Hatch v. Hamlin

J. F. Daly, J. [After stating the facts as above.]—The defendant, Hamlin, should have been allowed the sum he paid on the judgment against plaintiff’s assignor. Such payment was available to him when sued as a member of the firm of George Hamlin & Co. with the other members of the firm, for the balance alleged to be due the Sonoma Valley Wine and Brandy Company. He executed the undertaking at the request of the company made to the firm, and upon the agreement between the company and the firm, that the latter was to retain moneys of the former sufficient to indemnify him from loss by reason of the undertaking. When he became liable on the undertaking by reason of judgment going against his principal, the company, in its suit against Lax, his firm was authorized, under its agreement with the company, to pay the amount of such liability directly to Lax, or to retain it for the indemnification of Hamlin if he paid it to Lax, and in either event to charge it immediately against the company. In an action by.the company or its assignee against the firm for the monej'S so paid or retained, each member of the firm answering separately might avail himself of this defense of the firm, as Hamlin has done in this action. Such a defense is not in any sense founded upon an individual claim of his own by reason of his personal and several obligation in the undertaking apart from the other members of the firm, but is a defense on behalf of the firm here sued, founded upon the agreement made between them and the company, by which they were authorized to retain this money now sued for. The only questions in this case are: whether the payment made by Hamlin was rightfully made, so as to require restitution thereof from Lax upon the reversal of the judgment ; and whether Hamlin or the Sonoma Company was the party to demand such restitution. The payment appears to" have been rightfully- made, as Lax had obtained a judgment against his principal, .and there was no stay of execution. The demand made by the attorneys was regular, and the fact that Lax did not know [276] of it is only a matter between him and his attorneys. The fact that Hamlin took a release from further liability on making such payment inured as much to the benefit of his principal as himself, for it released the balance of the moneys of the former in his firm’s hands over such payment from further lien. Such payment having been made by the surety upon judgment against his principal, was made to the use of the principal, and is deemed at the instant of payment to be the money of the principal, who, upon the reversal of the judgment, would have the right to recover it back from the other party as his own money paid on the judgment. The surety, for that reason, would have no recourse against the party to whom he paid the money, but must look for indemnification to his principal. This is the settled law in this state (Garr v. Martin, 20 N. Y. 306). The reversal of the judgment on which the surety paid does not affect his right of recourse against his principal, as the above case holds ; he is in the same position as if he had handed the money to his principal to enable the latter to make the payment, and the principal’s liability to him is fixed from that moment. It follows, then, that when Hamlin paid the costs to the attorneys of Lax on the judgment against the Sonoma Company, it was as if so much money had been remitted to the company by him (Hamlin), and his firm was entitled to retain, for his indemnification, a like amount out of the moneys of the company in their hands, pursuant to their agreement with it. The exceptions are sustained, the verdict set aside, and a new trial ordered, with costs to defendant George Hamlin, to abide the event of the action. Yah Bkuht and Beach, JJ., concurred. Exceptions sustained and new trial ordered, with costs to defendant to abide event of action.