Court Opinion

ID: 3600695
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:47:14.866216+00
Date Added: 2024-06-11T09:25:52.665656
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 486 
[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 489 
The plaintiff was defeated at the circuit, and its complaint dismissed. No reasons therefor were stated at the trial, and we must see whether the defendant presents good reason therefor in his points in this court.
The point that the guaranty was void under the statute of frauds, as not expressing a consideration, is not good. (Church
v. Brown, 21 N.Y. 315, and cases there cited.) The point that it was not a continuing guaranty is not good. (Rindge v.Judson, 24 N.Y. 64, and cases there cited.) The point that the plaintiff cannot recover on the letter from the defendant of *Page 490 
October 6, 1875, is well taken; that is to say, it cannot make out by that letter alone, an original undertaking by the defendant; but that position established, will not of itself, sustain the dismissal of the complaint. The point that the money furnished to Woodruff, on the strength of the guaranty, was not used by him in the purposes of his legitimate business, is not well taken. Conceding that it be true that he used any part of that money for other purpose than that of his legitimate business, it is not shown that it was with the knowledge of the bank, or that the bank let him have more money, upon the guarantee, than was needed for his legitimate business purposes; or that it was loaned to him for other than those purposes. The bank was not obliged to see to the use made of the money by Woodruff. If it let him have no more than he required (that is, needed) for legitimate business purposes, it met the condition of the guaranty. It is not shown that it did otherwise. It is inferable that it kept within the limit. The point that the statute of limitations began to run from the date of the first transaction under the guaranty, to wit, the 20th of February, 1861, is not well taken. The guaranty was a continuing one, and every authorized renewal of the first advance kept alive the indebtedness created by that advance, and by every authorized subsequent advance it was similarly affected.
The point is good, that the liability created by the guaranty was that of a business firm and was joint, and that notice of the dissolution of the copartnership, on or about the 5th August, 1872, determined the right of the bank to loan to Woodruff more money on the faith of that liability, or to make further renewal of existing obligations. The copartnership being dissolved, there could no more be created a joint liability against the persons who were the former partners; nor, ordinarily, could a several liability arise where a joint one was attempted and failed. But this point alone, or with the one above held good, is not enough to sustain the dismissal of the complaint.
As we view the case, we need not pass upon the full scope of the point that the City National Bank cannot hold the defendant upon the obligation to the City Bank. The point, in *Page 491 
its extent, rests upon the proposition, that the plaintiff is a different corporation from the State City Bank; that they are distinct parties, and that the obligation of a surety to one party may not be availed of by another party. That the proposition applies to the change made by the City Bank from State to Federal jurisdiction is not so easy of concession or refutation as it may seem at first sight. This much, however, is certain, that whatever sum the State City Bank had a right to have of the defendant at the time when it took on an organization under the Federal law, the right to have that sum of him passed to the National City Bank. That new organization was made in 1865. The testimony shows that there remained unpaid as late as 3d July, 1876, a considerable part of the first indebtedness of Woodruff. So much of that indebtedness had never been extinguished. New notes had been given in renewal. These were but continuations of the original credit. They did not pay the original debt. (Jagger Iron Co. v. Walker, 76 N.Y. 521.) If the City Bank owned a liability of the defendant to pay that sum, the ownership of it passed to the City National Bank, as an asset of the City Bank transferred by law. (Laws of 1865, chap. 97, p. 169, § 6.) Though it be conceded for this time, that the City National Bank could not rightfully renew again, without the assent of the defendant; or make fresh advances, and still keep the defendant liable; it had the right to enforce the liability if one existed to the City Bank. No point is made, nor can any question arise, that by subsequent renewals of the notes of the principal debtor, an extension of time was given to him whereby the sureties were discharged. No question can arise. It is plain that the defendant knew of the extensions of time granted to Woodruff, and assented to them. His letter of October 5, 1875, though it may not alone found an action against him, is enough to conclude him on this head, aided as it is by the testimony of the cashier, and vice-president Innis, of his oral statements and declarations. It is not needed that we now consider the question of an estoppel in pais upon the defendant. The point that the plaintiff failed to sustain its complaint by proof is *Page 492 
not well taken. The averment of the complaint was indeed that the guaranty was to the plaintiff, while the proof showed that it was to the City Bank. If the dismissal of the complaint had been placed distinctly on this ground, although it does not go to the merits of the controversy, and there had been no motion made and denied for an amendment of the pleadings, we might be constrained to sustain the ruling. But nowhere in the appeal book does it appear that this was made or relied upon at the trial. It is hardly to be supposed that the trial court would have placed its decision upon a ground so little affecting the merits of the litigation.
