Submitted October 9th, 1869
Decided December 22d 1869
Joshua M. Van Cott, for appellant.
James L. Campbell, for respondent.
The defendant cannot be permitted to show, that this bond is invalid, on the ground that it was issued by the corporation for a purpose not authorized by its charter. The guaranty of payment of the bond by the defendant, imports an agreement or undertaking, that the makers of the bond were competent to contract in the manner they have, and that the instrument is a binding obligation upon the makers. ( Mason v. Eckford's Ex'rs, 15 N.Y.R., 502; Erwin v. Downs, 15 N.Y.R., 575; McLaughlin v. McGovern, 34 Barb. R., 208; Zabriskie v. Cleveland, Columbia Cincinnati R.R. Co., 23 How. U.S.R., 399; Coggill v. Am. Exchange Bank, 1 Comst. R., 113.)
This action was tried before the city judge, without a jury, and we must assume the facts to be as he has found them. As he has found that this second bond was not taken in the place of the first bond, but, on the contrary, was received as a collateral security only, for the same debt, and upon the express agreement that the former bond should remain in force, I do not see, how the appellant can possibly claim he is discharged from his guaranty, by the giving of time to the principal debtors. If this second bond was given merely as collateral security for the first bond, such bond will not be deemed extended, because that which is taken merely as collateral security, has time to run before it falls due. There is another answer to this objection; the judge has found, as a matter of fact, that this second bond was received by the plaintiff, with the knowledge and consent of the defendant.
If the defendant consented to an arrangement, the legal effect of which was to extend the time of payment to the principal debtor, he cannot certainly claim that he himself is discharged as surety thereby. The defendant having guaranteed the due payment of the bond, and the bond having a fixed time of payment, a default occurred when the day of payment had passed, and the principal debtors omitted to make payment. There is nothing in the objection, that the bond was, by its terms or condition, payable out of a particular fund. The agreement was, to pay this sum out of the receipts of the association.
There is an absolute agreement and undertaking, to pay this sum at the time stated; and they are not relieved from liability, because they have further agreed to pay it out of a particular fund. I am not able to perceive any error committed upon the trial, or in the judgment, and advise the affirmance of the judgment.
The Cemetery of the Evergreens gave its bond in question, conditioned to pay appellant $3,562.46, on or before the first of September, 1854, and out of the receipts of the said association, applicable according to the act of incorporation to the payment of such bonds, and in equal and ratable proportion with the other bonds of the said association given for similar liabilities of said association. The point is made by the exceptions taken on the trial, and on the argument here, that the respondent could not recover without showing that when the bond became due, the company had on hand sufficient funds, so that the proportionate shares of the funds applicable under the acts of incorporation to such bonds was equal to the amount due on this bond. The conclusion of the referee was, that the appellant having transferred the bond to the respondent, and at the same time guaranteed the due payment thereof, was liable for the amount unpaid on the bond. I think in that conclusion he was correct. Reading the guaranty by the light of surrounding circumstances, due payment was understood by the parties to mean payment at the time fixed in the bond, doubtless the respondent received it understanding that he was getting the personal guaranty of the appellant, and from the evidence, it is very manifest, that the appellant understood he was giving his personal guaranty that the money should all be paid at the time fixed. It was therefore right and proper to give it that construction. The referee has found that the second bond was given by said association to the respondent for the same debt, but not in payment thereof, but as collateral thereto, and upon the express agreement that the first should remain in full force. That being the case, the bond was not thereby discharged. The referee also found, that respondent received the second bond with the knowledge and consent of the appellant. If the guarantor consented to the extension of time given by the second bond, it certainly could not have the effect of relieving him from his liability. He thereby consented to have the time of his liability extended as in the second bond.
If I am right in these views, the judgment of the General Term should be affirmed with costs.
All concurring for affirmance, judgment affirmed.