Court Opinion

ID: 5305795
Source: CourtListenerOpinion
Date Created: 2022-01-08 03:28:23.067932+00
Date Added: 2024-06-11T08:29:08.413814
License: Public Domain

Taylor, J. (concurring in result).
Hyde v. Miller (45 App. Div. 396; affd., 168 N. Y. 590) involved the foreclosure of a real estate mortgage. The mortgagor and two intermediate grantees and an ultimate grantee were made parties defendant. Each grantee had assumed and agreed to pay the mortgage. The plaintiff stipulated with the two intermediate grantees (Miller and Oldfield) that he would not enter a deficiency judgment against them. The mortgagor, against whom a deficiency judgment was entered, paid it in ignorance of the stipulation. In the Appellate Division opinion the court discusses the rights of sureties as against their principals and creditors of both, when the obligation of the surety is changed without his consent through an arrangement between the creditor and the principal.. But the only thing decided in that case was that when a creditor — not finally releasing nor discharging the principal debtor from any obligation — makes an agreement with the principal not to enter a judgment against him, not to take immediate steps to fasten liability upon him — the surety who pays in ignorance of the agreement may still recover the amount paid from his principal. This is the decision made and nothing more. Its reasonableness is apparent under well-known principles applicable to suretyship.
But the instant case presents a "different situation, in which, however, the rights of the parties cannot now be conclusively or *217satisfactorily determined on account of the indefiriiteness of the complaint. If defendant Williams, the ultimate grantee (and the principal debtor here), paid the plaintiff in the foreclosure action only a part of the deficiency judgment entered against both himself and his sureties (plaintiffs Lobee in this action) and obtained nothing more than a receipt on account, or some document reserving the creditor’s rights to collect the balance from the sureties, the Lobees might recover from defendant Williams (the principal debtor) the amount they afterwards paid to plaintiff Maisel on the deficiency judgment. This proposition requires no sustaining argument. However — as plaintiffs’ complaint seems to indicate, although not with definiteness ■— if on payment by Williams of a part of the deficiency judgment, Maisel gave Williams a document entirely releasing and satisfying his claim in full for the deficiency, no debt remained owing to Maisel by Williams or by his sureties, the plaintiffs Lobee. And this being so, the principal debtor would have no claim left against his sureties nor vice versa. This action would then not be maintainable; for a surety, being secondarily liable, who pays the debt without first ascertaining that his principal has not paid it, does so at his peril. But the Lobees would have a remedy. For the creditor having formally acknowledged to the principal complete satisfaction of the debt due from him, if thereafter the sureties, in ignorance of the facts, paid to the creditor money to apply on the deficiency judgment, the sureties can recover that money back in an action against the creditor. For they would not be volunteers, but would have paid in ignorance of the true situation, and the creditor, in receiving the money from them, would have been defrauding them.
The judgment should be reversed on the law and a new trial granted, with costs to abide the event. And the interest of clarity and justice would be promoted if plaintiffs’ complaint were so amended as to state clearly the claimed facts as to the prior business transactions among the parties.
Judgment reversed on the law and a new trial granted, with costs to appellant to abide the event.