Imágenes de páginas
PDF
EPUB

SECOND DEPARTMENT, MARCH TERM, 1897.

[Vol. 15. like fractional amount of estimated annual taxes it seems is entered monthly. This is a mere estimate, necessarily uncertain in amount, and was properly disallowed. The same may be said of the amount charged off for asserted depreciation in value of assets, because there is no proof in support of such depreciation in value. The unearned rentals consist of advance payments for telephone service, without, so far as appears, any option on the part of those making the payments to relinquish and have the amount paid refunded, but it seems that the right to repayment is wholly dependent upon the default of the relator, and as there is no reasonable ground to apprehend its failure since it has a fair surplus and pays seven per cent dividends on its stock, the advance moneys paid on rentals may properly be included in the assets of the relator. This differs essentially from unearned premiums of insurance companies. In their case there is a contingent liability beyond the control of the companies to be estimated in making assessment of their personal property. The liability of the relator to repay the money so advanced is too slight, speculative and remote to require consideration. The unclaimed dividends are fixed sums which the relator is required to pay. They have been declared, and the stockholders are entitled to them on call. The amount of the dividends was properly allowed by the trial court. The assessed valuations were made by the defendants upon the basis of seventy per cent. Proceeding upon that basis, these views lead to the conclusion that the assessed valuation of the relator's personal property at the time in question was $422,610.23.

It is urged on the part of the relator that ten per cent of its capital should have been deducted pursuant to the statute providing something to that effect. (Laws of 1857, chap. 456, § 3.) This was repealed by Laws of 1896 (Chap. 908) and its provisions substantially continued. (Id. § 31.) It may be that the relator would have been entitled to such deduction if the claim for it had been made on the application or proceeding for review. No such claim was then made, but, on the contrary, the statement submitted by the relator to the defendants recognized its liability to assessment for $387,351.68, which did not include any such deduction, and on the examination thereupon had of the representative of the relator he conceded that such should be the amount of the assessment. As the failure to deduct the ten per cent of the capital was not made

App. Div.]

SECOND DEPARTMENT, MARCH TERM, 1897.

the subject of grievance, objection or complaint founded upon the application for review and correction, it is not necessarily or properly the subject for consideration in this proceeding, nor did the relator seek to bring it to the attention of the court by any allegation in the petition for the writ therein.

The judgment appealed from should be modified by reducing the assessment, thereby adjudged, to the sum of $422,610.23, and as so modified affirmed, without costs of this appeal to either party.

All concurred, except CULLEN, J., not sitting.

Judgment appealed from modified by reducing the assessment thereby adjudged to the sum of $422,610.23, and as so modified affirmed, without costs of this appeal to either party.

ROBERT S. LIVINGSTON, Appellant, v. EDWARD MOORE and Others, Defendants; THE CITY OF ALBANY, Respondent.

The contract of a surety is strictissimi juris-alteration and novation – -one who has indemnified his co-sureties by a mortgage may, after their discharge, sue, under section 1638 of the Code of Civil Procedure, to remove the lien-equitable power of the court to cancel such a mortgage discharged by novation.

A surety is entitled to the strictest construction of his contract, and is discharged by any substantial change in its terms, whether injurious to him or not, and also by any change in the terms of payment named in the contract. In an action brought to procure the cancellation of a bond and mortgage it appeared that, on July 6, 1887, the firm of William D. Andrews & Bro. contracted with the city of Albany to erect a water plant known as a gang well system, capable of furnishing 10,000,000 gallons of water a day; that they executed a bond to the city on which the plaintiff and the defendants Edward Moore and Henry C. Moore were sureties, and that the plaintiff indemnified his co-sureties by giving the bond and mortgage in question.

The original contract with the city was dated July 6, 1887, and on April 2, 1888, two other contracts, both made on the same day, were entered into, by which the capacity of the gang well system was increased, by additions thereto, to 16,000,000 gallons, and an 'enlarged receiver" and an enlarged well” and, presumably, a pump were provided for. These new contracts spoke of the new plant as the present plant as changed and enlarged," and of changes in the present plant." They required that the approval of a person not named in the first contract should be given to "the change in present

66

SECOND DEPARTMENT, MARCH TERM, 1897.

[Vol. 15. plant and the addition," postponed the time of the trial of the system, changed the method of testing it and the times of the payments to be made, and required the contractors to refund to the city, moneys received by them, in a manner which was not contemplated in the first contract. There was a further provision that the subsequent contracts should not affect the first one except as to the limit therein prohibiting the pumping of more than 10,000,000 gallons of water per day, and that "the provisions of the present (first) contract shall, so far as applicable and save as herein modified, apply to and be considered part of this contract."

The city of Albany, which was made a party defendant to this action, answered, demanding affirmative relief under section 1641 of the Code of Civil Procedure against the plaintiff as an alleged partner of the contractors, and asking to be subrogated to the rights of Edward and Henry C. Moore against the plaintiff upon the bond and mortgage in question. The city showed that there had been a breach of the first contract before the other contracts were made, and that it had, on the 19th day of August, 1888, after the subsequent contracts were made, notified the contractors that it had determined to abandon the enterprise under both contracts.

