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Brennan v. Arnstein

42 N.Y. Super. Ct. 375 10 Jones & S. 375 Court N.Y. Super. Ct. Decision date 1877-05-08 English

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MATHEW T. BRENNAN, late Sheriff, &c., Plaintiff, v. JOACHIM ARNSTEIN and PHILIP GOLDMAN, Defendants.

Headnote

I. UNDERTAKINGS; SEVERAL IN AN ACTION.
1. Release of sureties to a prior one; effect of on liability OF SURETIES TO A SUBSEQUENT ONE.
(a) The release by the party to whom the first undertaking is given or his assignee, of. the sureties to that undertaking does not release the sureties on a subsequent undertaking given to him.
3. Payment in whole or in part by the sureties to a prior undertaking.
(a) Reduces (he UaMMti/ of the sureties on a subsequent one to the party to whom is is given, by the amount of such payment.
H. CLAIM AND DELIVERY.
1. Undertakings in actions of, application of above principles.
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(a) A release of the sureties to the undertaking givertlry the plaintiff on taking the property from the defendants upon a receipt from them of a portion of the amount for which they are bound under their undertaking, will not release the sureties to an undertaking given by the plaintiff on appeal to the general term from a judgment rendered against him in the action for the purpose of staying execution; but they are entitled to have credited on the amount for which they are bound the sum received from the sureties on the first- undertaking.
III. UNBERTAKINQ-.
I. INSUFFICIENT TO STAY EXECUTION.
(a) Sureties liable thereon nevertheless, when.
1. When it has been accepted as sufficient and all proceedings have in fact been stayed on the faith thereof.
Before Sedgwick and Speir, JJ.
Decided May 8, 1877.
This is an appeal by the defendant Arnstein from an order denying a motion to vacate the judgment entered herein and the execution issued thereon and to allow him to defend the action.
In 1871, Caroline Pollock brought a replevin suit against the plaintiff in this action (being the defendant in that one) and she as principal and Wahlig & Ma- . thias as sureties, executed an undertaking to procure the delivery of the property to her. The defendant in that action recovered judgment, and the plaintiff therein appealed to the general term and gave an undertaking on appeal to stay proceedings with the defendants in this action as sureties. The general term affirmed the judgment; the defendant in that action (being the plaintiff in this) thereupon brought this action on the undertaking given on appeal against both the sureties thereto (being the defendants in this action) and recovered judgment herein against them both by default. The plaintiff assigned this judgment and all the collateral undertakings to one Nathan Hutkoff, who brought
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an action under the replevin undertaking, and the sureties to the undertaking. Wahlig & Mathias answered, but thereafter they paid to Hutkoff one-half the amount, and assigned to him all claims and rights of action which they had against Arnstein & Goldman by reason of their suretyship, and Hutkoff & Goldman executed to Wahlig & Mathias a release, of and from all claims and demands which they or either of them had against said Wahlig & Mathias or either of them arising out of the said undertaking executed by them. Hutkoff credited on the judgment in this action the full amount recovered from Wahlig & Mathias, and issued execution against both defendants for the balance.
Simon Sultan, attorney, and Algernon S. Sullivan, of counsel, for Arnstein, upon the points stated in the head note, urged:
I. Even leaving out the question entirely as to whether, the defendant Goldman had paid' the judgment, or Nathan Hutkof had bought it, and assuming the latter to be the fact, the release of the replevin bond was a release of these defendants. 1. The sureties on the undertaking on appeal were, in fact, sureties for the parties to the replevin bond. The undertaking on appeal not having been in the form prescribed by section 336 of the Code, it did not stay proceedings on the execution (Elliot v. Buckland, 37 How. 71 ); being otherwise of no necessity in law, it was a mere gratuitous undertaking, creating no liability, not being supported by the statutory consideration (Post v. Doremus, 60 N. Y. 371 ). The sureties to the replevin bond, by the recovery of the judgment in replevin against their principal, had themselves become principal debtors bound by their obligation to effect a return of the property according to the judgment, and only if they failed to procure such return, the judgment was for a specific sum of money to stand in lieu of the property. The sureties on the undertaking on appeal
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never agreed to look to the return of the property, but to the payment only of the amount directed to be paid by the judgment. That amount, however, was not due and payable, unless the sureties on the replevin bond had made default in their undertaking to procure a return of the property. The effect of the undertaking on, appeal, therefore, was an obligation to become answerable for such default. Within every principle this created the relation of principal and surety (See Wood v. Fisk, 65 N. Y. 250 , 251). The same reasoning applies to the relation here. The principals, the parties to the replevin bond, haying been discharged, the sureties were discharged likewise (Boyd v. McDonough, 39 How. 389 ). 2. The case of Hinckley v. Kreitz ( 58 N. Y. 583 ), contains no principle applicable to this case, and the learned judge erred in deciding the motion upon the doctrine there laid down. a. The undertaking on appeal in that case was indispensably necessary to effect an appeal at all, whereas in this case, there was no such necessity. The undertaking in that, case had the effect of staying proceedings on the execution, and to delay the collection of the judgment, the undertaking in this case did not stay anything (See Elliot v. Buckland, supra), b. It is argued in that case that the sureties on the first undertaking upon payment of the judgment when recovered had a right to stand in the place of a creditor as to all rights and remedies, but in order that the replevin sureties should have that resort here, they had necessarily to take an advantage of the breach of their own contract to have the property returned, for which default alone the money judgment, which the appeal bond secured, was payable. They could not take advantage of their own wrong. c. The principle in that case, and all the authorities cited in support of it, is that the interposition of the latter sureties was the means of involving the former into ultimate liability, and of securing a
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delay. There was no such legal result by means of the undertaking on appeal here, which was gratuitous and unsupported by any consideration.
L. A. Gould, attorney, and of counsel, for Nathan Hutkoff, upon the points stated in the head note urged:
I. Upon his own admission, Arnstein is liable to the holder of the judgment for the full amount thereof. And as surety upon the undertaking last given, he is primarily liable (Hinkley u. Kreitz, 58 N. Y. 583 ). So far he has paid nothing; if any sum is collected of him he may recover the whole amount from his principal, Pollock, and can demand contribution of his co-sureties if he pays more than the proportionate share (Holmes v. Weed, 19 Barb. 128 ; Bonney v. Seely, 2 Wend. 481 ; Bradley v. Burwell, 3 Den. 61 ; Norton v. Coons, 3 Id. 130 ; Easterly v. Barber, 3 C. S. 421; Armitage v. Pulver, 37 N. Y. 494 ).
II. The principal, Caroline Pollock, has never been discharged by any of the sureties, but if the other sureties had released her this could work no injury to the appellant, Arnstein, for he has not done so. The judgment against her remains in full force. Hutkoff, the holder of the judgment, could recover the full amount from any one of the four sureties, and if he compels payment from any one of them of a sum greater than his proportionate share, that one may claim contribution from the others. Payment of course can be required but once, and if any one chooses to pay the whole he forthwith may assume the position and rights of the judgment creditor to recover their proportion from the others (Cuyler v. Ensworth, 6 Paige, 31).
III. Appellant’s theory that the release of the sureties on the first undertaking on their paying one-half of the judgment operated to discharge him from all
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liability, has no foundation in reason, and is without authority in law. The primary liability resting upon the appellant and Goldman, their absolute release might be set up as a defense by Wahlig and Mathias, for the reason that the latter would have a remedy over against the former, of which the discharge of the former would deprive them (Hinkley v. Kreitz, supra, p. 592 ). But the release of Wahlig and Mathias could have no such effect even if it were absolute. Arnstein and Goldman could not compel Wahlig and Mathias to pay more than one-half of the judgment, and that amount Hutkoff compelled them to pay, credited the same to Arnstein and Goldman on the judgment, and issued execution against both for the balance only. If Arnstein alone is compelled to pay the whole sum remaining unpaid, he may have contribution against Goldman for one-half the amount so paid, and may recover the balance from his principal, Caroline Pollock. The obligation of the principal to a surety arises not from the signing of the undertaking by the principal, but from the implied agreement to indemnify the surety. There is no averment that Caroline Pollock is insolvent, nor that Goldman is not amply responsible. The appellant has suffered no injury, nor are his rights at all endangered. The order should be affirmed with costs.

