Salt Springs National Bank v. Sloan — 39 N.Y. St. Rep. 771

Majority

p. 771

The Salt Springs National Bank of Syracuse, Resp’t, v. George B. Sloan, App’lt.

(Supreme Court, General Term, Fourth Department,

Filed July 7, 1891.)

Headnote

Guaranty—Of payment—Release of guarantor.

Defendant executed and delivered to plaintiff his bond guaranteeing the payment of certain drafts discounted for the firm of B. & C., in case plaintiff was unable by due diligence to collect the same within one year. In an action on said bond the evidence showed that plaintiff filed its claim upon said drafts with the assignee of B. & C., and had brought an action against B. & 0., but had consented to extensions of time to answer for ninety-nine days; that execution was not issued against them until after the year expired, and was not returned until after this action was commenced. Held, that it was error to refuse a motion to nonsuit and submit the question of due diligence to the jury as one of fact.

Verdict at the Oneida circuit for plaintiff for $5,814.99. Motion for a new trial on the minutes denied. This case was before us on a former appeal, and is reported in 57 Hun, 265 ; 32 N. Y. State Rep., 652. At the close of the plaintiff’s evidence the defendant moved for a nonsuit upon the following grounds:

“ First. Because the plaintiff has failed to prove facts sufficient to constitute a cause of action.

“ (a) By not showing execution issued against the principal debtors, and returned before suit brought.

“ (b) By showing the execution was not issued until the year limited by the bond had expired.

“ (c) By showing one draft was never sued.

“ (d) By voluntarily giving Baker & Clark time to answer to the complaint

“ Second. Because the plaintiff has been guilty of laches in not pushing the drafts to judgment, and issuing execution thereon.

“ Third. Because the plaintiff has failed to show due diligence,, the condition precedent expressed in the bond.”

p. 772

The motion was denied and an exception was taken. At the close of the evidence the defendant made a motion based upon similar grounds, and the motion was denied and an exception was taken.

In the course of the charge the trial judge said, viz.: “ I am going to leave all that as a question for you, for you to say whether they used due diligence or not. The language of the bond and of the agreement is, that they shall use due diligence. If they failed at any time during the year this bond ran to use that due diligence, then they failed to comply with the condition which they were obliged to comply with in order to maintain this action at all.” Again he said: “I think it is competent for the defendant to claim, if the fact be true, that there was a failure to exercise due diligence after the expiration of the year, and before the commencement of this action.” Also, “Whether they are entitled to recover that depends upon whether they exercised due diligence in the collections of those claims under the conditions of the bond and agreement. If they did- exercise due diligence, which is for the plaintiff to show, and is a condition precedent, they would be entitled to recover. If they have not satisfied you that they have exercised due diligence during the year, although they did obtain the money afterwards, they, are not entitled to recover. I am requested to charge in behalf of the plaintiff, that under the bond and agreement it was not necessary for plaintiff to proceed against both Baker & Clark and their assignee for the collection of the drafts, but it could discharge its obligation by proceeding against either one of them. As I have already indicated, I decline to charge that I charge it was their duty to proceed against the assignors and assignee too.” The judge also charged: “ It is for the jury to say at each step of the case, whether in doing what he did do, he failed to exercise due diligence, or whether he did exercise due diligence.”

An action was not commenced against Baker & Clark until August, 1887; they obtained extensions by the consent of the plaintiff’amounting to some ninety-nine days, and judgment was not •entered until January 4,1888. No execution was lodged with the sheriff until the 23 d of February, 1888, which was several days after the expiration of the year mentioned in the defendant’s bond. This action was commenced on the 17th of March, 1888. No execution was returned until April 12, 1888, when the execution was returned nulla bona. February 24, 1887, proof of claim upon the drafts was filed by the plaintiff with the assignee of Baker & Clark but no final accounting was had by the assignee prior to the commencement of this action.

Francis E. Hamilton and Elisha B. Powell, for app’lt; Frank H. Hiscock, for resp’t.

—It seems to be conceded by the respondent that “the facts now presented being practically unchanged,” or not essentially different from those presented to us on the former appeal, we therefore think we should follow our former decision in disposing of the appeal now before us. Applying the doctrine of

p. 773

¿he opinion, delivered, we think the learned trial judge erred in refusing a motion for a nonsuit and in submitting the question of due diligence to a jury as one of fact, and that the verdict is not supported by the evidence.

Our attention is called to Mead v. Parker, 41 Hun, 577 ; 5 N.Y. State Rep., 194; S. C., affirmed, 111 N. Y., 259 ; 19 N. Y. State Rep., 363. That was an action upon a guaranty of collection of a bond and mortgage. The suit was defended on the ground that the plaintiff has not been “ reasonably diligent in his efforts to collect.” “At the trial the plaintiff introduced parol evidence, for the purpose of showing that the defendant consented to the delay and waived performance of the condition of the guaranty, which the law implies, that the assignee of the bond and mortgage shall proceed with reasonable diligence to collect them; ” and it was held “ that the reception of parol proof, tending to show such consent and waiver subsequent to the making of the guaranty was not error.” See opinion of Smith, P. J., 41 Hun, 578 ; 5 N. Y. State Rep., 194.

In the course of the opinion in the court of appeals it is said: “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 parole 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.” See 111 N. Y., 263 ; 19 N. Y. State Rep., 363.

In the case in hand no acquiescence was shown or consent given by the defendant to any laches, omissions or delays of the plaintiff. • In the case of Mead v. Parker, supra, the evidence relating to the acquiescence or consent of the creditor was of such a character as to warrant the submission of the question to the jury in respect thereto. The finding of the jury of “ a waiver by the defendant of strict performance on the part of the plaintiff” was upheld, it being said near the close of the opinion, “ there was sufficient evidence in the case to support the verdict.” We think the case in hand differs from that one.

In Beardsley v. Fowler, 23 Barb., 628 , it was held “ Nothing will excuse the party holding the guaranty from the performance of this condition, except the act of the guarantor himself. It will not suffice for such party to say it would have been of no use to prosecute.” That was an action upon a guaranty of a bond and mortgage, and it was held that the waiver by the guarantor of the proceedings to foreclose the mortgage did not excuse the assignee from proceeding against the mortgagor as stated upon the bond. In the course of the opinion it is said : “ There is not evidence sufficient to be submitted to the jury of any waiver excepting to what related to the foreclosure of the mortgage; the evidence

p. 774

touching the waiver relates entirely to the mortgagee,” and a non-suit was upheld.

In Tiffany v. Willis, 30 Hun, 266 , it was said by this court in the course of the opinion delivered in that case, viz.: “As there was no dispute about the situation and circumstances of the parties, and no question as to the steps which have been taken or omitted by the guarantee against the principal debtor, the question of due diligence was a question of law. Burt v. Horner, 5 Barb., 501 .” Following the reasoning of our former-opinion in this case we feel constrained to set aside the verdict and order a new trial. 57 Hun, 265 ; 32 N. Y. State Rep., 652.

Judgment and order reversed upon the exceptions and a new trial ordered, with costs to abide the event.

Martin and Merwin, JJ., concur.