Mackellar v. Farrell — 57 N.Y. Super. Ct. 398

Majority

p. 398

THOMAS MACKELLAR, Respondent, v. THOMAS FARRELL and THOMAS HAGAN, Appellants.

Headnote

Sureties on an undertaking given to stay proceedings on a judgment of foreclosure and salepending an appeal to general term, ivhen notrelievedfrom liability by proceedings taken to obtain, and the obtaining, a stay pending an appeal to the Court of Appeals.—Procuring the appointment of a person inplace of a receiver declining to act, when not violation of a stay.

The sureties on an undertaking given to stay proceedings on an appeal to the general term from a judgment of foreclosure and sale, are not relieved from the liability thereby assumed by reason of an appeal taken from the affirmance of the judgment to the court of appeals and proceedings on the judgment below being stayed against the opposition of the respondent pending such appeal, pursuant to the provisions of law upon the giving of an undertaking under § 1331 of the Code of Civil Procedure.

An order made under §1331 of the Code of Civil Procedure upon the application of the appellant against the opposition of the respondent fixing the amount of the undertaking to be given on the appeal to the court of appeals for the purpose of staying proceedings, giving the appellant fourteen days in which to file the undertaking, and staying proceedings in the meantime, does not amount to a novation and substitution of the undertaking given under the order in the place and stead of that given on the appeal to the general term.

Neither the possibility that the mortgaged property may, or the fact that it actually has, pending the appeal to the court of appeals, so depreciated in value as that a sale thereof after affirmance by the court of appeals, produces a deficiency which would not have occurred if the property had been sold as soon after the general term judgment as With reasonable diligence it could have been, will not take the case out of the general rule governing the liability of sureties on undertakings given to stay proceedings on appeal from judgment. The possibility of such depreciation is one of the risks the sureties assumed.

An application made pending a stay of proceedings under a judgment for the appointment of a person in place of a receiver who had been appointed before judgment but who had declined to act, is not a violation of the stay.

Before Sedgwick, Oh. J., Feeedman and Ingbaham, JJ.

Decided January 6, 1890.

Appeal by defendants from a judgment entered upon a verdict directed against them at trial term..

p. 399

A judgment of foreclosure and sale having been rendered in an action pending between Thomas MacKellar, the plaintiff herein, and George W. Rogers, impleaded, with others, the defendants in order to enable Rogers to stay proceedings on the judgment pending an appeal to the general term, executed the undertaking on which this action is brought.

The undertaking was given under §§ 1352 and 1331 of the Code of Civil Procedure, and provided, among other things, that, if the judgment should be affirmed or the appeal dismissed, the appellant would pay any deficiency that might occur on the sale in discharging the sum to pay which the sale was directed with interest, costs and all expenses chargeable against the proceeds of sale, not exceeding the sum mentioned in the undertaking.

The judgment was affirmed at general term. Rogers appealed to the court of appeals, and in order to procure a stay pending the appeal moved on notice for an order fixing the amount of the undertaking to be given pursuant to above cited section 1331, and procured a stay of proceeding until the hearing and decision of . the motion. The motion was opposed by the plaintiff, but was granted and the amount fixed, and the appellants given fourteen days within which to file the undertaking—proceedings in the meantime being stayed. An undertaking was given pursuant to such order, and the proceedings on the judgment were thereby stayed pending the appeal to the court of appeals. The judgment was affirmed by the court of appeals, a sale was made and resulted in a deficiency, to recover which this action is brought.

Other matters appear in the opinion.

John C. Shaw, attorney, and E. J. Myers of counsel, for appellants, raises the following points :—

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I. The order of the special term providing for the stay pending the appeal to the court of appeals, upon the execution and filing of an undertaking in the sum of sixteen thousand two hundred and ninety-seven dollars and ninety-seven cents ($16,297.97), being made without notice to and consent of the sureties, discharged them from further liability on their undertaking, because it amounted to a novation in law, and a substitution of the new undertaking in the place and stead of the former undertaking,

II. The order appointing a receiver after the undertaking on the appeal to the general term had been given was a violation of the stay, and operated to discharge the sureties. These propositions were supported by an extended argument; but no authorities were cited.

George M. MacKellar, attorney and of counsel, for respondent, on the questions considered in the opinion, argued:—

I. The plaintiff did not proceed to obtain the appointment of a receiver, contrary to the terms of the stay. The receiver was appointed March 31, 1885, before the action had been tried. The receiver appointed declining to act, application was made to have some person appointed in his place. The orders and the giving of the undertakings only stayed proceedings under the judgment. Code, §§ 1351— 1331.

II. The undertaking given upon the appeal to the court of appeals was not a • substitute for the undertaking given by the defendants upon the appeal to the general term. In support of this counsel cited the cases referred to in the opinion.

This action is brought upon an undertaking executed by the de

p. 401

fondants and given npon an appeal taken to the general term from a judgment of foreclosure and sale in the action of MacKellar v. Rogers by the defendant in that action. The defendants here resist recovery upon the ground that after the affirmance of the judgment in MacKellar v. Rogers by the general term, the defendant in that action obtained a stay of proceedings, pending an appeal taken to the court of appeals from the judgment of affirmance upon giving an undertaking.

