Case Name: Merchants and Manufacturers' National Bank of Middletown, Resp't, v. Ira T. Cummings, App'lt
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1894-06-18
Citations: 61 N.Y. St. Rep. 345
Docket Number: 
Parties: Merchants and Manufacturers’ National Bank of Middletown, Resp’t, v. Ira T. Cummings, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 61
Pages: 345–347

Head Matter:
Merchants and Manufacturers’ National Bank of Middletown, Resp’t, v. Ira T. Cummings, App’lt.
(Supreme Court, General Term, Second Department,
Filed June 18, 1894.)
Principal and surety—Security.
A creditor is entitled to the benefit of collateral security given by the principal to his surety.
.Appeal from a judgment in favor of plaintiff.
Daniel Finn, for app’lt; George H. Dicker, for resp’t,

Opinion:
Cullen, J.
—This is an appeal from a judgment in favor of the plaintiff, entered on the decision of the special term,before which this cause was tried, without a jury. One Joseph Cummings made liis note for $2,000, to the order of John L. Cummings, which the latter indorsed for the accommodation of the maker. The note was discounted by the plaintiff. As security for such indorsement, Joseph Cummings made a second note to John L. .Cummings for the same sum, and payable at the same date, which note, before delivery, was indorsed by the defendant, Ira T. Cummings, for the like purpose of securing the first-narned indorser. John L. Cummings assigned this hitter note to the plaintiff, who, upon default in the payment of the first note, brought this suit. Ira T. Cummings, the indorser, alone defends.
On the back of the second note was written, at the time of its delivery, this statement:
"This note is given and is to be held by John L. Cummings as collateral security for his indorsement on my note, same date, tenor, and amount, favor of John L. Cummings, to be by him indorsed and delivered to the Merchants' and Manufacturers' Bank of Middletown.
"[Signed] Joseph Cummings."
It is conceded that, though John L. Cummings is the payee and the defendant the indorser on the note in suit, still, by the original agreement between the parties, the defendant is liable as indorser to the payee. The recovery is resisted upon the ground that the payee has paid nothing on account of the original note, and that, therefore, no liability has accrued on the collateral note. We do not think it worth while to follow the elaborate discussions in the briefs of counsel as to the character of the note in suit as affected by the written statement on its back. We may admit that the note could not have been disposed of by the payee either before or after maturity, so as to constitute any obligation against the parties to it, separate from the debt created by the original note discounted by the plaintiff. Still, we think the plaintiff was entitled to recover on it. John L. Cummings, the accommodation indorser, was in the nature on a surety of the debt of the plaintiff. The note in suit was a security to the surety. " It is a settled rule in equity that the creditor shall have the benefit of any counter bonds or collateral securities which the prinbipal debtor has given to the surety, or persons standing in the situation of surety, for his indemnity. Such securities are regarded as trusts for the better security of the debt, and chancery will compel the execution of the trusts for the benefit of the creditor." Vail v. Foster, 4 N. Y. 312. It is not necessary that the surety shall have paid anything on account of his liability, as such, to give the creditor the right to enforce the collateral obligations. In fact, if the creditor could collect his claim directly from the surety, ordinarily he would have little need to seek these collateral securities. In Vail v. Foster, supra, the principal debtor gave his surety a bond and mortgage as security. The surety paid nothing on the principal debt, and became insolvent. The creditor was held entitled to foreclose the mortgage for the payment of his claim. The case of Crosby v. Crafts, 5 Hun, 327; affirmed, 69 N. Y. 607, is still stronger. The debtor confessed judgment in favor of the surety for the amount of the debt. It was assumed that the estate of the surety' was discharged from any liability by his decease; yet it was held that the j udgment still remained a valid lien, as security for the benefit of the creditor. It follows that the plaintiff could compel John L. Cummings to assign the note in suit to him, and could enforce its payment.
The j udgment appealed from should be affirmed, with costs.
All concur.