Court Opinion

ID: 6121299
Source: CourtListenerOpinion
Date Created: 2022-02-04 18:47:48.858635+00
Date Added: 2024-06-11T08:23:26.406914
License: Public Domain

Smith, J.:
The principal contract provided that in case the proceeds from the collection and sale of the claims and demands belonging to the firm, estimated to be of the value of $25,000, should be insuffiicient to pay the liabilities and debts of the firm, such deficiency should be paid, three-fourths by the principals of the defendants, and one-fourth by the plaintiff. Thus, the liability of the defendants was limited to three-fourths-of any deficiency that the plaintiff should be‘ compelled to pay after the accounts and bills receivable of the firm had been applied in the manner provided by the contract. *411In order, therefore, to charge the defendants upon the guaranty, it was incumbent on the plaintiff to show that the .demands of the firm had been exhausted and their proceeds applied to the payment of the firm debts. That the plaintiff undertook to prove, but the only evidence on the subject consists of the testimony of the plaintiff tending to show that accounts were sold at auction of the nominal amount of $3,200, that one or two small claims were collected by him, and that he and the principals, in the absence of the defendants, looked over the books of the firm and found there was a deficiency of $491.89, for which he gave his check to the principals and they gave him a receipt. In such settlement of tile deficiency the note of Pierce & Haggerty, thereafter paid by the plaintiff, and to recover three-quarters of which payment this action was brought, was not included. The check and receipt were also .in' evidence. The books, check and receipt were no evidence whatever, as against the sureties, that the claims had been collected and paid according to the contract. As against the principals, the proof would have been sufficient; but as to the sureties, the contents of the books of the principals, the receipt given by them, ’ their verbal admissions to the plaintiff, and his check, were but the" declarations of third persons, by which the sureties were in no manner affected. The latter bound themselves for any deficiency remaining after the claims were applied, not for such deficiency as the principals should admit. These views are fully sustained by authority. (Hatch v. Elkins, 65 N. Y., 489; Tenth National Bank v. Darragh, 1 Hun, 111; 1 Greenl. Ev., § 187.) The point was raised at the trial by objections to the evidence and a motion for nonsuit. In overruling it we think the judge erred.
We are also of the opinion that it was error to admit evidence' of the insolvency of Davies, Jones, Beckwith & Co., and that the defendants had indorsed for them. We are unable to see that it was relevant to the issue, and it is impossible to say that it did not prejudice the defendants in the minds of the jurors.
The judgment and order refusing a new trial should be reversed.
Present — -Talcott, P. J., Smith and Hardin, JJ.
Judgment and order refusing new trial reversed and new trial1, ordered, costs to abide event.