Case ID: misc_38/html/0246-01.html
Source: Caselaw Access Project
Author: {"author": "Clarke, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William H. Taylor, Plaintiff, v. William H. Simpkins, Defendant.
    (Supreme Court, New York Special Term,
    June, 1902.)
    Action to cancel judgment — Guaranty of payment — Merger — Bate of interest.
    Where the holder of a note made in, and secured by a mortgage on land in, another State, recovers judgment in the State of New York against a guarantor of the payment of the note, the remedy of the holder against the maker and his land is merged in the judgment, bearing 6 per cent, interest, and therefore where the holder subsequently forecloses the mortgage on the land in the foreign State and buys it in at a price which covers his debt, the guarantor is entitled to maintain an action here to have the New York judgment canceled, and the holder of the note is not entitled to compute interest, on that judgment up to the time of the sale and foreclosure, at 12 per cent., the legal rate of the foreign State.
    Action to have canceled of record two judgments, now standing on the docket of New York county.
    Coleman & Donohue (G. W. Coleman, of counsel), for plaintiff.
    George H. Pettit, for defendant.
   Clarke, J.

The plaintiff is the guarantor of a note for $10,000, made in Kansas and secured by a mortgage on land in that State. The note was not paid and the holder thereof, the present defendant, brought action in this court against this plaintiff, in which plaintiff’s guaranty was held to be a guaranty of payment, and judgment was entered thereon, June 4, 1894, for $10,950 and $401 costs, and affirmed November 28, 1894, with $97.40 additional costs. This action is brought to have canceled of record these two judgments, now standing on the docket of New York county. On the trial a motion to dismiss the complaint was made on the ground that the plaintiff has not complied with the requirements of section 1261 of the Code of Civil Procedure. The motion must be denied. That section does not limit the power of this court to direct the satisfaction of a judgment upon proper grounds being shown, but merely directs that a judgment creditor, under the conditions therein described, must execute a certificate of satisfaction. The only question presented in this case is whether these judgments against this plaintiff have been paid, and it is proper to bring action to determine such controversy. Van Etten v. Hasbrouck, 4 N. Y. St. Repr. 803. Subsequently to the entry of the judgments against this plaintiff as a guarantor, judgment of foreclosure of the mortgage was entered in the State of Kansas by this defendant against the principal debtor, the maker of the note. The indebtedness on the note was thereby fixed at $13,200. The land was sold for $14,000 to this defendant, a deed thereof executed April 17, 1896, and a receipt signed April 20, 1896, by this defendant for $14,000, less the costs of foreclosure and taxes due on the premises. The deed was not delivered until eighteen months after its execution. The defendant contends that the indebtedness of the plaintiff as guarantor is the amount found due in the Kansas foreclosure, with the legal, rate of 12 per cent, interest thereon to the date of the delivery of the deed, amounting to $16,860.80; he concedes a credit of $14,000, minus $918.92 (being $126.05, the costs of foreclosure, and $792.87 taxes on the property), or $13,081.08, and claims a balance of $3,779.72 as due by this plaintiff on his guaranty. The plaintiff contends that his only liability was upon the judgments entered in the State of New York against him as guarantor and the interest thereon at 6 per cent, to April 20, 1896, the date of the defendant’s receipt, amounting to $12,728.71; that even conceding he is chargeable with the costs of foreclosure and that the taxes paid were all liens upon the property at the time of the sale, the defendant has heen fully paid .by the principal, inasmuch as he admits having received $13,081.08, being said sum of $14,000, less $918.92 costs and taxes; and that, as there is nothing due from him to> the defendant, the judgments against him as guarantor should be satisfied of record. Had the defendant first brought action against the principal in Kansas and collected what he could by foreclosure, his contention that the guarantor would be liable for any deficiency remaining due under the laws of Kansas would prevail. But he has elected to first bring his action on the guaranty of payment and obtained a money judgment thereon in this. State, and thereafter brought his action of foreclosure against the principal in Kansas. “ A cause of action is merged in a judgment rendered upon it, not only for the reason that a judgment is of a higher nature, hut because it would be vexatious to the one party and of no benefit to the other to permit the recovery of two judgments against the same person for one debt.’5. Gray v. Richmond Bicycle Co., 167 N. Y. 348. The plaintiff’s liability was, therefore, fixed by the judgment rendered against him on his contract of guaranty. It is a well-recognized rule of law that payment of the debt by the principal discharges the surety from liability on his contract. A surety is entitled to the same rights after judgment has been rendered against him as before, and any action on the part of the creditor which would have released the surety before judgment will equally release him afterward. Bangs v. Strong, 4 N. Y. 315; Webb v. Dickinson, 11 Wend. 62. Had the guarantor paid the judgments against him, he would have been entitled to be subrogated to the rights of the creditor and to foreclose the mortgage for his indemnity. Mathews v. Aikin, 1 N. Y. 595; Clason v. Morris, 10 Johns. 524; Humphrey v. Hayes, 94 N. Y. 594. The money realized on the foreclosure of the mortgage securing the note guaranteed by this plaintiff must be applied to the satisfaction of the note.' Orleans County National Bank v. Moore, 112 N. Y. 543. If the sum realized by the creditor on the foreclosure against the principal debtor was in excess of the judgments entered against this plaintiff on his guaranty and interest thereon at 6 per eenf. to-the date of their payment, together with the cost of collecting the same, these judgments must be satisfied of record. It is not disputed that the land was bought in by the creditor for $14,000; that on April 20, 1896, the creditor executed a receipt for $14,000, less the costs of foreclosure and certain taxes, and it is agreed that such costs and taxes do not exceed $918.92.

In other words, the land was taken by the creditor in lieu of $13,081.08 net, after all taxes and costs of foreclosure were paid. It appears that the deed was not actually delivered until some eighteen months after its execution, and the defendant contends that he is entitled to interest on the judgments against this plaintiff until the actual delivery of the deed, as the date of such delivery was the date of payment by the principal. As it appears that the purchase money was receipted for at the time of the sale, the contention cannot be sustained. Had a third party bought the property and paid the sheriff, who thereupon paid the mortgagee and took his receipt, it is clear that the date of such payment to the mortgagee would be the date of payment by the principal of his obligation to the creditor. Any postponement in the delivery of the deed would only affect the sheriff and the third party purchasing. The fact that the mortgagee himself bid in the property does not alter the situation. Upon the mortgagee’s executing a receipt to the sheriff on April 20, 1896, he acknowledged receiving a payment as mortgagee, and any questions subsequently arising concerning the delivery of the deed were between him as purchaser and the sheriff.

As the sum of $13,081.08 credited to the defendant is in excess of $12,728.17, being the amount of the judgments previously entered against the plaintiff as guarantor, together with the interest thereon to the date of payment, these judgments may be satisfied of record, but without costs. Settle order on notice.

Ordered accordingly.