Cass v. Shewman — 41 N.Y. St. Rep. 72

Majority

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Marcus M. Cass, App’lt, v. James Shewman, Resp’t.

(Supreme Court, General Term, Fourth Department,

Filed November 21, 1891.)

Headnote

1. Appeal—Exceptions.

Exceptions to the decision of the court on the trial of an issue of law are not required in order to raise the question of the correctness of the decision on appeal.

2. Lease—Liability op surety.

Plaintiff leased certain lands for three years, the lease providing that the lessee should carry on the farm in a good and farmer-like manner, and prohibiting the cutting of standing timber until the down timber was used • up. Defendant executed an agreement as surety on said lease, agreeing to fulfill all the terms and conditions thereof not fulfilled by the lessee. Held, That this was a guaranty of payment, and not of collection, and that an action could be maintained thereon for breach of the conditions of the lease in failing to pay rent, committing waste, failing to do the work in á farmer-like manner, and cutting timber, without previous demand of the lessee and notice to the surety.

Appeal by the plaintiff from a judgment entered in Schuyler county on July 6, 1891, overruling a demurrer by plaintiff to the fifth coun't or defense in the answer. Appeal, also, from an order entered July 2, 1891, regulating the form of the judgment to be entered.

On the 3d April, 1888, the plaintiff and one Jennie D. Shew-man entered into a written agreement, by which the plaintiff leased to said Shewman bis farm of 110 acres for the term of three years from April 1, 1888, at the annual rent of $125, payable on the 1st of March of each year. It was among other things provided that Shewman, the party of the second part, should have “ fire wood and privilege to cut and use posts for

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fencing on said, farm, but shall not cut standing timber until down timber is used up,” and the party of the second part agreed to carry on the farm in a good and farmer-like manner.

Upon the same occasion, and in connection with said lease, the defendant executed and delivered to plaintiff an instrument, of which the following is a copy: “ For a valuable consideration to me paid by M. M. Cass, the receipt whereof is hereby acknowledged, I hereby agree to become, and do become, security for the fulfillment of the above lease by the party of the second part, hereby agreeing to fulfill all the terms and conditions of said lease not fulfilled by said party of second part. Witness my hand this 3d day of April, 1888. Jambs Shewmah.”

In the complaint, the lease and the guaranty of defendant are set out, and it is alleged that the lessee went into possession, and that the year’s rent of $125 that became due March 1, 1891, has not been paid. It is also alleged that the lessee has not carried on the farm in good and farmer-like manner, has committed waste, has tom down and injured fences, has injured the buildings, and has cut down and appropriated many standing trees contrary to the provisions of the agreement, thereby damaging the plaintiff to the amount of $300, which by the terms of the agreement the lessee is liable to pay; that in these respects the lessee has made default and has failed to fulfil the agreement. Judgment is demanded against the defendant for $425.

In the fifth count or defense in the answer, it is alleged by the defendant that no demand Was made by plaintiff before the commencement of this action of said lessee for the payment of said rent, or for the performance on her part of the conditions and provisions in said lease contained, alleged in the complaint to have been broken and violated by her, or for compensation in damages for such alleged breach or for the injury as alleged to the real property ; that plaintiff had taken no steps and resorted to no legal remedy against the lessee to recover the said rent and for damages for a breach of performance of the conditions of the agreement, and had not exhausted his remedies, legal or otherwise, against the lessee.

In the seventh count or defense, the defendant alleged that the lease or agreement set forth in the complaint was void for the reason that it was not sealed, acknowledged or witnessed.

The plaintiff demurred to the fifth and seventh defenses in the answer, on the ground that each of said answers is insufficient in law upon the face thereof and neither contains sufficient facts or allegations to constitute a defense.

The court in its decision sustained the demurrer to the seventh defense, giving the defendant leave to amend on payment of costs of the demurrer, but overruled the demurrer to the fifth defense and directed an interlocutory judgment to that effect. The court at the same term granted an order, which was entered July 2, 1891, directing that the demurrer to the fifth count be overruled, « and that “the defendant may enter judgment herein, dismissing said complaint, with costs, which judgment shall stand upon the

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record until the trial of the issue joineu in this action, and in case said action shall be determined in favor of the defendant, said judgment, together with judgment for further costs, shall stand as the final judgment in this action, otherwise to be of no force and effect.” This order and the judgment entered in pursuance thereof on the 6th July, 1891, are appealed from.

