Court Opinion

ID: 5498385
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:55:47.763682+00
Date Added: 2024-06-11T08:33:52.256002
License: Public Domain

Corlett, J.,
(dissenting.) At the time therein stated a bond was executed, of which the following is a copy:
“Know all men by these presents, that we, Charles Ensign and Elisha W. Ensign, of the city of Buffalo, and George W. Holt, of the village of Westfield, in the state of Hew York, are held and firmly bound unto Rufus 0. Palmer, of Leroy, Genesee county, and state of Hew York, in the sum of thirty thousand dollars, lawful money of the United States of America, to be paid to the said Rufus C. Palmer, his heirs, administrators, or assigns, for which payment, well and truly to be made, we bind ourselves, our heirs, executors, and administrators, firmly by these presents. Sealed with our seals. Dated the first day of June, one thousand eight hundred and seventy-two. The condition of this obligation is such that if the above-bounden Charles Ensign, Elisha W. Ensign, and George W. Holt, their heirs, executors, or administrators, shall well and truly pay, or cause to be paid, unto the above-bounden Rufus C. Palmer, his executors, administrators, or assigns, the just and full sum of fifteen thousand dollars in one year from date hereof, with interest semi-annually, without fraud or delay, then the above obligation to be void; otherwise, to remain in full force and virtue. Chas. Ensign. [l. s."
“E. W. Ensign. [l. s/
“Geobge W. Holt. [l. s.‘
“Signed, sealed, and delivered in the presence of James W. Booth.”
Elisha Ensign died on the 1st day of October, 1877. Afterwards, Charles Ensign and George W. Holt died. Charles Ensign and Holt had been partners, and they were owing Rufus 0. Palmer, the plaintiff’s intestate, at the time of the execution of the bond, the sum of $15,000, which accrued in the course of the partnership business, to secure the payment of which the bond was executed. Elisha W. Ensign signed the bond, as the referee finds, solely for the accommodation and benefit of Charles Ensign and George W. Holt. He also finds that Palmer knew who created the debt, to secure the payment of which the bond was executed. This action was commenced in the life-time of Palmer by a committee of his person and estate; he having been adjudged a lunatic. It was continued after his death by the plaintiffs, his administrators. Charles Ensign and George W. Holt were utterly insolvent, and this action was brought to enforce the balance which should be found due after applying the proceeds of a mortgage executed at the time of the bond, by Holt and wife, to secure the payment of the debt. Issue was joined, and the case referred. The referee made his report on the 29th day of July, 1889. He found, among other things, that the defendant was not liable as administratrix upon the bond signed by Elisha W. Ensign, deceased. Ho case was prepared, and the hearing here is upon the referee’s findings and conclusions. The sole contention upon this appeal is whether the estate of Elisha W. Ensign is liable upon the bond. The seventeenth finding of the referee is “that there is no evidence in the case that any agreement was entered into between Elisha "V7. Ensign and Rufus C. Palmer to the effect that Elisha W. Ensign was to be bound by said bond as a surety for Charles Ensign and George W. Holt, and that the last two named were alone to .be considered by the said Palmer as the principal debtors to him upon said obligation.” The next finding was “that there is no evidence in the case that Elisha W. Ensign contracted or intended to be bound on said bond to Rufus C. Palmer in any other capacity than as a principal thereon. ” The nineteenth finding is “that the obligation that Elisha W. Ensign entered into with Rufus C. Palmer by said bond was that of one of three principal joint debtors thereon, to said *578Palmer for the amount of fifteen thousand dollars, and interest secured thereby.” The eighth conclusion of law is “that the said Elisha W. Ensign bound himself by said bond to said Eufus 0. Palmer as a principal obligor therein.”