Held, that the changes made by the second and third contracts were material, and that, as they were made without the consent of the plaintiff, he was discharged from all liability whatever under the bond of indemnity which he had given to his co-sureties.

That as the final tests of the water plant were, by the terms of the second and third contracts, to be made under those contracts, the city had no right to decide that there was a breach of the first contract until after such final tests were made;

That after the city had waived, by modifying the plant, the contractors' default in failing to complete the plant in time, the liability of the sureties was gone and could not be revived by a subsequent notice given by the city that it claimed a breach of the first contract;

That the action was maintainable, under section 1638 of the Code of Civil Procedure, as amended in 1891, by the owner of the fee in the mortgaged lands to compel the determination of any claim adverse to that of the plaintiff, "including any lien or incumbrance" upon said property;

That the court had equitable jurisdiction, apart from the statute, to cancel a mortgage given under the circumstances alleged in the complaint, when the novation of the contract had worked a discharge of the liability of the plaintiff as a surety.

APPEAL by the plaintiff, Robert S. Livingston, from a judgment of the Supreme Court in favor of the defendant, The City of Albany, entered in the office of the clerk of the county of Dutchess on the 15th day of September, 1896, upon the decision of the court rendered after a trial at the Dutchess Special Term dismissing his complaint.

App. Div.]

SECOND DEPARTMENT, MARCH TERM, 1897.

George F. Canfield and Francis C. Huntington, for the appellant.

John A. Delehanty, for the respondent.

GOODRICH, P. J.:

This action is brought for the cancellation of a bond and mortgage made by the plaintiff for the purpose of indemnity to two of the defendants, on the ground that the obligation for which the bond and mortgage were given as security has been released and discharged.

The firm of Wm. D. Andrews & Bro. contracted with the city of Albany in 1887 to erect a water plant known as a gang well system. The members of the firm as principals, and the plaintiff and the defendants Moore and Flynn as sureties, executed a bond to the city for the performance of the contract. The plaintiff gave a bond of indemnity for the execution of the city bond to his co-sureties, Edward and Henry C. Moore, and, as collateral thereto, the mortgage in question. All the parties to the bond and the city itself are parties to this action.

The original contract with the city was dated July 6, 1887, and the Andrews entered upon its performance, but had not completed it when, on April 2, 1888, the Andrews made two other contracts with the city respecting the water plant. It is claimed by the plaintiff that these contracts constituted a novation of the original contract whereby the sureties were discharged from liability, and he asks that all the bonds in question be canceled, and the mortgage be discharged of record, and that the plaintiff be adjudged free from liability to any of the defendants, including the city of Albany, as surety on the bond or otherwise. Before proceeding to an analysis of the alleged changes in the contract it will be profitable to consider the principles which govern sureties in respect of novations of

contracts.

In Grant v. Smith (46 N. Y. 93) Judge ALLEN said: "Judge STORY, in Miller v. Stewart (9 Wheat. 680), enunciates the principle by which the obligations of sureties are controlled very distinctly, and in accordance with the whole current of authority. He says: Nothing can be clearer, both upon principle and authority, APP. DIV.-VOL. XV.

3

SECOND DEPARTMENT, MARCH TERM, 1897.

[Vol. 15. than the doctrine that the liability of a surety is not to be extended by implication beyond the terms of his contract. To the extent and in the manner and under the circumstances pointed out in his obligation, he is bound, and no farther. It is not sufficient that he may sustain no injury by a change in the contract, or that it may even be for his benefit. He has a right to stand upon the very terms of his contract, and if he does not assent to any variation of it, and a variation is made, it is fatal," " and cited authority.

* * *

In Paine v. Jones (76 N. Y. 274) Judge DANFORTH (at p. 278) says: "In Calvo v. Davies (8 Hun, 222 [affd., 73 N. Y. 211]) the court say: The rule is absolute that there shall be no transaction with the principal debtor without acquainting the person who has a part interest in it.' The respondent's counsel, however, contends with much earnestness that the alteration made by the creditor and principal debtor is not material, and, therefore, does not injuriously affect the surety. That it changes the contract is very plain, and it does not seem necessary to inquire what mischief the alteration might produce, or how it might be prejudicial to the surety. The law requires that if there is any agreement between the principals with reference to a contract to the performance of which another is bound as surety, he ought to be consulted in regard to any proposed alteration, and if he is not or does not consent to the alteration, he will be no longer bound, and the court will not inquire whether it is or not to his injury.”

In Page v. Krekey (137 N. Y. 307, 314) Judge O'BRIEN said: "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, to which his guaranty applied, whether material or not, and the courts will not inquire whether it is or is not to his injury." For a similar case see Dobbin v. Bradley (17 Wend. 422).

Brandt, in his work on Suretyship and Guaranty (2d ed., § 388), says: "No principle of law is better settled at this day than that the undertaking of the surety being one strictissimi juris, he cannot, either at law or in equity, be bound further or otherwise than he is by the very terms of his contract. . . Neither is it of any consequence that the alteration in the contract is trivial, nor even that

« AnteriorContinuar »