Opinion
July 2, 1926.
Appeal from Supreme Court of Albany County.
Jacob I. Goodstein, for the appellant Industries Development Corporation.
Wallace P. Harvey [ Thomas E. White of counsel], for the appellant and respondent Fidelity and Deposit Company of Maryland.
Charles Saleson [ Jacob I. Goodstein of counsel], for the plaintiff, respondent.
The bond was given solely for the protection of the State. There is no evidence and it is not claimed that the assignee advanced any money which went into the construction in question. As against the assignee, therefore, the surety is subrogated to all the rights and remedies of the State and this right of equitable subrogation arose when the contract with the State was made. ( Prairie State Bank v. United States, 164 U.S. 227.) As the State on completion by it of the defaulted contract would not be liable to the assignee so neither is the surety which is subrogated to the rights of the State. As to the lienor a different equity arises. It furnished material which went into the construction and to that extent diminished the expense which otherwise the surety would have been obliged to pay. In 27 American and English Encyclopedia of Law (2d ed. p. 204) it is said: "Subrogation being the creature of equity it will not be permitted where it would work injustice to the rights of those having equal or superior equities." The right does not originate in contract and, therefore, does not extend beyond the requirements of equity and justice. For the surety to receive equity it should do equity to the lienor for lightening the burden of the surety. (See, also, Clarke Company v. Plass Bro., Inc., 107 Misc. 722; affd., on opinion below, 187 App. Div. 904, and Maneely v. City of New York, 119 id. 376, cases in which rights of assignees were not involved.) Having held that the assignee has no claim on the fund in question those authorities are applicable here.
The judgment should be affirmed, with costs to the plaintiff against the appellant assignee.
All concur.
Judgment unanimously affirmed, with costs to the plaintiff against the appellant assignee.