Court Opinion

ID: 5756834
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:07:50.872463+00
Date Added: 2024-06-11T08:41:26.398895
License: Public Domain

Eager, J.
(dissenting in part). I concur in the affirmance of the judgment in favor of defendant Pour Seasons Country Club Caterers, Inc. (Pour Seasons), but I would reverse the order and the judgment appealed from insofar as they provide for the dismissal of the complaint as against the individual defendants Dubov and the corporation Jack Dubov Associates, Inc. (herein referred to as defendants Dubov), and deny the cross motion by them for summary judgment.
The written instrument of guarantee signed by said defendants is in form an absolute and unconditional guarantee of payment of the notes. It recites that the notes were “ each in the sum of $1,000.00 with interest”, and certain of the notes on their face do purport to bear interest at 6 %. These particular defendants do not plead affirmatively an unauthorized alteration of the notes. Furthermore, the answering affidavit of the plaintiff expressly alleges that the defendants Dubov represented and agreed that the notes all bore interest; and that it was agreed between the plaintiff and the defendants Dubov that the plaintiff should collect the principal owed on the notes from the maker, Pour Seasons, and then, after all the notes were paid, if it would not pay the interest, the defendants Dubov would pay the same in accordance with their agreement.
It is well settled that ‘ ‘ Where interest is provided for by contract, the payment of the principal debt will not defeat the right to recover accrued interest by a subsequent suit ” (47 C. J. S., Interest, § 71, subd. [b]. See, also, 32 N. Y. Jur., Interest and Usury, § 34; Ann. 100 A. L. R. 98). It is true that the surrender of a negotiable note to the maker ordinarily operates to discharge the instrument and bars any further recovery thereon from the maker or from those secondarily liable, including a recovery of unpaid interest. (See Negotiable Instruments Law, §§ 200, 201; Uniform Commercial Note, §§ 3-601, 3-603, 3-604, 3—606; Gerard v. Bank of New York & Trust Co., 265 N. Y. 336; Larkin v. Hardenbrook, 90 N. Y. 333; Schwartzman v. Post, 94 App. Div. 474.) The surrender of the note terminates the life of that instrument but the liability on the independent agreement of guarantee may remain. The plaintiff here, seeking to recover unpaid interest agreed to be paid, pleads and shows a valid independent cause of action against the defendants Dubov on the basis of the separate written agreement of guarantee.
Upon the nonpayment of any portion of the indebtedness owing on the respective notes on maturity, a cause of action accrued against the guarantors separate and distinct from a *313cause of action, if any, against the principal debtor; and the guarantors became independently liable for any balance owing on account of principal or interest. So, a complete discharge or release by the creditor of the cause of action against the principal debtor may, but does not necessarily, release the guarantors from liability on the independent cause of action. It is familiar law and well settled that where the guarantor or surety consents to the release of the principal debtor with the agreement, as here alleged, that he (the guarantor or surety) will remain obligated to pay an unpaid portion of the indebtedness, the release of the principal will not operate to discharge thu guarantor or surety. Such reservation of the rights of a creditor against the guarantor is fully effective. (See Restatement, Security, § 82, Comment g; § 122; Stearns, Law of Suretyship, § 6.45, p. 182; 24 Am. Jur., Guaranty, §§ 88, 89; 50 Am. Jur., Suretyship, §§ 126, 129; 72 C. J. S., Principal and Surety, § 223, p. 686; Redfield, Law of Commercial Paper, §§ 200-204; Wright v. Storrs, 6 Bosw. 600, 601; Frost v. Harbert, 20 Idaho 336. Cf. 42 N. Y. Jur., Negotiable Instruments, § 605; Uniform Commercial Code, § 1-201, subd. [40]; § 3-606, subd. [1] ; General Obligations Law, § 15-104.)
This is not the case of a, mere unilateral reservation of the rights of a promisee against a guarantor, and, thus, Spies v. National City Bank (174 N. Y. 222) and other authorities cited in the majority opinion concerning effect of a unilateral reservation are inapplicable. Where, as here, the guarantor or surety consents to the release of the principal debtor, “he is not discharged, because he has waived his remedies of subrogation and reimbursement and evidenced his intention to remain liable on the debt even though the principal has been discharged. ” (Simpson, Suretyship, § 63, p. 296.)
Furthermore, the plaintiff here is seeking merely to hold the defendants Dubov to the full measure of their liability as assumed by their original written agreement of guarantee. Plaintiff’s claim is not grounded upon a new, independent and “special promise to answer for the debt” of Four Seasons. Thus, we are not concerned here with subdivision 2 of section 5-701 of the General Obligations Law and decisions cited by the majority alluding to the application of the Statute of Frauds pertinent to such a promise.
A motion for summary judgment is devoted to issue finding and not to deciding of issues of fact. (See Esteve v. Abad, 271 App. Div. 725, 727; Kuniholm v. Kuniholm, 15 A D 2d 50, 54.) The “‘drastic remedy’ of summary judgment should not be granted where there is any doubt as to the existence of ‘ [factual] *314issues’. ” (Millerton Agway Co-op. v. Briarcliff Farms, 16 N Y 2d 57, 61.) Here, as to tlie defendants Dubov, it appears that there are fact issues as to whether or not is was agreed that the notes or some of them would bear interest and whether said defendants independently agreed that their liability to pay such interest was to continue notwithstanding the surrender of the notes.
Finally, it is significant that the defendants Dubov have not affirmatively pleaded the defense of discharge or accord and satisfaction, particularly where, as here, the maker has pleaded the defense. In any event, the failure to plead the defense precludes them from the right to have summary judgment
granted on the basis thereof. (See Planet Constr. Corp. v. Board of Educ. of City of N. Y., 7 N Y 2d 381; Moon v. Tollefsen Bros., 14 A D 2d 520; Grande v. Torello, 12 A D 2d 937; Krohn v. Steinlauf, 11 A D 2d 695.)
Breitel, J. P., and McNally, J., concur with .Stevens, J.; Eager, J., dissents in part in opinion, in which Babin, J., concurs.
Order and judgment affirmed, with $50 costs to the respondents.