Opinion
January Term, 1868
E.H. Benn, for the appellant.
R. King, for the respondent.
The principle is well settled that where a creditor, by a valid and binding agreement between himself and the principal debtor, without the consent of the surety, extends the time of payment, and thus ties up the hands of the creditor, that the surety is thereby discharged. ( Gahn v. Niemcewiez, 11 Wend. 312; Colemard v. Lamb, 15 id. 329; Miller v. McCan, 7 Paige, 457; Bangs v. Strong, 7 Hill, 250; Dorlon v. Christie, 39 Barb. 610; Fox v. Parker, 44 id. 541; Smith v. Townsend, 25 N.Y. 479; Billington v. Wagner, 33 id. 32.) The agreement must be one which can be enforced, and of such a character as will prevent the collection, of the original demand, to secure which a new obligation was taken. It must also have a sufficient consideration, so as to prevent the prosecution of the debt by the owner, and to prevent the surety from compelling him to enforce it.
In the case at bar, it was claimed upon the trial, and evidence was introduced to prove that the plaintiff was induced to enter into the agreement, and to take notes extending the time of payment, by the fraudulent representations made by the principal debtor as to his pecuniary circumstances and responsibility. Fraud vitiates all contracts, and if the notes indorsed upon the bond in suit and now in question were received by the plaintiff by means of the false representations alleged, then there was no valid agreement to extend the time for the payment of the bond which was binding upon the parties. The fraud which characterized and infected the transaction entirely vitiated the contract and rendered it utterly illegal and void. The indorsements upon the bond of the receipt of the notes as payments, were fruitless and unavailing, and the instrument remained in full force and effect the same as if they never had been made. The plaintiff could prosecute the bond the same as if the notes had never been given, and it would be no defense, under the circumstances, that the principal had by fraudulent means obtained an extension of the time of payment.
The principal exceptions taken upon the trial relate to the charge of the judge and his refusal to charge as requested, and I will examine those which are now pressed upon our attention. The judge very properly, I think, left it for the jury to determine whether the notes were imposed upon the plaintiff by the fraud of Ely, and whether the agreement to take the notes and to extend the time of payment was procured fraudulently. It cannot be denied that there was considerable evidence in the case which tended to establish that Ely had falsely represented the situation of his property, and the jury were required to find that these representations were false, and that Ely knew them to be so. Clearly there was no error in thus presenting the main issue involved in the case to the jury.
The charge of the judge that the extension of the time of payment would not discharge the surety as to the residue of the bond beyond the amount of the notes, and all his remarks as to that branch of the case were, I think, correct and unobjectionable. The taking of the notes for a less amount than the sum due upon the bond, could at most but operate as a discharge of the surety to the amount of the notes, and left him unaffected as to the remainder. They were taken only as a conditional payment upon the bond, and to that extent only could they be effective.
If there had been an actual payment of the bond by Ely to the amount of these notes, it would not have affected the right of action of the plaintiff against the surety for the remainder of the bond, and the receipt of the notes could have no greater effect than a payment of money. The theory upon which sureties are discharged is, a suspension of their remedy over their right to demand that the creditor should sue the principal. ( Myers v. Wells, 5 Hill, 465.) The remedy here could not have been suspended beyond the amount of the notes, and hence there is no good reason why the surety should be discharged beyond that sum, even if a valid agreement had been made. If any alteration was made in the contract it was merely to the extent of a payment pro tanto, and there would appear to be no valid and satisfactory reason why the defendant has a right to claim any benefit beyond that. As the jury found adversely to the defendant upon the question of fraud, I do not see how he could have been injured by this portion of the charge. Nor does any question arise at this time whether two actions could be maintained upon the bond, the only question to be now determined being as to sustaining the present action.
It was also proper to submit to the jury to determine whether, if the plaintiff offered to return the notes, he did so in a reasonable time. The plaintiff was not aware of Ely's insolvency until after his decease, and when this occurred there was no one to whom the plaintiff could tender the notes until an administrator was appointed. They were tendered to the administrator soon after he was appointed, and this action was commenced shortly after the tender was made. It was probably enough that the tender was made upon the trial. ( Nichols v. Michael, 23 N.Y. 264, 267.)
The evidence offered to prove the publication by the administrators of Parmenter, the surety in 1859, of a notice to creditors to present their claims against the estate, was properly excluded, as it was not material to the issue upon trial and could have no legitimate bearing upon the case. It was not offered for the purpose of procuring a certificate according to the provisions of 2 Revised Statutes, section forty-one (p. 90); and, as far as any question of costs is concerned, it would more properly arise upon a motion. As the evidence was excluded, the request to charge as to the effect of such a notice was properly refused.
None of the exceptions to the charge of the judge or to his refusal to charge can be sustained, and his rulings in regard to evidence were entirely correct.
The judgment of the court below should be affirmed.
Judgment affirmed.