It will be observed that the referee finds, in substance, that Elisha intended to bind himself to Palmer, and did so, as principal, and that, as between him and the other obligors, he signed for their benefit and accommodation. There is no inconsistency between those findings. Berg v. Radcliff, 6 Johns. Ch. 302; East India Co. v. Boddam, 9 Ves. 464. To Palmer he bound himself as principal, but he did so for the accommodation of the other parties to the bond. The other finding is that Palmer knew that the debt which the bond was given to secure was due him from Charles Ensign and Holt. The referee, in his opinion, states his position as follows: “It was necessary, in order to charge defendant Hamilton in equity for any deficiency that might arise upon the foreclosure and sale under the mortgage, to show that a moral obligation was imposed upon the obligor Elisha W. Ensign by the contract to pay the debt,—that such surety owed the debt outside and irrespective of the joint obligation.” He cites some authorities in support of his position, among which is Bradley v. Burwell, 3 Denio, 61, where it was held that, where one died, his estate was discharged at law, but liable in equity, and Richter v. Poppenhausen, 42 N. Y. 373, where it was held that the executor of a deceased partner could not be joined in an action at law to collect a partnership debt; Getty v. Binsse, 49 N. Y. 385, where the instrument was a joint promissory note. One signed as surety for the other. The court held that the contract was the measure of the surety’s liability, and that, under the facts of that case, his estate was discharged in law and equity,—and Richardson v. Draper, 87 N. Y. 337, where it was held: “The death of a joint obligor only discharges his obligation in a case where it appears he was a mere surety, who received no benefit whatever from the joint obligation.” There the estate was held liable upon the facts. In all the cases cited by the learned counsel and the referee, decided in this state, the obligations were joint. Hone of them, like the bond in question, bound the “heirs, executors, and administrators. ” The doctrine of the cases in this state before section 758 of the Code of Civil Procedure, which has no application, was that the liability of the surety was limited to his contract, and that upon his death his estate was not liable at law or in equity; that in all the cases of joint contracts the death of one extinguished liability at law, but not in equity; and that, as between sureties, equity would compel contribution. The effect of words in a bond binding the heirs, executors, and administrators of the surety does not appear to have been considered or determined in this state. In 87 N. Y., above cited, the judge delivering the opinion says: “The reasoning upon which the exemption of the deceased surety’s estate from liability is founded, though sanctioned by numerous cases, is not very convincing, and has not always been viewed by judges and jurists with favor.” “It is the rule, where findings of fact by a referee conflict, the defeated party is entitled to those most favorable to him, and may rely upon them in aid of exceptions to the referee’s conclusion of law.” Schwinger v. Raymond, 83 N. Y. 192; Bonnell v. Griswold, 89 N. Y. 122. As above stated, the findings of the referee do not conflict; but, if it should be held otherwise, the appellants may rely upon these favorable to their contention.
The substance of the referee’s findings is that Elisha, as between him and Palmer, signed the bond, and intended to do so, as one of the principal debtors. The time of payment, by the terms of the bond, was extended one year. Upon whose request or suggestion this extension was granted by Palmer does not appear. It may be that Elisha consented to bind himself as principal in favor of Palmer, in whole or in part, on account of such extension, which is a valuable consideration, (Cary v. White, 52 N. Y. 138;) or *579there may have been dealings between him and the other obligors, or one of them, which caused him to assume the obligation of principal debtor. In the absence of a case, the circumstances attending the transaction cannot be ascertained outside of the findings. The form in which the bond was drawn is some evidence indicating that Elisha intended that his estate should be bound. It is true that the instrument is joint between him and his co-obligors, and that upon the death of either an action at law could not be maintained against the survivors and the representatives of the deceased; nor, in the event of the death of all the obligors, could joint proceedings be maintained in equity to enforce payment. But, if they were all joint debtors, proceedings could be resorted to in equity to enforce payment. If any force attaches to the words of the bond, it is obvious that Elisha did not in fact limit, or intend to limit, his liability to a joint proceeding against the obligors, but he intended to bind his estate in case of his death before payment of the debt. The learned counsel for the respondent cites Pickersgill v. Lahens, 15 Wall. 140, as an authority for the position that the insertion of those words could not extend liability. The case is.silent as to whether it was considered by the court, or whether attention was called to that fact. The learned counsel is informed by those engaged in the case that in fact the bond was in that form. The question does not seem to have been considered in any of the other cases cited by the learned counsel. Attention has not been called to any case showing the effect of such words in a bond or contract. The exact question presented in this case does not appear to have been determined in this state. The referee, as already shown, proceeded upon the assumption that, as Elisha was surety for his co-obligors, he was not liable to pay the debt outside of the bond, and that his estate could not be charged in equity. It is agreed that the estate of a deceased joint debtor is liable in equity; and the question, under the findings here, is whether Elisha could bind himself as principal to Palmer when in fact he was not liable for the debt outside of the bond. Where a joint bond is signed, upon a good consideration, to secure the payment of a debt, and it contains all the provisions needful to bind the obligor jointly with the others, and expressly charges his representatives, it is difficult to see upon what principle his estate should not be liable in equity. Berg v. Radcliff, 6 Johns. Ch. 302, where it was held that the estate of the surety was bound in equity. The fact that he was a surety for the other obligors could not be urged in equity as a reason why he should be relieved from the payment of the debt, when the understanding was, as the findings show, that, as between him and the person accepting the bond, the debt should be treated as due from him. The legislature have interfered for the protection of creditors, and the courts are not inclined to extend the rule exempting the surety’s estate from liability. Richardson v. Draper, 87 N. Y. 338-344; Long v. Stafford, 103 N. Y. 274, 8 N. E. Rep. 522; Deobold v. Oppermann, 111 N. Y. 531, 19 N. E. Rep. 94. To uphold the judgment in this case, it is necessary to decide that it is impossible for a surety signing a joint bond to bind himself to creditors so that equity will enforce payment out of his estate. It is not believed that the adjudications go to that extent, or that equity will sanction such results. The judgment should be reversed, and a new trial granted before another referee, with costs to abide the final award of costs.