The defendants claim that the stay was obtained against their wishes, but it is equally true that it was obtained against the wishes of the plaintiff, for the latter opposed the granting of it as well as he could. The fact is that the stay was granted by the court on a special motion made for that purpose and opposed by the plaintiff.

The undertaking by the defendants was for the payment of any deficiency which should occur upon a sale of the mortgaged premises, not exceeding the sum of $2,500.

The understanding which constituted the basis for the stay complained of was to the like effect, except that it was to the amount of $16,297.97, and also covered the costs of the appeal to the court of appeals.

. The question, therefore, is whether the defendants, as sureties upon the first undertaking, upon the affirmance of the judgment by the general term, had such an absolute right to have the sale of the real estate under the judgment of foreclosure take place and to have the precise extent of their liability determined,' that the order of the special term providing for a stay pending the appeal to the court of appeals, upon the execution of the second undertaking, made without notice to or the consent of the defendants, discharged them from further liability on their undertaking,

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for the reason that the order amounted to a novation and a substitution of the new undertaking in the place and stead of the first undertaking.

In Burrall v. Vanderbilt, 6 Abb. 70 , it was held that, when sureties join in an undertaking, they are presumed to know the legal effects of their act, and that one of those effects will probably be the release of the real estate of the debtor from the lien of the judgment; and that, consequently, the obtaining by the appellant, without notice to his sureties, of an order declaring the judgment secured on appeal, does not discharge the liability of the sureties, though the appellant was enabled thereby to convey away real estate to which, under the lien of the judgment, they had looked for their indemnity.

In Heebner v. Townsend, 8 Abb. 234 , it was held, that the fact that the defendant had taken and perfected an appeal to the court of appeals from the judgment of affirmance, was no defence to an action by the respondent upon the undertaking given on the first appeal.

The authorities are numerous and uniform that the sureties upon the undertaking given on the first appeal are liable to the extent of their undertaking upon the affirmance of the judgment against their principal by the last court to which an appeal was taken. Smith v. Crouse, 24 Barb. 433 ; Letson v. Dodge, 61 Ib. 125; Gardner v. Barney, 24 How. 467 ; Richardson v. Kropf, 47 Ib. 286; affirmed, 60 N. Y. 634 ; Bennett v. Brown, 20 Ib. 99; Robinson v. Plympton, 25 Ib. 484; Humerton v. Hay, 65 Ib. 380; Church v. Simmons, 83 Ib. 261; Clute v. Knies, 102 Ib. 377.

The principle of the decisions is that the undertaking is a statutory one, that its form is prescribed by statute ; that the proper construction of the words of the statute must always prevail over the private intent of the sureties; and that by such construe

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tion the affirmance mentioned in the undertaking means an affirmance by the legally constituted tribunal having final cognizance of the subject of the litigation.

Thus it has been held that the sureties remain bound if the judgment, though reversed by the court at general term, is afterwards carried by appeal to the court of appeals and there the reversal is reversed and the original judgment affirmed, and that it makes no difference that when the undertaking was executed there was no appeal to the court of appeals, but that the law under which the appeal was taken ■ was passed after the execution of the undertaking. Gardner v. Barney, 24 How. 467 .

And in Horner v. Lyman, 2 Abb. Ct. App. Dec. 399 ; S. C. 4, Keyes, 237, it was held, that the obligation of the sureties in the undertaking is to be interpreted by the law as it exists at the time they are called on to perform it.

The only statutory provision which remains to be noticed is that, where an appeal is perfected to the court of appeals and security is given thereupon to stay the execution of the judgment or order appealed from, an action shall not be maintained upon the undertaking given upon the preceding appeal until after the final determination of the appeal to the court of appeals. Code of Civ. Pro., § 1309. This is a recognition of continued liability.

For the reasons stated the sureties in this case had no right to a' sale within a reasonable time after the affirmance of the judgment by the general term, and 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 them. So far as the point now under consideration is concerned, the law makes no distinction between different kinds of judgment, and it therefore can make no differ

p. 404

ence that, if the premises had been sold within a reasonable time after the 'affirmance of the judgment by the general term, they would have brought a sum sufficient to pay the amount of the judgment and the costs up to that time.

It has also been argued that the defendants are discharged because, after the giving of their undertaking, the respondent, contrary to the terms of the stay, obtained the appointment of a receiver of the mortgaged premises. The proof does not show that the appointment was in violation of the stay. A receiver was appointed before the trial of the issues and he subsequently declined to act. Application was then made after judgment to have some person appointed in his place. This involved no violation of the stay which only stayed proceedings under the judgment.

Upon a consideration of the whole case no exception can be found which constitutes ground for reversal.

The judgment should be affirmed with costs.

Sedgwick, Ch. J., and Ingbaham, J., concurred.

Cases cited

Smith v. Crouse 24 Barb. 433 N.Y. Sup. Ct. 1857-04-14 p. 402