The bar of the statute of limitations is set up in the answer. It is doubtful, in view of the points made in this court, whether it was meant by it to present the question whether the statute did not begin to run from the date of the guaranty, or at least from the date of the first loan to Woodruff based upon it, or from the time of the reorganization of the City Bank, or from the time of notice to the City Bank or to the plaintiff of the dissolution of the firm of Phelps  Kingman. Conceding, for this time, that the statute was a bar to an action against Kingman, it is not plain that it is to this one against Phelps. The lapse of the time fixed by the statute raises a presumption which may be met by proof of the continuance or renewal of the obligation. An acknowledgment of continuance or new promise, in writing, by the debtor, furnishes that proof. (Old Code, § 110; new Code, § 395.) Though one copartner or joint debtor may not always bind his co-contractor in that way, yet he will, though the co-contractor is not held thereby, be held himself. (Van Keuren v.Parmelee, 2 N.Y. 523; Shoemaker v. Benedict, 11 id. 176.) It appears that this action was begun in the first part of January, 1877. In October, 1875, Phelps sent to the plaintiff a letter, in which was an acknowledgment of the continued existence of the obligation. The bar of the statute does not apply in favor of the defendant.
The point is not good that there was no notice to the defendant of the acceptance of the guaranty. The jury could have *Page 493 
well inferred, from the letters and negotiations of the parties, that the guarantors had early notice of the acceptance of it. The letters show conclusively that Phelps did have notice thereof, though at a late period, and that he then treated it as binding. Kingman went to the banking-house and looked at it But more than that, this is a kind of guaranty, the acceptance of which need not be notified to the maker. It is an absolute guaranty. (SeeWhitney v. Groot, 24 Wend. 82; Smith v. Dann, 6 Hill, 543; Clark v. Burdett, 2 Hall, 217; Douglass v. Howland,
24 Wend. 35; Union Bank v. Coster's Ex'rs, 3 N.Y. 203;Kennaway v. Treleavan, 5 M.  W. 498, 500, 501.)
The case then is this: The defendant and his copartner in business gave to the City Bank a valid and binding continuing guaranty for the payment of moneys loaned to Woodruff; upon the strength of that guaranty the City Bank made loans to Woodruff, which, upon the strength of the guaranty, were renewed from time to time, in whole or in part, and have not yet been fully paid; at the time when the City Bank gave up its organization under the State law, there was an amount unpaid of those loans, which it had a right then to collect of Woodruff or of the defendant, so far as any point yet presented to us avails to the contrary; that right passed as an asset of the City Bank to the plaintiff, and when possessed of by it was enforceable by it against Woodruff or the defendant; that right has been kept alive by repeated renewals and extensions of the time of payment, which were made with the assent, if not at the request, of the defendant; though it be conceded that the copartner of the defendant has been released by operation of law, and though the liability of the defendant was at first joint, his individual action toward the plaintiff has continued that liability, or created a new one against him alone, on the same principle on which one of several copartners or joint debtors may keep alive or renew a joint liability, so far as to affect himself, though those at first bound with him have been relieved by the running of the statute of limitations. We see no reason why the plaintiff should not recover of the defendant *Page 494 
so much of the indebtedness of Woodruff to the City Bank as was incurred before that bank reorganized into The City National Bank, and as remained unpaid at that time.
It follows that it was error to dismiss the complaint, and the judgment should be reversed and a new trial ordered etc.
All concur.
Judgment reversed