Lawton v. Sayles

Follett, J.: Hpon the trial Goldsmith was permitted to testify that it was agreed between himself, plaintiff and Henry H. Sayles, that the bond and mortgage were to be held by H. H. Sayles & Co., as security for $300 and interest thereon from November 22, 1882, and upon payment of that sum, the bond and mortgage were to be reassigned to the plaintiff. The defendant objected to this evidence upon the ground that the witness was interested in the event and incompetent to testify to a personal transaction with Henry H. Sayles, as against his surviving partner, under section 829, Code of Civil Procedure, which objection was overruled and the defendant excepted. Afterwards, and before the trial closed, the defendant moved, .upon t'he same ground, to strike out the evidence, which motion was granted and the plaintiff excepted. Whether Goldsmith was competent to testify to the agreement with Henry H. Sayles, is the sole question raised upon this appeal. In Church v. Howard (79 N. Y., 415), the action was to recover of Fargo and Howard the amount due on a promissory note signed by Fargo as principal, and by Howard as surety. Fargo made no [254] defense, and bis liability to pay tbe amount due on tbe note was-fixed. Howard defended on tbe ground that tbe note bad been materially altered by Fargo and tbe payee, without Howard’s consent, and that tbe six year's’ statute of limitations had applied as a bar. Neither of these defenses were available to Fargo, for tbe alteration was made by Fargo and tbe payee; and Fargo, bad made payments within tbe six years preceding tbe commencement of tbe action. Fargo was permitted to testify that the note was altered by himself and tbe payee. This was held to be error, on tbe ground, that Fargo was interested in the event, and incompetent to testify under section 829, notwithstanding the fact that the defense was-not available to him, and notwithstanding tbe fact that his liability to pay the note was undisputed, and was then fixed by bis default in tbe action. Tbe decision was not placed upon the ground that Fargo was a party to tbe action, but solely upon tbe ground that be was interested in tbe event. Millee, J., in speaking for tbe court said : “ He (Fargo) was interested in avoiding a judgment against tbe defendant Howard, tbe surety, which would entitle such surety to prosecute and obtain a judgment against the- defendant Fargo,, which be might be compelled to pay. He (Fargo) would be affected by tbe legal operation- and effect of tbe judgment, and tbe record would be legal evidence in an action by tbe surety to recover tbe amount paid for bis principal.” (79 N. Y., 420.) Howard bad promised to ■ pay a sum of money with and fox Fargo, and a judgment would have fixed the amount of Howard’s liability on his promise to the plaintiff, but it would not have fixed tbe amount of Fargo’s liability to Howard, unless Howard afterward paid the judgment, as a surety cannot i eco ver of bis principal until be has paid in whole or in part tbe sum for which bound, and can only recover the amount actually paid. (Powell v. Smith, 8 Johns., 249 ; Hannay v. Pell, 3 E. D. Smith, 432, 438 ; Elwood v. Deifendorf, 5 Barb., 398.) In Church v. Howard, a judgment for either party would not enlarge or diminish Fargo’s liability. A judgment in favor of Howard would have left Fargo liable to Church for tbe full amount claimed. A judgment against Howard, and its payment by him, would have left Fargo liable to Howard, instead of to Churchy for tbe full amount claimed, a mere shifting of creditors. [255] In the case at bar a judgment for or against either party would not enlarge or diminish Goldsmith’s liability, which is $1,013.s2 and interest from April 10, 1884-, on the judgment. Had the plaintiff succeeded, Goldsmith would have become liable to plaintiff for $300 and interest from November 22, 1882, and his liability to defendant diminished by a like amount. The defendant having succeeded, Goldsmith’s liability to defendant is diminished by the' amount that may be realized by the defendant upon the bond and mortgage, a mere shifting of creditors. In the case at bar the plaintiff had not promised to pay H. H. Sayles & Co. any sum, but had assigned the whole or part of the amount due on the bond and mortgage to secure the indebtedness of Goldsmith to the assignees, and there was no contract between Goldsmith and the plaintiff except the one implied by law, that the principal will indemnify his surety for all sums paid. The issue was, what was the ultimate sum which the plaintiff’s bond and: mortgage were assigned to secure, and the judgment fixes the ultimate sum which plaintiff may pay, and call upon Goldsmith for repayment. Just that, and only that could have been the effect of a judgment in favor of Church against Howard ; and if Fargo, the principal, was incompetent to testify for his surety in that case and .upon that issue, it follows that Goldsmith, the principal, was incompetent to testify for the plaintiff, his surety in the case at bar. Hill v Hotchkin (23 Hun, 414) need not be considered, for it was decided solely upon the authority of Church v. Howard. The judgment should be affirmed, with costs. HaRdiN, P. J., and BoARdman, J., concurred. Judgment affirmed, with costs.