Chester v. Broderick — 39 N.Y. St. Rep. 683

Majority

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Jane E. Chester et al., Resp’ts, v. Lucy Broderick et al., Ex’rs, App’lts.

(Supreme Court, General Term, Fourth Department,

Filed July 7, 1891.)

Headnote

Undertaking—Liability oe sureties on appeal.

The sureties upon an undertaking on appeal from a judgment of foreclosure are not discharged from liability by the giving of a second undertaking on appeal to the court of appeals, but upon affirmance by that court they are liable for any deficiency remaining after application of the amount paid under the second undertaking.

Appeal from an order made at the Broome special term, confirming the report of a referee upon a claim made against the appellants; and also an appeal from the judgment entered in pursuance of the report and order in Schuyler county, on the 4th day of December, 1890.

Robert T. Turner, for app’lts; Baxter, Gibson & Gaylord, for resp’ts.

—Appellants’ testator executed an undertaking on appeal to the general term from a judgment of foreclosure and sale rendered in an action wherein Sarah Decker was plaintiff and Hattie Decker and others were defendants. The undertaking was executed by the deceased and one Sackett, as sureties, and it was given to stay proceedings on such an appeal, and was conditioned to pay any deficiency that might arise upon the foreclosure sale in case the decree was affirmed by the general term or the appeal dismissed. The judgment was affirmed by the general term and thereupon the defendant, Hattie Decker, appealed to the court of appeals, and upon such appeal an undertaking was given in the sum of $9,000, with Turner and Gillette as sureties. The judgment was affirmed by the court of appeals and the premises subsequently sold on the judgment of foreclosure and sale, and there remained a large deficiency. The sureties upon the undertaking given on the appeal to the court of appeals paid the full amount of their obligation, and after that payment was applied there remained a deficiency of $2,586.90 unpaid upon the original

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judgment of foreclosure. To recover that sum a claim was made against the estate of Broderick upon the undertaking which he had executed. The claim was rejected by his executors and a referee was appointed who reported in favor of the claimant against the estate of Broderick, and the report so made by the referee was confirmed by the special term. The position taken by the appellants is “that the giving of the said undertaking on the perfection of the appeal to the court of appeals discharged the prior sureties from further liability because it amounted to a novation and a substitution of the new undertaking in place of the old.” We are of the opinion that the undertaking given by the appellants’ testator remained valid, notwithstanding the undertaking given thereafter to perfect the appeal in the court of appeals. It may be conceded that the undertaking given in the court of appeals constituted the prior or primary obligation for the payment of the deficiency arising upon the sale of the mortgaged premises. However, that is not important in this case, as the obligation has been fully met and the moneys mentioned in the undertaking given in the court of appeals have been paid over to the plaintiff in that action and applied in liquidation of the deficiency, and the estate represented by the appellants in this case would only be declared liable for the remaining deficiency.

The reasoning of the court in Smith v. Falconer, 11 Hun, 483 ; S. C., aff’d 79 N. Y., 633 , seems to be adverse to the contention of the appellants. In that case it was said “ the engagement was absolute to pay any judgment which the plaintiffs might recover in the action, and was wholly independent of any statutory right to which the defendant, his principal, might resort for a stay of proceedings, which was the chief object of the undertaking given on the appeal The plaintiffs are not responsible for the subsequent proceedings of the principal; they were obliged to submit, and the delay to which they were subjected was caused by the bond which the defendant gave. * * * If the defendant desired to prevent the accumulation of costs and interest, it was his duty, when the judgment was obtained, which ensued upon the reference, to have-tendered the amount of it, and thus prevented any further liability. He did not do so, but permitted the appeal and the further undertaking and delay without any act to protect himself.”

The .case of Mackellar v. Farrell, 29 N. Y. State Rep., 350, is adverse to the contention of the appellants. It was there said that “ the perfection of the appeal to the court of appeals by the appellant, by giving a new undertaking and procuring a stay thereon, did not amount to a novation and did not discharge such sureties.” The authorities cited in the opinion delivered in the case seem tp sustain the conclusion reached by the cdurt.

In Babbitt v. Finn, 101 U. S., 7 , a decision was made which is adverse to the appellants. In the course of the opinion in that case Judge Clifford says: “Where the bond is given in a subordinate court to prosecute an appeal to effect in a superior court, the sureties become liable if the judgment is affirmed in the superior court; nor are they discharged in case the judgment of

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the superior court is removed into a higher court for re-examination, and a new bond is given to prosecute the second appeal, if the judgment is affirmed in the court of last resort Nothing will discharge the sureties given to prosecute the appeal from the court of original jurisdiction but the reversal of the judgment in some court having jurisdiction to correct the alleged error.” Numerous cases are cited to sustain the position.

In Smith v. Crouse, 24 Barb., 437 , the court, in dealing with a similar question, observed: “No breach of the condition of the undertaking occurred till the judgment of this court was rendered, and the execution thereon was returned unsatisfied. When the breach occurred, then the liability of the defendant became commensurate therewith; and he cannot claim to have it limited to a part, which cannot be measured or judicially ascertained, even though under another state of facts that might have been the extent of his liability.”

It is argued by the learned counsel for the appellant that the effect upon the estate, caused by reason of the appeal to the court of appeals, was to permit the mortgaged property to diminish in value pending the appeal. We think the answer to that suggestion lies in the fact that that risk was assumed by the appellants when they executed the undertaking. If they had desired to avoid any diminution or delay, they could have paid up the judgment secured by the undertaking, and been subrogated to the rights of the judgment creditor; however, they were passive, and acquiesced in the delay occasioned by use of the ordinary means of reviewing the primary judgment We think the condition of the appellants’ undertaking required them to abide the action of the ultimate court, as was said by Judge Allen in Robinson v. Plimpton, 25 N. Y., 485 : “ The condition is, in substance, for the ultimate affirmance of the judgment appealed from. Upon the most literal and strict reading of the undertaking, the defendants became liable upon the filing of the remittitur from this court, and the entry of the proper judgment in the supreme court. The first judgment of that court became as if it had never been pronounced ; and the judgment entered in pursuance of the decision of this court was one in affirmance of the judgment first appealed from. That the remedy of the plaintiff was suspended, or, rather, .that the defendants’ liability was in suspense pending the appeal to this court, does not affect the question. * * * They consented to become liable upon a contingency which has happened, and for the result of an action of which they had no control and to which they were not parties, and are bound, not because they were parties to either appeal, but by the terms of their undertaking.”

We think Gardner v. Barney, 24 How., 467 , supports the position of the respondent. See Seacord v. Morgan, 4 Abb., N. S., 251; Humerton v. Hay, 65 N. Y., 380 .

We are of the opinion that the second undertaking on the perfection of the appeal to the court of appeals did not discharge the appellants’ testator from the obligation a'ssumed by him when he .executed the undertaking.

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We are of the opinion that the report of the referee is right, and that the order confirming the same was properly made. Judgment and order affirmed, with costs.

Martin and Merwin, JJ., concur.