Kuhn v. Brown — 4 Thomp. & Cook 29

Majority

p. 29

Kuhn, appellant, v. Brown.

Headnote

Statute of frauds—when note or memorandum, sufficient.

Plaintiff being indebted to W. in the sum of $7,000, it was agreed between them that W. should take $2,000 in satisfaction thereof, provided A. would become surety for its payment. A. agreed orally to become such surety. Afterward an agreement in writing was executed by plaintiff and A., reciting that, whereas A. “ has become and is security to the said W. for the pay

p. 30

ment oí the said $3,000/’ therefore it was agreed that one L., who held a mortgage for $2,000 belonging to plaintiff, might retain said mortgage to secure said A. The mortgage in L.’s hands having been paid, plaintiff brought action to recover the proceeds. Held, that the agreement executed by plaintiff and A. was sufficient within the statute of frauds to charge A. as surety to W., and that plaintiff was not entitled to recover.

Appeal from a judgment entered on a trial by the court without a jury.

The action was brought by George Kuhn against Warren G. Brown, Charles W. Alcott, Charles C. Wehrum and Alfred Lockwood, to recover from said Lockwood the sum of $2,000, which had-been paid to him in discharge of a mortgage owned by the plaintiff.

The plaintiff being indebted to said Wehrum in the sum of $7,066, it was agreed between them in May, 1869, that Wehrum should take the sum. of $2,000 in discharge of said indebtedness, provided the defendant Alcott would become surety for the payment of that sum. Alcott thereupon agreed verbally to become such surety, and an entry was made of the transaction in Alcott’s books, but not in a form sufficient to bind Alcott.

On the 6th of August plaintiff assigned to defendant Lockwood a bond and mortgage for $20,000, and also as collateral security for the payment thereof, a bond and mortgage executed to plaintiff by William, Kreitz for $2,000. An agreement was at the same time executed by plaintiff and Alcott, of which the following is a copy:'

“Whereas, George Kuhn, of Mott Haven, Westchester county, New York, is indebted to Charles C. Wehrum, of the city of New York, in the sum of $2,000, payable on the 1st of May, 1870, without interest; and whereas, Charles W. Alcott' has become and is security to the said Wehrum for the payment of the said $2,000 on the said 1st day of May, 1870; and whereas, the said Kuhn has assigned to Alfred Lockwood, of the city of Paris, France, a certain bond and mortgage made by William Kreitz to said Kuhn, to secure $2,000, said mortgage being recorded in the register’s office of the city of New York, in liber 931 of mortgages, page 19, said assignment to said Lockwood being security to said Lockwood upon the assignment of a $20,000 bond and mortgage made by said Alcott to said Kuhn, and by said Kuhn to said Lockwood. Now, therefore, in consideration of one dollar, it is agreed that said Lockwood may hold said $2,000 mortgage, to secure said Alcott for his liability as

p. 31

security as aforesaid, and for that purpose he may, after the payment of said $20,000 bond and mortgage, assign said $2,000 bond and mortgage to said Alcott, to secure him for being such security as aforesaid, or to indemnify or repay to him the amount which he may pay, as such security, on or after May 1, 1870, and said Alcott agrees to use his exertions to induce said Lockwood to surrender said $2,000 bond and mortgage, and accept other securities in the place of it whensoever said $2,000 bond and mortgage shall be paid, if paid before maturity, so that the said $2,000 may be paid to said Kuhn.

“ George Kxjhít. [l. s.]

“ O. W. Alcott.” [l. s.]

In November, 1869, the Kreitz mortgage was paid to Lockwood, and this action was brought to recover the money. When the action was commenced there were nearly $10,000 due and unpaid on the mortgage sold to Lockwood, and at the time of the trial $400 was due thereon. This amount plaintiff tendered at the trial.

The case was tried by Mr. Justice Brady, without a jury, who decided that Alcott was legally hound as surety for the payment of the $2,000 to Wehrum, and was entitled to have the proceeds of the mortgage applied in discharge of said obligation.^[1]

p. 32

B. P. Oowles, for appellant.

Warren G. Brown, for respondents.

All allegations of fraud.or imposition on the appellant in procuring the instrument of the 6th of August, 1869, having been distinctly withdrawn during the trial (as appears at fob 202 of the case), that paper stood, as the court then remarked, unimpugned and upon its legal effect. It was upon this instrument that the learned judge, at special term, predicated the defendant

p. 33

Alcott’s liability, as surety for plaintiff, to the defendant Wehrum. The instrument recited that Alcott had become, and was, security for the payment of the sum of $2,000 to the defendant Wehrum, on the 1st of May, 1870, and provided that Lockwood should hold the mortgage of Kreitz as an indemnity to Alcott upon his liability as such. It was signed and sealed by both the principal and surety. This was, in our opinion, sufficient to take the promise of Alcott out of the operation of the statute of frauds. The reasons given by Brady, J., in his opinion at special term, are quite satis

p. 34

factory to us on this point, and we adopt them as expressing what we deem to be the law.

The effect of the tender of the money due on the $3,000 mortgage is not material to be discussed in this case, so far as relates to the $30,000 mortgage, held as collateral. When the suit was commenced the Kreitz mortgage was properly held by Lockwood as collateral to the balance claimed to be unpaid on the $30,000 mortgage, but, as between the appellant and Alcott, the Kreitz mortgage was also held to secure Alcott on his obligations as surety for appellant’s debt to'Wehrum. The right and duty of Lockwood to still hold the Kreitz mortgage as assignee, for Alcott’s benefit, under the instrument of 6th of August, would still remain after the extinguishment of the debt, to which he held it as collateral for his own benefit. Lockwood is not denying, but affirming, this liability, and thereby ratifying the act of his agent Brown in receiving the agreement clothing him with that power.

Alcott, who is also a defendant in the suit, makes no question whatever of the validity of his agreement to be security. How far, under such circumstances, the principal debtor, who has placed in his hands, or in the hands of a third person, collateral to indemnify him against such liability, can be. permitted to raise the question, it is not necessary to determine. Hpon the facts found by the judge, we are of opinion that his conclusion of law was sound, and that the judgment rendered thereupon should be affirmed.

Daniels and Westbbook, JJ., concurred.

Judgment affirmed.