Court Opinion

ID: 5205386
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:00:48.420759+00
Date Added: 2024-06-11T08:27:16.469750
License: Public Domain

Patterson, P. J. (dissenting):
I cannot concur in the affirmance of this judgment. It is very plain, I think, that the surety was discharged by' an alteration in the *333terms of the agreement between the bank and the borrower of the money. The surety became responsible for the performance of the particular contract mentioned in the bond, and only for the repayment of a loan to be made by the bank to Newman of $5,000 upon his promissory note, payable four months after date. This bond was given after an arrangement had been made between the bank and Newman by which the bank undertook to make a loan of $5,000 upon being furnished with a bond of some surety company. That contemplated the actual advance of the full sum and there can be no doubt of that fact, for the vice-president of the bank so states in his testimony. He says that Newman agreed to that, and brought back to the bank the bond upon which this action is founded. After that was done and the bond was furnished and presented to the bank, an entirely different arrangement was made; not to put the borrower.in possession of the full sum of $5,000, . but, as the vice-president testifies, “ when he (JTewman) brought this bond, to the bank, I did not at once give him the money or anything. We made certain conditions upon which the loan would be put through. They were that he should carry with us a proportionate balance. He asked what balance would be required ; I stated $1,500. He agreed to do so, and. give us his check in order that the balance might be assured us.” This witness also testifies that this $1,500 was placed in such a position that Newman never could draw it or use it, and thus there was a conditional and new arrangement made by which Newman was to receive only $3,500 instead of $5,000. The shallow device by which this was effected and sought to be made the equivalent of a loan of the full sum cannot alter the real situation. It is entirely immaterial whether this change in the terms of the contract was injurious or beneficial to the surety. As was said in the case of Walrath v. Thompson (6 Hill, 540; affd., 2 N. Y. 185), where there has not been a compliance Avith the terms of the contract, “ the objection cannot be got over.” That was a case in which a guaranty was given by the defendant to pay for goods supplied to a third party. They were to be paid for on January 1, 1840. The seller took the purchaser’s note, payable December 25, 1839, and the court held that the defendant was not bound by the guaranty, although the plaintiff did not require payment until after the 1st of January, 1840. *334In Page v. Krekey (137 N. Y. 307) the court says ■ that where the obligation of the principal is different from that under which the surety became bound, the surety is released, and “ this question seems to have been disposed of in the court below on the ground that the change was not material. But the answer to that is that the defendant’s obligation is strictissimi juris, and he is discharged by any alteration of the contract, tó which his guaranty applied, whether material or. not, and the courts will not inquire whether it is Or is not to his injury.” (Citing Paine v. Jones, 76 N. Y. 278; Grant v. Smith, 46 id. 98; National Mechanics’ Banking Assn. v. Conkling, 90 id. 116; Bangs v. Strong, 7 Hill, 250; Henderson v. Marvin, 31 Barb. 297.) In Smith v. Molleson (148 N. Y. 241) the court says that when the terms of the contract of guaranty have been changed and the contract as finally made is not the one upon which the surety agreed to become bound, he will be released. Here, by the statement of the vice-president of the bank who conducted the transaction for the plaintiff, it is admitted that a new contract Was.made—one that did not put Hewman in possession of $5,000, but' only of $3,500. They might as well have' agreed to retain $4,000 as $1,500. It is not a case of a departure in the performance of a contract from a requirement thereof, in which case, in order • to defeat an action upon the. surety bond, it would be necessary for the defendant to show that he had suffered some detriment, but it is a clear case of the substitution of another contract, viz., for a conditional loan of money for that absolute loan to protect which the bond was given.
I am of the opinion that the ‘ judgment should be reversed and a new trial ordered.
Judgment affirmed, with costs.