The only facts in controversy relate to the assignment of the judgment to Hutkoff. The appellant Arnstein claims that the assignment to him was colorable only—that Goldman furnished the money to keep the judgment alive and to enforce it against Arnstein.

I am of the opinion that the court below justly decided that the weight of evidence sustained the validity of the assignment. The burden was upon the appellant to show affirmatively that the transaction

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was collusive. The strength of his application for relief greatly depends upon the allegation of bad faith on the part of his co-defendant and Hutktiff, as his moving papers disclose no defense to the action should he succeed in securing the favor of the court in permitting him to come in and defend. It is not claimed but that he became liable as surety, or that he has paid anything in satisfaction of his liability. Upon the decision of this controverted question of fact, the court on appeal has no ground to interfere.

The question is whether the sureties are liable upon the undertaking upon the appeal from the judgment against Caroline Pollock to the general term of this court. After reciting that she intended to appeal to the general term, the sureties ‘‘ undertook that the said appellant will pay all costs and damages which may be awarded against her on said appeal, not exceeding five hundred dollars, and also undertook, that if the said judgment so appealed from, or any part thereof, be affirmed, or the appeal be dismissed, the said appellant will pay the amount directed to be paid, &c.”

As surety upon this undertaking Arnstein became liable absolutely by the very terms of the undertaking when the judgment below was affirmed by the general term." His papers make the admission that he is liable to the holder of the judgment for the full amount. He may recover the whole amount of any sum, which may be collected of him from his principal Pollock.

The only equities which arise in the case relate to the equitable right of contribution. If he pay more than the proportionate share, he can demand contribution of his co-sureties. Therefore the appellant’s position that the release of the sureties on the first undertaking by paying one-half of the judgment operated to dis

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charge the appellant from all liability has no foundation in law.

It was also objected that the undertaking on appeal, not having been in the form prescribed .by the code, did not stay the .proceedings on the execution, and created no liability, not being supported by the statutory consideration. > The omission, upon which the objection is founded, is that of a clause binding the sureties to obey the order of the appellate court. Otherwise the undertaking is regular. The appellant’s surety in his oath avers that he executed this undertaking “to stay all proceedings on the said judgment.” It was accepted and all proceedings were accordingly stayed. I am inclined to think that it is too late to raise this objection.

It would be grossly unjust to allow the appellant to escape from his obligation, voluntarily given, and which has been accepted and accomplished the purpose for which it was given, on the sole ground of .technical defects and informalities which he himself has committed.

The order must be affirmed with costs.

Sedgwick, J., concurred.

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