tallman 67 N. Y. 95 N.Y. 1876-10-03 p. 9