
    Barnett v. Wing et al.
    
    
      (Supreme Court, General Term, Third Department.
    
    November 30, 1891.)
    1. Guaranty of Payment of Note—Renewals.
    A verbal guarantor of a note admitted that he had asked plaintiff to sign the note? for his (guarantor’s) son, and promised that if the son did not pay the note he (guarantor) would, and that otherwise plaintiff would not have signed the note. Held not to imply a contract of guaranty to pay any renewal of the original note.
    2. Same—Statute of Frauds—Collateral Undertaking.
    The guaranty in question, being collateral to the agreement of the maker to pay the same, was a mere promise to pay the debt of another, and, not being in writing, no action could be maintained thereon against the guarantor.
    3. Same—Original Undertaking—Harm to Promisee.
    Plaintiff having, in consequence of the guaranty, relinquished no right or advantage which might have enabled him to obtain satisfaction of his debt, the promise in question cannot be held an original undertaking on the part of the guarantor.
    Appeal from judgment on report of referee.
    Action by John M. Barnett against Asahel R. Wing and another, executors of Edwin B. Hash, deceased, to recover on an alleged paroi agreement by defendants’ testator that if plaintiff would indorse a note for $1,500 for Melvin A. Hash, and Melvin A. did not pay it,-he, the testator, would. The note was solely for the benefit of the maker, Melvin A. Hash. At maturity it was renewed, the plaintiff indorsing the renewal note, on which, at maturity, the maker paid $500, and the note of the maker indorsed by the plaintiff was given for the unpaid balance. Other notes were given, on which the-maker paid small payments. The maker on the last renewal note paid $280.73-when due, and the plaintiff paid the balance. The defendants’ testator having died, the plaintiff brought this action to recover the amount so paid by him. From a judgment for plaintiff, defendants appeal.
    Reversed.
    Argued before Learned, P. J., and Landon and Mayhah, JJ.
    
      Edgar Hull, (C. A. Sturges, of counsel,) for appellants. Potter & Little, for respondent.
   Mayham, J.

The referee found as facts the making of the note by Melvin A. Nash, indorsed by the plaintiff, and that before the indorsement Edwin B. Nasli requested the plaintiff to indorse the note, promising him that if he would do so he (Edwin) would pay the same when due if Melvin did not, that he would indemnify and hold the plaintiff unharmed on account thereof, and that, relying on said promise, plaintiff did then indorse said note. The appellants insist that this finding is not supported by the evidence. The only evidence in support of this finding is found in the testimony of Melvin A. Nash, and his testimony upon that subject is as follows: “I had a conversation with my father, Edwin B. Nash, at or about the date of the original note, a few days after. He told me he had asked Mr. Barnett to sign a note for me, or he would not have done it. He said he asked Mr. Barnett to sign the note, and if I did not pay it be would, or Barnett would not have signed it.” It is insisted by the appellants that this language does not, upon the most favorable construction or interpretation of it for the plaintiff, prove a promise by the testator to guaranty or indemnify the plaintiff, or keep him unharmed by signing or indorsing this note, and I am quite inclined to agree with that contention. It would certainly require a forced and unnatural construction of these words to give them the force of a contract of guaranty or indemnity against the legal consequence of signing or indorsing this note. The most that would fairly be claimed for the language used was an agreement of the decedent to pay this note if the maker failed to do so. There was nothing in the language to justify the conclusion that the testator intended to pay any other or future notes made by Melvin A. Nash, and indorsed by the plaintiff, upon the failure of the maker to pay; and if it could be held that an agreement by the testator to pay that note, if not paid by the maker, was in the nature of a guaranty that the indorser would not be called on to pay that note, still such a guaranty could not be made to extend to other and subsequent notes made by Melvin, and indorsed by the plaintiff, to which no reference was made by the decedent If, as matter of law, the statement of the deceased, proved to have been made, can be construed as evidence of a guaranty against the first note, still, within the well-settled rules of construction of guaranties, it could not be extended to other and subsequent notes not referred to in that statement, or in existence at that time. In the case of Bank v. Kaufmann, 93 N. Y. 281, the court says: “But when the meaning of the language used in. a guaranty is ascertained, the surety is entitled to the application of the strict rule of construction, and cannot be held beyond the precise terms of the contract.” Applying this rule, it is difficult to see how the defendants’ testator can be held, even by the most liberal interpretation of the words imputed to him, to have guarantied the plaintiff against the consequence of his indorsement of these renewal notes. A guarantor has a mht to prescribe the exact terms upon which he will enter into the obligation, and insist upon his' discharge, in case those terms are not observed. Barns v. Barrow, 61 N. Y. 39.

