Court Opinion

ID: 3680445
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:26:03.710322+00
Date Added: 2024-06-11T15:28:09.258878
License: Public Domain

The defendants have filed a petition for rehearing in which they strenuously contend that the facts as found by the trial court and approved by this court clearly show that the arrangement whereby the county of Hettinger accepted trust certificates issued by the depositors' committee resulted in a novation under the provisions of ¶ 2, § 5830, N.D. Comp. Laws 1913, and that the sureties are thereby released. It is asserted that a new debtor *Page 215 
was substituted in place of the old one with intent to release the latter. They cite the case of Oakland County v. Allen,295 Mich. 61, 294 N.W. 98. In that case Oakland county held certificates of deposit in the Birmingham Savings Bank. The defendants were sureties for these deposits. The First National Bank assumed the liability of the Birmingham Savings Bank. Thereafter the county transacted business with the First National Bank, surrendered to it the Birmingham Savings Bank certificates and accepted in lieu thereof certificates of the First National Bank which were not in the same form and which bore a greater rate of interest. The First National Bank closed and the county filed a claim against the receiver for the money formerly in the Birmingham Savings Bank and accepted dividends thereon. The county also brought an action to recover on the depository bond of the Birmingham Savings Bank. The trial court determined that the county had no cause of action on the bond. This decision was affirmed on appeal by an equally divided court. The prevailing opinion holds that the conduct of the parties including the county constituted a novation and the sureties were released under the general rule that the novation of a contract, the performance of which is guaranteed by a surety, will discharge the surety from his obligation.
The facts in the case cited by the defendants differ materially from those before us. In the Michigan case it does not appear that the sureties on the depository bond of the Birmingham Savings Bank were parties to the arrangement whereby Oakland county accepted certificates of deposit of the First National Bank while in the case before us the sureties consented to and participated in the arrangement whereby trust certificates were issued to the county for the balance of the unpaid deposits in the defunct bank. The sureties gave their written consent to a resolution of the board of county commissioners outlining the plan which the sureties now claim resulted in a novation. They specifically agreed that they should not be released from liability. Furthermore, they participated in carrying out the plan in the manner outlined in the main opinion. Such consent and participation now bars them from claiming release from liability on the ground of novation. Rehearing denied.
BURR, Ch. J., and NUESSLE, BURKE, and CHRISTIANSON, JJ., concur. *Page 216