Case Name: The American Surety Company of New York, Plaintiff, v. Moses R. Crow et al., Defendants
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1898-02
Citations: 22 Misc. 573
Docket Number: 
Parties: The American Surety Company of New York, Plaintiff, v. Moses R. Crow et al., Defendants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 22
Pages: 573–576

Head Matter:
The American Surety Company of New York, Plaintiff, v. Moses R. Crow et al., Defendants.
(Supreme Court, New York Trial Term,
February, 1898.)
1. Indemnitors — Inconsistent parol agreement that an indemnitor shall not be liable — An attorney as an indemnitor.
An indemnitor of a corporation, which, upon the faith of an agreement of indemnity, became surety upon an undertaking given upon appeal from a judgment, cannot, in an action subsequently brought upon the agreement, be permitted to show by parol an alleged contemporaneous agreement, by the terms of which his execution of the ■ indemnity agreement was to be purely formal, while the corporation was to look for actual indemnity solely to a coindemnitor; nor does the fact.that the indemnitor was an attorney-at-law affect his liability.
2. Same — Extension of time.
An extension of time, given by the party indemnified, to a surety • will not discharge a cosurety where he has not been in any manner prejudiced by the extension.
3. Same — Application of payments.
Application of payments in favor and against indemnitors.
Action against sureties on indemnity agreement.
John J. Crawford, for plaintiff.
Franklin Bien, for defendant Crow, ■

Opinion:
McAdam, J.
The Shickle, Harrison & Howard Iron Company on August 20, 1889, recovered a judgment against Rowland N. Hazard and others for $16,974.15, from which Hazard appealed to the Supreme Court, General Term; and the plaintiff herein, at the request of the defendants herein, executed the usual statutory undertaking thereon, wheréby.it obligated itself that the appellant would pay the judgment if affirmed on such appeal, together with all costs awarded on such affirmance. The complaint alleges and the. answer-admits "that in consideration and as a condition of the execution hy this plaintiff of the undertaking aforesaid, the defendants herein, by their agreement in writing', signed with their names and sealed with their seals, promised and agreed with-this plaintiff, that they, the said defendants, should and would at all times - indemnify and keep indemnified, and save harmless this plaintiff from and against all loss, damages, costs, charges, counsel fees and expense whatsoever which plaintiff might for any cause, at any time, sustain or incur by reason or in consequence of having executed- the said undertaking," Thereafter, and on January 9, 1891, the said judgment was affirmed, with $112.17 costs. Hazard failed to pay the" judgment, and the plaintiff on January 30, 1891, was obliged to and did pay $18,557.80 in settlement thereof. It was objected that the trial could not- proceed against the. defendant Crow,on the ground that the action was not at issue as to his two codefendants and joint obligors, Thurber and Hazard., process not having been served upon them. The same objection was made when the cause was ordered on the calendar'; but it was overruled, and an appeal from the [order was dismissed by the Appellate Bivision. ' This.ruling is, therefore, accepted as settling the law of the case in respect to the point raised. Apart from certain credits claimed by the defendant Crow, which will be. hereafter considered, he places his defense upon -the grounds: (1) That he was interested on the appeal as the attorney for Hazard, the defeated defendant; that Horace K. Thurber had been accepted by the plaintiff as a satisfactory indemnitor; that Mr. Nugent, who was then secretary of the plaintiff and in charge of the bond department, stated that he desired Mr. Crow to execute the indemnity agreement to satisfy the rules of the company, which required two indemnitors/ but that the execution of the bond by him was to be regarded as formal only, for he would not be holden thereon, as the plaintiff would look for indemnity exclusively to Mr. Thurber, by whom- it was to be secured. Crow testified that such was the arrangement' under which he became surety. Mr. Nugent, on the other hand, denies that-there was any such understanding, and testified'that while the rules of the company do not direct the taking of any fixed number of sureties it required two in this instance, and he was, therefore, particular enough to require Mr. Grow to -justify before he would accept him — a Course not likely to be pursued' with a nominal surety. The indemnity agreement shows that Crow did justify by affidavit, showing the ownership of $150,000 worth of property, which he particularly specified.'