Opinion
Argued May 20, 1912
Decided June 18, 1912
Philip S. Dean for appellant.
Charles Meyers for plaintiffs, respondents.
Abraham Spigelgass and Joseph J. Schwartz for defendants, respondents.
The claim of the appellant as stated in its brief is that "The appellant stood as surety to Kratenstein and Weinstein and was entitled to be subrogated, on payment, to their lien and to all collateral thereto, and when they put it out of their power to assign their claim against Silverstein, they so impaired the appellant's right of subrogation as to subordinate their lien."
The appellant, to sustain its claim that the lien of Kratenstein and Weinstein should be subordinated to its mortgages, relies upon the decision in Barnes v. Mott ( 64 N.Y. 397). In that case it was held, as stated in the head note, that "where lands incumbered by a judgment are conveyed with covenants of warranty to a purchaser for full value, the grantee and his successors in interest occupy a position similar to that of sureties for the judgment debtor and are entitled to the same equities. A release by the judgment creditor without their consent and with knowledge of their rights of any security to which, in equity, they would be entitled on payment of the judgment, discharges the lien of the judgment."
The court, in that case, say: "The doctrine of subrogation or substitution, at first applied in behalf of those who were bound by the original security with the principal debtor, has been greatly extended, and the principle, modified to meet the circumstances of cases as they have arisen, has been applied in favor of volunteers intervening subsequent to the original obligation, and as between different classes of sureties, and in the marshaling of assets, and prescribing the order in which property and funds shall be subjected to the discharge of different classes of obligations, and as between different classes of creditors, so as to do substantial justice and equity in each case." (p. 401.)
The parties in the case now before us occupy in equity a position that is the reverse of the position of the parties in the Barnes case. Silverstein, who was primarily liable to Kratenstein and Weinstein upon the contract made by him with them for labor to be performed and materials to be furnished upon and toward the erection of said buildings, provided in his deed to the Little Giant Company that said company pay all the claims for materials furnished and labor performed upon and toward the erection of said buildings, and that company thereby became as between Silverstein and such company the primary and principal debtor, and Silverstein thereafter occupied as between them the position of a surety. ( Howard v. Robbins, 170 N.Y. 498; Johnson v. Zink, 51 N.Y. 333; Tripp v. Vincent, 3 Barb. Ch., 613.) The lien filed by Kratenstein and Weinstein was against the real property so previously conveyed to the Little Giant Company and then owned by it, the grantee named in said deed, and the principal debtor in equity, for the materials and labor for which the lien was filed. If the lien is paid by the Little Giant Company or from the real property conveyed to it by said deed, against which the lien was filed, there will not survive an enforceable demand in law or equity on the part of any person against Silverstein for the amount of such payment.
The execution and delivery of the release, therefore, in no way affects the rights of the Lawyers Title Insurance and Trust Company.
The principle contended for by the appellant is not applicable to the facts in this case.
The judgment should be affirmed, with costs.
CULLEN, Ch. J., GRAY, WILLARD BARTLETT, HISCOCK and COLLIN, JJ., concur; VANN, J., absent.
Judgment affirmed.