Court Opinion

ID: 5371682
Source: CourtListenerOpinion
Date Created: 2022-01-08 08:15:40.987963+00
Date Added: 2024-06-11T08:30:01.397093
License: Public Domain

Close, J.
(dissenting). The agreement upon which this action is based was a compromise agreement settling a dispute that existed among these coadventurers and must be viewed in that light. Pursuant to the agreement, the plaintiff’s testator guaranteed the payment of a portion of a debt owed to the Roth Estate by the Newman & Carey Subway Construction Company, which portion could not exceed the sum of $95,809.32 and might, under the *358terms of the agreement, be less. The agreement provided that in case of the death of the plaintiff’s testator any unpaid balance of the amount that he had guaranteed could be paid by delivering to the Roth Estate twenty-five per cent of the shares of stock that he owned in the Necaro Co., Inc. The agreement further provided that if the balance of the indebtedness of the testator should be less than the value of twenty-five per cent of his stock interest in the Necaro Company, such value being the book value without any item for good will, trade name or other intangible assets, then his indebtedness was to be satisfied by transferring such a percentage of his Necaro Company stock as would satisfy the lesser obligation. After the death of the plaintiff’s testator' his estate took advantage of the form of payment provided for in the agreement; and pursuant to the terms of the agreement, his liability was canceled. It seems clear that by accepting the stock in payment of the amount guaranteed by the plaintiff’s testator, the debt owing by the Subway Construction Company to the Roth Estate was reduced by the amount of the plaintiff-testator’s guaranty. In our opinion this agreement said in effect that twenty-five per cent of the stock owned in the Necaro Company by each one of these guarantors was equal in value to the proportionate share of the debt owed to the Roth Estate by the Subway Construction Company and guaranteed to the Roth Estate by each of the coadventurers. In other words, the agreement fixed the price at which under a certain contingency the stock of the Necaro Company could be turned over to the Roth Estate.
Under well-settled principles of law, when the plaintiff’s testator paid the debt or a portion of the debt of the Subway Construction Company, he became a creditor of that company and became entitled to indemnification from the company, out of a certain fund, for the amount which he paid. (Blanchard v. Blanchard, 61 Misc. 497; affd., 133 App. Div. 937; affd., 201 N. Y. 134; Stearns on Law of Suretyship [4th ed.], §§ 280, 282, 289.)
Under the terms of the agreement the plaintiff’s testator was entitled to have the benefit of the payments made to the Roth Estate through dividends on the Necaro stock credited on the total amount due to that estate from the Subway Construction Company. The Roth Estate’s share of the guaranty was thirty per cent of the debt due to it by the Subway Construction Company. The other guarantors are entitled to an adjustment based on that theory. If this agreement be construed against its background of compromise, it is clear that the assets of the Subway Construction Company were set apart as a trust fund to pay its debts, and that this plaintiff has an equitable right to share in such fund. It is not denied *359that the company’s claim against the city was practically its only asset. It was from the proceeds of the successful prosecution of this claim that the coadventurers and coguarantors were to be reimbursed. The result here is inequitable and unjust and the judgment should be reversed and a new trial granted.
Carswell, J., concurs with Close, J.
Judgment dismissing the complaint affirmed, without costs.