Court Opinion

ID: 3605373
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:51:00.608844+00
Date Added: 2024-06-11T13:46:52.618918
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 385 
The undertaking of the defendants was as sureties for one Bucknam; and the right of the plaintiff to recover at all is challenged upon the ground that upon the only interpretation of the condition of the obligation allowable, as against sureties liable only strictissimi juris, no liability attached. The claim is that the bond is to pay the rent mentioned and indemnify the obligee only as against a liability therefor, already incurred by him and existing at the time of the execution of the instrument.
There is no rule exclusively applicable to instruments of suretyship and requiring them to be in all cases interpreted with stringency and critical acumen in favor of the surety and against the creditor, and all ambiguities to be resolved to the advantage of the promissor, and every liability excluded *Page 388 
from the operation of the instrument that can by a strained and refined construction be deemed outside of the agreement. In guarantees, letters of credit, and other obligations of sureties, the terms used and the language employed are to have a reasonable interpretation, according to the intent of the parties as disclosed by the instrument, read in the light of the surrounding circumstances and the purposes for which it was made. If the terms are ambiguous the ambiguity may be explained by reference to the circumstances surrounding the parties, and by such aids as are allowable in other cases; and, if an ambiguity still remains, I know of no reason why the same rule which holds in regard to other instrument should not apply; and if the surety has left any thing ambiguous in his expressions, the ambiguity be taken most strongly against him. This, certainly, should be the rule to the extent that the creditor has in good faith acted upon and given credit to the supposed intent of the surety. He is not liable on an implied engagement, and his obligation cannot be extended, by construction or implication, beyond the precise terms of the instrument by which he has become surety. But in such instruments the meaning of written language is to be ascertained in the same manner and by the same rules as in other instruments; and when the meaning is ascertained effect is to be given to it. (Gates
v. McKee, 3 Kern., 232; Poppenhusen v. Seeley, 3 Keyes, 150; Hamilton v. Van Rensselaer, 43 N.Y., 244; Melick v.Knox, 44 id., 677; Agawam Bank v. Strever, 18 id., 502.)
The condition of the bond is not necessarily confined to a liability of the obligor already incurred, to the exclusion of a liability to be assumed thereafter. There is no recital to limit the general terms of the condition; and no reference is made to the nature of the liability or the form in which it has been or may be incurred, or the date of its inception. The terms are entirely consistent with the intent to indemnify against a liability to be incurred upon the faith of the indemnity; and it having been received by the obligee as a security against and a consideration for becoming surety, it *Page 389 
should have that interpretation, as between the parties, which will make it effectual. (Agawam Bank v. Strever, supra.) The subject-matter of the indemnity was the rent of the premises named for the term specified. That was the substance of the agreement; and the time, form, manner or means at, in or by which a liability had been or should be incurred by the obligor, was not of the essence of the agreement. The debt assumed was clearly specified, and the language referring to the obligation of the obligee was sufficiently comprehensive to embrace a liability in any form, whether existing or subsequently incurred. The giving of the bond was in fact the inducement to and the consideration of the signing of the lease by the obligee; and the circumstances under which the bond was given were properly in evidence to aid in the interpretation of the instrument, if the words were not so plain as to obviate the necessity of such aid. The condition of the obligation is absolute for the payment of the rent by Bucknam, and that condition has been broken; and the law would presume, from the giving of the bond, an interest in the obligee in the rent, to sustain an action on the bond. The further condition to indemnify, etc., discloses the intent; and the most reasonable interpretation is to regard the liability referred to as one to be incurred thereafter, or, as was the fact, incurred simultaneously with the delivery of the bond, as there would be no consideration to support the instrument as an indemnity against a liability already incurred.
The referee properly excluded evidence of the secret understanding between the defendants and Bucknam, not communicated to or known by the obligee, to limit the effect of the instrument if its legal effect could qualify its terms by any agreement or understanding by parol. The possession of the bond by the principal was evidence of authority to deliver it, and to authorize the obligee to act upon it as valid and effectual for all it purported to be. Any parol or other qualification of the liability imputed by the body of the instrument, not made known to the party for whose protection *Page 390 
it was designed, could not affect him, and could not be proved against him. There was no claim that the bond was not rightfully delivered to the obligee; and the liability then assumed has not been enlarged or increased by any act of the obligee. The rent is precisely that guaranteed by the defendant; and the delivery of the bond, under the circumstances, was authority for the obligee to sign the lease then awaiting his signature, and which he had refused to sign without security, relying upon the indemnity so aptly secured by the condition of the bond.
The only other question is as to the rule of damages. Had this bond been conditioned solely to indemnify and save harmless from damages, by reason of the liability, the obligee, the recovery would necessarily have been limited to the actual damages sustained by him. He could only have recovered to the amount of actual damnification. (Gilbert v. Wiman, 1 Comst., 550.) When the bond is, as in this case, conditioned as well to pay the debt or sum specified as to indemnify and save harmless the obligee against his liability to pay the same, the obligee may recover the entire debt or demand upon default in the payment, without having paid any thing. (Churchill v. Hunt, 3 Denio, 321;Rockfeller v. Donelly, 8 Cow., 623; Wright v. Whiting, 40 Barb., 235; Jarvis v. Sewell, id., 449; Port v. Jackson,
17 J.R., 239; S.C., id., 479; see also cases cited by Judge PRATT in Gilbert v. Wiman, supra.)
Non damnificatus would have been no answer to the present action.
We find no error in the judgment of the referee, and the order of the court reversing the judgment and granting a new trial must be reversed, and the judgment of the referee affirmed.
All concur; EARL, J., not sitting.
Order reversed, and judgment accordingly. *Page 391