.. While an instrument not under seal may be delivered upon condition, the observance of which as between the parties is essential to its validity (Bookstaver v. Jayne, 60 N. Y. 146; Benton v. Martin, 52 id. 570; Higgins v. Ridgway, 153 id. 130), it is not admissible to show a contemporaneous parol agreement inconsistent with that which is written and tending directly to nullify it. Gordan v. Niemann, 118 N. Y. 152; Thomas v. Scutt, 127 id. 133; Grocers' Bank v. Murphy, 9 Daly, 510; Russell v. Kinney, 1 Sandf. Ch. 34; First Nat. Bank v. Tisdale, 18 Hun, 151; affirmed, 84 N. Y. 655; Davis v. Randall, 115 Mass. 547. The indemnity bond was given to induce the plaintiff to become surety on the undertaking on appeal; and the plaintiff was induced thereby to incur the liability indemnified' against, so that the obligation is founded on a valuable consideration. In this respect the case differs from Higgins v. Ridgway, supra, which was an action on a promissory note without consideration, delivered upon condition that the maker should not be liable thereon. Crow is' evidently mistaken in supposing that any such inconsistent oral understanding was had, for the parties in interest intended and acted on the intention that he should be holden according to the terms of the sealed obligation. The fact that Crow was attorney for the principal does not affect his liability as surety. The obligation was not an ordinary court bond; if it had been, he might have been rejected by the court because of his relation to the principal; but where no such objection is made by the creditor, even an attorney may become liable. Fexwell v. Bowerman, 2 East, 182; Banter v. Levi, 1 Chitt. 713; Bell v. Gate, 1 Taunt. 162. (2) That the plaintiff settled all liability on the bond with Thurber, the cosurety, by accepting from him notes, stocks and securities, whereby Crow was discharged. Thurber did give a six months' note for the demand, secured by stock of the Hazard Co., which note, after the payment of six .months' interest, was renewed by another at three months. But these promises to pay were not given or accepted in satisfaction, and were not so to operate unless followed by payment. They were unperformed, and nothing was realized from the stock. The broken promises' to pay did not discharge. the sealed obligation sued upon. Where time is given to the principal debtor without the consent of the sureties they may be discharged; but the mere
giving of time to a cosurety whose obligation is1 equal will not discharge the other if not prejudiced thereby. Draper v. Weld, 13 Gray, 580. The acts of Thurber in further securing the plaintiff in -no manner prejudiced his cosurety, Crow, and did not discharge the liability of either on the bond. These defenses being unavailing, the next question arises as to what, if any, credits the indemnitors are entitled to on account of collections made by the plaintiff in proceedings founded 'on the judgment secured, and of which it afterwards became the owner by assignment. The agreement with Thurber respecting the Thirty-eighth street house clearly shows that the interest taken by him in that transaction was to protect his liability on the bond in suit, and that the profit made thereon by the plaintiff should be credited on the indemnity obligation, for he was interested in discharging that obligation, and that only. The indemnitors must also be credited with so much of the moneys collected in the surplus proceedings on the Waverly. place property, as are properly applicable - to the iron company's judgment, upon tlie principle decided in the Matter of Hazard, 73 Hun, 22; affirmed, 141 N. Y. 586; and see Goetz v. Mott, 21 Abb. N. C. 246. The moneys realized !on the attachment against the Harragansett property were properly applied to the Wing judgment.because collected in proceedings, founded upon it. 2 Am. & Eng. Enc. of Law (2d ed.), 459. The $1,000 received on the Thompson claim came from one Moriarty, who was interested in having it applied on the Thompson liability, with respect to which he was co-obligor. These two items cannot be credited to the defendants. Ho specific application of the moneys was made by the -creditor until the cause was on trial, and after the' right had. vested in the court to make such application as would have been made if the parties in interest had acted in the matter. 2 Am. & Eng. Enc. of L, (2d ed.), 447. Indeed, in a case of payments other than by the voluntary act -of the debtor, there is generally no question of application by the parties. Id. 459; Orleans Co. N. Bk. v. Moore, 112 N. Y. 543. The principal and interest account between the parties stated, according to these views,leaves a balauce of $8,823.13 due to the plaintiff. Judgment, accordingly, with costs, and $20.0 allowance.
Judgment accordingly, with costs and $200 allowance.