M. M. Cass, Jr., for app’lt; Cole & Bolyen, for resp’t.

No exceptions to the decision of the court were filed by the appellant, and the respondent therefore claims that the appellant is not in a position to question the correctness of the decision. The cases cited to sustain this view of the practice relate only to trials of issues of fact. By §' 992 of the Code of Civil Procedure it is provided that “ an exception may be taken to the ruling of the court or of a referee upon a question of law arising upon the trial of an issue of fact.” The manner in which such exceptions shall be taken is regulated by §§ 994 and 995. We are referred to no provision of the Code, or to any authority, which requires exceptions to be taken to the decision of the court on the trial of an issue of law. Under the former Code, the practice, as understood, did not require exceptions in such a case. 3 Waits Pr. 232. We think none were necessary.

Upon the merits of the demurrer the claim of the respondent, as indicated by his points, is that he is not liable until a demand is made upon the principal debtor and that “ it must be shown that she refused to fulfil the covenants, and the surety must have previous notice and a demand must also be made on him so that he may have knowledge of the breach and an opportunity to fulfil himself." To sustain this view the cases of McMurray v. Noyes, 72 N. Y., 523 ; Toles v. Adee, 91 id., 562 ; Bank, etc. v. Livingston, 2 Johns., Cas., 409 ; Mechanic Fire Ins. Co. v. Ogden, 1 Wend., 137 , are cited.

In the McMurray case, the defendant, upon an assignment of a bond and mortgage, covenanted that if, in case of foreclosure and sale of the mortgaged premises, there should arise a deficiency, he would pay the same on demand. In an action on this guaranty it was held that the foreclosure and sale were conditions precedent, to be performed with due diligence in order to establish the liability of the guarantor. Toles v. Adee was an action upon an undertaking, given upon the discharge of a defendant from an order of arrest and conditioned that the party discharged would at all times hold himself amenable to process issued to enforce the judgment. It was held that the entry of judgment and issuing of process against the principal debtor were conditions precedent to the liability of the surety, and that a neglect to perform such conditions with due diligence discharged the surety. In Bank v. Livingston, there was an absolute guaranty of repayment of certain monies advanced to a committee. The only question raised was whether the committee should have been first sued, and it was held that this was not necessary. In Mechanic Fire Ins. Co. v. Ogden, the defendant had assigned to plaintiff certain contracts-and covenanted that the sum set opposite to each

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contract in a statement annexed was then justly due 'thereon, and that “ each and every sum should be well and truly paid to the plaintiffs, with the interest on each, respectively.” It was held that plaintiffs could not call on defendant for payment without first making demand of those who signed the contracts, but that it was not necessary to bring suit against them.

The first two cases are clearly distinguishable from the present. In those, something was to be done by the creditor before the liability of the surety was determined. Here the liability attached and was determined the moment the lessee failed to perform his duty, and the liability of the surety was as extensive as that of the lessee. Pothier on Obligations, 404.

The case in 1st Wend, sustains somewhat the position of defendant, but other cases are in a different direction. In Allen v. Rightmere, 20 Johns., 365 , there was a guaranty by the defendant of the payment of a note, and it was held not to be necessary to make a demand of the maker before suing the defendant, it being said that the undertaking of the defendant was that the maker should pay the note when due or that the defendant would pay it himself. The doctrine of this case was followed and established by the court of appeals in Brown v. Curtiss, 2 N. Y., 225 .

In Mann v. Eckford's Ex’rs, 15 Wend., 502 , the obligation sued on was a bond of defendant’s testator, conditioned that one Gibbons “should punctually satisfy and pay to the J5tna Insurance Company ” the amount of a certain bond and mortgage executed by Gibbons and upon which the company had advanced the money, with interest, as the same should become due. It was held not to be necessary for the plaintiff to prove a demand upon Gibbous for payment of the money and notice to the obligor or to defendants, it being said that if a person make an unconditional engagement for the act of a third person the contract will be broken if that person fails to do the act.

In Douglass v. Howland, 24 Wend., 35 , there was an agreement between plaintiff and one Bingham whereby, among other things, Bingham agreed to pay 'the plaintiff such, sum as should be found due upon an accounting provided for in the agreement. Underneath the agreement the defendant executed an instrument by which he covenanted that Bingham should “ well and faithfully perform on his part the above agreement." It was held that defendant was not entitled to notice, before action, of Bingham’s default. Among other cases there cited was the case of Brookbank v. Taylor, Cro. Jac., 685, where the promise was that the defendant would pay the plaintiff the rent due from another if the latter did not pay it, and it was held that the defendant must notice the non-payment at his peril.

