Case ID: ny-st-rep_19/html/0769-01.html
Source: Caselaw Access Project
Author: {"author": "Bartlett, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Elizabeth S. Spring, as Administratrix of Marshall Spring, Dec’d, v. Francis George, Impleaded, with Cornelius Stokem.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed November 24, 1888.)
    
    1. Surety—"W"hen believed by action of cbeditob.
    The doctrine that the creditor is under no obligation to the surety to proceed actively against the principal debtor, does not go so far as to justify the creditor in releasing the xiroperty, of the principal debtor which he has actually levied upon under an attachment, when the effect of such action on his part is to render it inrpossible to collect the debt from the principal.
    
      2. Same—Notes and bills—When indorser relieved by action oe payee.
    In an. action against the indorser of a note, it appeared that a suit had been brought against him and the maker previously, in -which the plaintiff had obtained a warrant of attainment under which the sheriff levied upon sufficient property of the maker to sa isfy the note, and that subsequently the plaintiff in s ¡id suit, without the knowledge or consent of the indorser, directed the sheriff to abandon the levy and release the attached property, since which time the maker had become insolvent. Held, that the indorser was relieved from liability by reason thereof. Distinguishing People v. White, 28 Hun, 289, and Smith v. Erwin, 77 N. Y., 466.
    8. Same—Evidence.
    The defendant offered in evidence to sustain, this defense, the affidavit cf the plaintiff in the aforesaid suit on which the warrant of attachment was granted, which showed that the claim there in suit was based upon the very note which was the subject of this action. Held, that it was competent and material evidence.
    Exceptions ordered to be beard, in the first instance, at general term.
    
      C. Bainbridge Smith, for def’t; Albert Bach, for pl’ff.
   Bartlett, J.

This is an action upon a promissory note. The maker does not defend. The court at circuit directed a verdict against the indorser and ordered the exceptions to be heard, in the first instance, at general term.

One of the defenses of Francis George, the indorser, was that Marshall Spring, the plaintiff’s intestate, brought a suit on the note against him and Cornelius Stokem, the maker, in 1870 ; that he obtained a warrant of attachment under which the sheriff levied upon sufficient property of Stokem, the maker, to satisfy the note; and that subsequently Spring, without the knowledge or consent of George, the indorser, directed the sheriff to abandon the levy and release the attached property, since which time the maker, Stokem, has become insolvent.

The defendant offered evidence to sustain this defense, some of which was received by the trial court and some of which was excluded. It was proved by a witness who was a deputy sheriff in the city of New York in 1870 and 1871, that he had an attachment against the property of Cornelius Stokem in favor of Marshall Spring, and that after a man had been put in charge of the attached property, the' attachment was withdrawn by reason of a notice from the plaintiff’s attorney. Stokem, the maker of the note, also testified to the fact of the attachment, and that the property levied upon was worth four or five thousand dollars, or considerably in excess of the amount of the note. The affidavit of Spring, on which the warrant of attachment was granted, was excluded by the court. We think it ought to ha.ve been received. It showed that the claim there in suit was based upon the very note which is the subject of this action, and it was competent and material evidence for that purpose. Proof as to the subsequent insolvency of Stokem, the maker, was given by introducing transcripts of judgments against him which did not appear to have been satisfied.

In view of this evidence the plaintiff was not entitled to have a verdict directed in her favor.

It is doubtless true, as a general rule, that mere delay on the part of a creditor to enforce an obligation as against the principal debtor will not operate to relieve the surety. People v. White, 28 Hun, 289, 294.

And it has been held that the holders of a promissory note owe an accommodation indorser no active diligence to secure or protect his interests, and are not obliged on his account to sue the note, or enter judgment thereon or issue execution. Smith v. Erwin, 77 N. Y., 466.

But when the creditor, in the course of legal proceedings based upon his claim, once gets hold of property of the principal which is applicable to the payment of the debt, the surety is entitled to insist that the creditor shall not voluntarily let the property go; and if he does so, and the claim subsequently proves to be uncollectible from the principal, the surety is discharged.

Such seems to be the meaning of the rule approved by the court of appeals in the case of Shutts v. Fingar (100 N. Y., 539, 546): “But although the creditor is not bound to take active measures to enforce payment of the debt and may, therefore, stop short in those which he has taken, even though their further prosecution would have been successful, yet he is not entitled to relinguish any hold which he has actually acquired on the property or estate of the principal and which might have been made affectual for the payment of the debt. This is the necessary result of the rule that a creditor shall not arbitrarily shift the burden of a debt from the party primarily liable for its payment, and impose it on another whose liability is secondary.”

In Smith v. Erwin (supra), the accommodation indorser claimed to have been released from liability because the holders of the note, after obtaining judgment and issuing execution against the maker at a time when the latter had property enough to meet the demand, did not direct the sheriff to levy until more than six months after the execution was issued, when no property could be found. The decision was adverse to the indorser, but turned upon the fact that the plaintiffs in the first instance directed the sheriff not to levy until he should receive further orders from them. It was held that this rendered the execution dormant in the meantime, and that the defendant’s property was not bound, thereby until the subsequent order was given. Hence no lien ever was acquired and none had been lost. But from the manner in which the question was treated and from the language already quoted from Shutts v. Fin-gar, it is plain that if the execution had been issued to the sheriff to be executed immediately, at a time when the defendant had sufficient personal property to satisfy the same in his open and visible possession, and after an actual levy thereon the plaintiffs had given directions to the sheriff which deprived them of the lien thus obtained, it would have been held that the indorser was discharged.

In the case before us, the property of,the principal debtor was taken under a warrant of' attachment instead of an execution. But the creditor thereby certainly acquired a hold on the estate of the principal. The latter does not appear ever to have interposed any defence .to the claim made against him as the maker of the note; and it is obvious that the hold thus acquired, “might have been made effectual for the payment of the debt,” by simply retaining the property until judgment was obtained by default and execution was issued thereon. The doctrine that a creditor is under no obligation to a surety to proceed actively against the principal debtor should not be carried so far as to justify the creditor in releasing the property of the principal debtor which he has actually levied upon under an attachment, when the effect of such action on his part is to render it impossible to collect the debt from the principal.

It was error to direct a verdict for the plaintiff. The defendant’s exception to such direction, and likewise his exception to* the exclusion of Marshall Spring’s affidavit to obtain the attachment, must be sustained, and a new trial granted, with costs to the defendant to abide the event.

Van Brunt, P. J., and Brady, J., concur.