Jefferson County National Bank v. Dewey

Stover, J.: On the 25th day of December, 1891, the Eureka Chemical Company, a corporation doing business 'at Syracuse, N. Y., made and delivered its promissory note for $2,800, payable in three months at plaintiff’s banking office. Said note was payable to the order of A. E. Dewey, the testator of the defendant Adelaide W. Dewey and the other defendants, and was indorsed by each of them. Plaintiff discounted said note at its date, and, not being paid at maturity, it was protested for non-payment, and notice duly given to the indorsers. Plaintiff on September 2, 1892, recovered judgment on said note against the maker for the full amount thereof ($2,934.96). Plaintiff subsequently brought an action based upon this judgment against Margaret A. Townley and others to set aside certain judgments which were apparent liens upon the property of the Eureka Chemical Company, but which were claimed to be fraudu-' lent as to plaintiff.. Plaintiff recovered a judgment in said action and the property of the Eureka Chemical Company was sold thereunder, and on March 21, 1895, the proceeds of such sale, amounting to $2,576.41, were paid to plaintiff, and that amount, less the legal fees for collection, was indorsed upon the note in question. In December, 1895, plaintiff demanded of the indorsers the payment of the balance due on said note, and on December 18, 1895, A. E. Dewey, Nettleton and Phillips each paid about $127, being one-sixth of the amount due. About March 1, 1896, the plaintiff demanded of the defendants- Nettleton and A. E. Dewey the sum of' $430.70 as the balance due upon said note, and on the 7th day [445] of March, 1896, the defendants Albert E. Nettleton and A. E. Dewey paid the balance of $430.Y0 due on said note and the plains tiff indorsed said sum upon said note and then surrendered said note to said A. E. Dewey who continued in possession thereof from said date and produced said note upon the trial of this action. The referee finds that such payment and delivery were made with the intent and purpose of discharging the debt, and that said note was voluntarily surrendered with full knowledge of the facts and without any fraud or mistake existing after the payment of March, 1895. An appeal was taken by Margaret A. Townley in the creditor’s action, and the judgment and decree under which the money paid over on March 21, 1895, was collected was reversed. On a new trial of the creditor’s action the complaint was dismissed. On August 12, 1899, an order was made directing the plaintiff to repay said sum to the sheriff, and such repayment was made by plaintiff. Plaintiff subsequently demanded said sum and costs incurred front the defendants Nettleton and A. E. Dewey, which demand was refused. It was conceded on the trial that as to the defendants other than Nettleton and Dewey, except Phillips, the claim upon said note was barred by the Statute of Limitations, and that said Phillips was insolvent. It is contended by appellant that the creditor’s action was brought at the request of defendants Nettleton and A. E„ Dewey. The trial court has found to the contrary upon evidence which justified such finding. There is no direct evidence of an agreement to bring the suit, and one of the respondents denies that there was any agreement. So, however strong the inference from circumstances of an agreement, the court’s finding cannot be disregarded on appeal. There was no mistake of fact. The payment of the balance claimed to be due was made with a full understanding of the circumstances. When the payment was made, the indorser’s right to subrogation, except for the amount then paid, was gone. The holder had no claim against the indorser, and if the entire amount of the note had been paid by the indorsers, they would have had no recourse against the maker beyond the balance due after crediting the amount realized upon the judgments against the maker. It [446] was not possible, at the time the balance was paid by the indorsers, for plaintiff to put them (the indorsers) in a position to enforce the notes for their full amount against the makers. The rule applied in Larkin v. Hardenbrook (90 N. Y. 333) should be applied here. The court having found upon sufficient evidence that the note was'surrendered at the time of the payment of the balance then due, “ with the intent and purpose of discharging the debt and the plaintiff accepted said sum and indorsed the same upon the said note, and thereupon surrendered said note to the said Addice E. Dewey,” one of the indorsers, and “ that said note was voluntarily surrendered by the plaintiff at said time, With full knowledge of all the facts, and without any fraud or mistake existing at that time,” a complete satisfaction was shown, and effect should be given to it. Plaintiff might'have reserved its right, but it did not. It is quite evident that it relied upon its judgment, and when it surrendered the note it intended to discharge the liability of the indorsers. In fact, it could not refuse to do otherwise. . It had the avails of the judgment credited to the note, and the indorsers were entitled to its surrender on payment of the balance. If plaintiff had by any act of its own placed itself in a position where it was not able to respond to the indorsers Upon a demand of subrogation on payment as indemnity for the full amount paid, it alone was responsible, and, so far as it had lost the ability to answer to the demand, it had relieved the indorsers^ The evidence warranted the findings of the trial judge, and the law was correctly applied. The judgment should be affirmed. All concurred, except Williams, J., who dissented in an opinion ; Hiscook, J., not sitting.