Case ID: ad_156/html/0861-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Hotchkiss, J.: \n      Laughlin, J. (dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Isidor Stein, Respondent, v. Clarence P. Whitman and John B. Faunce, Appellants.
    First Department,
    May 29, 1913.
    Bond—assignment by obligee with guaranty of payment — suit by assignee —parties defendant — Code' Civil Procedure, section 464.
    Where a bond under seal providing that the obligee may declare the whole amount due on default in payment of interest is assigned by the obligee who guarantees the payment thereof according to its tenor, the assignee on default of the obligor may join the obligor and the assignor as parties defendant in an action upon the instrument. This, because under the circumstances the defendants are liable upon the same instrument within the meaning of section 454 of the Code of Civil Procedure.
    Laughlin and Dowling, JJ., dissented, with opinion.
    Appeal by the defendants, Clarence P. Whitman and another, from an order of the Supreme Court, made at, the Yew York Special Term and entered in the office of the clerk of the county of Yew York on the 6th day of March, 1913, overruling the defendants’ demurrer to the complaint and granting the plaintiff’s motion for judgment on the pleadings.
    
      Edwin P. Kilroe, for the appellants.
    
      Ludwig M. Wilson, for the respondent.
   Hotchkiss, J.:

The complaint alleges that the defendant Whitman made his bond under seal payable to defendant Fauncé, which bond provided that the whole amount should, at Faunae’s option, become due on default of any installment of interest; "that ■ FaunCe assigned the bond to plaintiff, guaranteeing payment thereof according to its tenor;' that default had been made' in a semi-annual installment of interest, and plaintiff elected to have the whole amount due, wherefore, he demands judgment against both defendants.

The demurrer is upon the ground that the defendants are not severally liable upon the same instrument.

The allegation is that appellant guaranteed payment of the debt expressed by the bond. Strictly, appellant’s obligation was in the nature of that of a surety rather than that of a guarantor. As such he became primarily liable for the original debt (Loos v. McCormack, 107 App. Div. 8), and respondent at his election could proceed against Whitman and appellant simultaneously.

If, therefore, appellant'became, as to respondent, a principal debtor under the bond, he and Whitman were liable upon the same instrument and could be joined as defendants. (Oode Civ. Proc. § 454.)

In Roehr v. Liebmann (9 App. Div. 247) and kindred cases it was held that the contract of the principal debtor and that of the. guarantor arose out of distinct and independent contracts and not upon the same instrument!

I apprehend that a sound distinction between the above cases and the present lies in the essential difference between the. liability of a surety and that of a guarantor, the liability of the former being original and that of the latter being collateral or, as it is sometimes expressed, the liability of a surety is to pay if the principal does not, while that of a guarantor is to pay if the principal cannot. In other words, the distinction goes to the root of "the difference between an obligation to pay and one for collection.

The order should be affirmed, with costs.

Ingraham, P. J., and McLaughlin, J., concurred; Laughlin and Dowling, JJ., dissented.

Laughlin, J. (dissenting):

The plaintiff in this action seeks to recover the sum of $3,500 together with interest thereon of both defendants. His cause of action against the defendant Whitman is based on a bond executed by him for the payment of said sum to the defendant Faunce, and his cause of action against the defendant Faunce is on an assignment in writing of said bond by Faunce to the plaintiff; and it is alleged that he guaranteed to the plaintiff the payment of said bond, according to its tenor.”

The defendants demurred on the ground that causes of action have been improperly united. The plaintiff thereupon moved for judgment on the pleadings and his motion was granted. The appeal, therefore, presents but a single question, namely, whether these two causes of action have been improperly united.

Undoubtedly the assignor of the bond guaranteed, not the collection of the amount, but the payment of the bond; and he became hable to the plaintiff on his guaranty the moment the default occurred. The plaintiff was then in a position to sue- either of the defendants. . The liability of the obligor was created by the bond itself, and that of the assignor by the assignment by which he assumed liability for the performance of the obligation; and that is the point decided in Loos v. McCormack (107 App. Div. 8), which is analogous in that respect, but is not decisive of the question presented by this appeal; which is whether this liability, which is several, may be enforced in one action, where the objection is timely and properly taken. The defendants are not hable on the same instrument, and, therefore, ■ section 454 of the Code of Civil Procedure does not authorize their joinder. That section embraces a several liability, where one party is hable as a principal and another as a guarantor or surety, but, with the exception of bills of exchange and promissory notes, only where the liabihty in the latter capacity is created by the same contract or instrument in writing, by the guarantor or surety becoming a party thereto originally, or becoming, in effect, a party thereto and liable thereon, subsequently. (Carman v. Plass, 23 N. Y. 286; Barton v. Speis, 5 Hun, 60; Roehr v. Liebmann, 9 App. Div. 247; De Ridder v. Schermerhorn, 10 Barb. 638; Tibbits v. Percy, 24 id. 39; International Text Book Co. v. Fox, 149 App. Div. 369; Draper v. Snow, 20 N. Y. 331; Tuton v. Thayer, 47 How. Pr. 180.)

. I, therefore, vote for reversal of the judgment.

Dowling, J., concurred.

Order affirmed) with costs.