Mead v. Parker — 19 N.Y. St. Rep. 363

Majority

p. 363

Elias A. Mead, Resp’t, v. Charles E. Parker, App’lt.^[1]

(Court of Appeals,

Filed November 27, 1888.)

Headnote

1. Mortgage—Guaranteeing the collection of—Effect of.

Where one guarantees the collection of a bond and mortgage, this guarantee is simply an undertaking on his part that the debt will be paid if the principal be prosecuted with reasonable diligence. ( Whether reasonable diligence has been exercised in commencing a suit for the collection, of the bond may be a question of law or of fact.

2. Same—Reasonable diligence.

In the case in question an action to foreclose the mortgage was commenced three years after the mortgage became due, and resulted in a judgment for deficiency against the mortgagor, and this suit was brought against the defendant upon a guarantee which he signed and by which he guaranteed the collection of the bond. Held that the unexplained 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 discharges a surety of this nature.

3. Same—Evidence.

It was competent for the plaintiff to show in evidence a parol request of' the surety to refrain from the commencement of the action until a certain time had elapsed within which he (the surety) said that he had no doubt but that the principal debtor would pay. Such evidence is competent as showing the circumstances which rendered the action of the plaintiff reasonably diligent in prosecuting the suit to foreclose the mortgage. That it did not alter the contract which was made by the defendant in writing.

4. Same—Waiver—What amounts to.

If the creditor indulges the debtor by not enforcing the payment of the debt by suit, and 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.

p. 364

Appeal from a judgment of the supreme court, general term, fifth department, affirming a judgment in favor of the plaintiff, entered on the verdict rendered by a jury at the Cayuga circuit.

James R. Cox, for app’lt; H. V. Howland, for resp’t.

This action was commenced to recover the balance due upon a bond and mortgage, the latter of which had 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 the 10th of May, 1872. The defendant assigned it to Jennings on the 1st of September, 1-875, and Jennings assigned it to the plaintiff on the 1st of April, 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 of this nature.

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

p. 365

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 ( 80 N. Y., 269 ), yet without pausing to determine definitely 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 guarantee 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. of N. Y. v. Wright, 76 id., 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 ), Woodruth, J., observed: “Every question of due diligence must be decided in 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 .above cited where the plaintiffs covenanted to prosecute immediately after the several sums of money became due.”

In Teneyck v. Elmendorf (1 Caines, 427), upon such a guaranty, Thompson, J., said: “The plaintiffs were to use all due diligence and take all legal measures by prosecution at law to recover the money from Redington, by which I understand, all ordinary and legal measures prosecuted with good faith.”

p. 366

Certainly it is a circumstance, and one of a most material and controlling nature upon the issue, as to whether due diligence had been 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 Insurance Co. v. Wright {supra) 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. Church, Ch. 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 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 jmrpose 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 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 Bos., 600); Theobold on Principal and Security, § 165, p. 87; Woodcock v. Oxford and Worcester R. R. Co. (21 Law and Eq. R., 285); Cumings v. Arnold ( 3 Met., 486 ); Adams v. Way ( 32 Conn., 160 -172).

p. 367

The general term in this case held that the evidence was properly admitted to prove the 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 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.

All concur.