In the East River Bank v. Rogers, 7 Bos., 493, the plaintiff made a loan to one Chase, payable in sixty days, and the defendant promised that if Chase failed to repay the amount, with interest, within the sixty days, “ then and in such case the defendant will become answerable to the plaintiffs for such repayment, after thirty days notice of such default.” It was held that a de

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mand of the principal need not be made before suit against the defendant.

In Clark v. Burdett, 2 Hall, 197 , there was a guaranty by defendant of payment of bills of merchandise, purchased or to be purchased, and it was held that a demand of the purchaser and notice to defendant were not necessary as conditions precedent to plaintiff’s right of action. In Turnure v. Hohenthal, 4 J. & S., 79, where a surety to a lease bound himself that in case default should at any time be made by his principal in payment of rent and in the performance of the conditions of the lease to be by him performed, he would pay the rent in arrear and all damages in consequence of the non-performance of the covenants, without requiring any notice of such default, it was held that no demand was necessary to be made of the tenant by the landlord for the rent before proceeding against the surety, and that the landlord was under no obligation to attempt to collect the rent or enforce the covenants against the tenant. A like view was taken in McKensie v. Farrell, 4 Bos., 204, and in Ducker v. Rapp, 9 J. & S., 235. In Cordier v. Thompson, 8 Daly, 172 , one Perrero executed an instrument by which she agreed to return to plaintiff’s intestate a certain amount of money at a certain time, and the obligation of the defendant was in the following form: “ I guarantee the above obligation.” This was held to be a guaranty of payment and that neither demand on the principal or notice to the guarantor of default were prerequisite to an action on the guaranty. Voltz v. Harris, 40 Ill., 155 , was an action upon a guaranty of a lease by which the guarantor became “ security ” that the lessee would do and perform all the covenants contained in the lease, and promised to pay to the lessors all rents and damages the lessors might sustain by reason of the non compliance or non fulfilment of the stipulations of the lease by the lessee. It was held that the liability of the guarantor was primary and that he was not entitled to notice of the non-performance of the stipulations. In Ashton v. Bayard, 71 Penn St., 139 , the obligation against the surety was “ I hereby become the security of S. Coulter for the fulfilment qf the within obligation.” This referred to a due bill given by Coulter for certain shares of stock. This was held to be an original undertaking by the surety and a recovery thereon could be had without proving diligence to pursue Coulter. See, also, Brandt on Suretyship, §§ 86, 172.

In the present case, as against the lessee, no demand was necessary. Ja ckson v. Binns, 10 Wk. Dig., 105; McMurphy v. Minot, 4 N. H., 251 . His agreement was broken when he failed to pay and when he violated the conditions of the lease. The defendant agreed to fulfil all the terms and conditions not fulfilled by the tenant. This was in effect an agreement to pay, if the lessee did not. When the plaintiff shows a breach by the lessee and nonpayment or non-fulfilment, then he shows all that by the terms of the contract he is required to show in order to make the defendant liable. The agreement of defendant was not that the lessee would pay on demand or upon suit brought, but it was absolute that he would fulfil if the lessee did not. This in substance was

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a guaranty of payment and not of collection. The defendant in his agreement required no demand or notice or exhaustion of remedies against the tenant. Ho duty was imposed on the lessor in the first instance to take any steps against the debtor, and that is said to be the test in order to determine whether a guaran ty'of payment or collection exists. Toles v. Adee, supra, 573.

The contracts of sureties are to be construed like other contracts; so as to give effect to the intention of the parties. People v. Backus, 117 N. Y., 201 ; 27 St. Rep., 173 . It is hardly to be assumed here, in the absence of an express stipulation to that effect, that the intention of the parties was that the lessor should pursue the lessee to the end of an execution before calling upon the surety. In fact, that does not now seem to be claimed by the respondent’s counsel, but he relies on the question of demand and notice. This the defendant did not require by his agreement, and he was not entitled to it, any more than in "case of an absolute guaranty of payment. This view is, I think, in accordance with the current of authority, as illustrated by the cases above referred to. It follows that the demurrer should have been sustained.

Judgment and order reversed, with costs of appeal, and interlocutory judgment ordered for the plaintiff upon the demurrer, with costs, with leave to the defendant to answer in twenty days upon the payment of the costs of the demurrer and of the appeal.

Hardin, P. J., and Martin, J, concur.