But it is further-insisted upon the part of the appellants that, in any aspect of this case, the promise claimed to have been made by the defendants’ testator was but a paroi collateral promise to answer for the debt, default, or miscarriage of another, and, not being in writing and subscribed by him, was void by the statute of frauds. If this position is true, then the plaintiff could not recover in this action, and the judgment should be reversed. It will be borne in mind that the only promise proved was that if Melvin A. Nash, the maker, did not pay the note, he, Edwin B. Nash, would. Melvin A. Nash was the maker of the note, and the principal debtor. John M. Barnett was the payee, and the person to whom, or to whose order, the payment was to be made. Edwin B. Nash agreed with the payee that if Melvin A. did not pay the note he would. If, therefore, he was liable on that agreement, it was as the guarantor that Melvin A. would pay the note. If Melvin A. had paid the note, Edwin B.’s obligation would have been discharged, and hence his agreement was collateral to the performance by Melvin A. His was not an original agreement to pay this note in any event, but only in the event that Melvin A. did not pay it, and therefore collateral to the agreement of Melvin A. “Collateral” is defined by Webster as “security given in addition to the principal promise or bond.” In this case Melvin A. had by his promissory note agreed to pay this plaintiff or to his order $1,500. This was the principal promise, and, collateral to that promise, Edwin B. promised that if Melvin A. failed to perform, as he agreed to pay the note, he (Edwin B.) would pay it. He was therefore the verbal guarantor of Melvin A.’s agreement in the note. A guarantor is one who agrees to see the engagement of another performed, and tiiat is all that can fairly be claimed the plaintiff’s testator assumed to do in this case. Bonvier defines a “guaranty” as “an undertaking to answer for another’s liability, and collateral thereto. A collateral undertaking to pay the debt of another in case he does not pay it.” 1 Bouv. Law Diet. 640. In Gallagher v. Nichols, 60 N. Y. 444, the court of appeals says: “A ‘guaranty’ is defined by elementary writers to be a promise to answer for the payment of some debt or the performance of some duty in case of the failure of another person who in first instance is liable for such payment or performance;” citing 3 Kent, Comm. 121. If this were a legal guaranty of the payment of this note by the maker, it would have passed on the indorsement of the note to the bank, and would have been enforceable by it. Everson v. Gere, 122 N. Y. 290, 25 N. E. Rep. 492. But, if we are right in our conclusion that it was only a paroi collateral promise by Edwin B. Hash to answer for the debt or default of Melvin A. Hash, it comes clearly within the definition of a contract void by the statute of frauds.

The respondent insists that, as between Barnett, to whom it is alleged the promise was made, and Edwin B. Hash, by whom it was made, it is not a •collateral, but a direct, promise, and that there was a sufficient consideration of harm to the promisee to take it out of the operation of the statute. In .■support of this theory, the respondent cites Mallory v. Gillett, 21 N. Y. 412; Tighe v. Morrison, 116 N. Y. 263, 22 N. E. Rep. 164; Leonard v. Vredenburg, 8 Johns. 29; Chapin v. Merrill, 4 Wend. 657; Emerson v. Slater, 22 How. 28; McCreary v. Van Hook, 35 Tex. 631; and Tisdale v. Morgan, 7 Hun, 583. In Mallory v. Gillett, supra, the plaintiff was in possession of a boat on which he had a lien for repairs, and the defendant promised by paroi that, if the plaintiff would surrender the boat to the owner, he would pay the ■charges, some of which he paid at the time. It was held to be an original, and not a collateral, promise, and not within the statute; and the reason for it seems to be that, though the debt of another may have been the original cause of the promise, yet, if the person to whom it is made relinquish some right or advantage which he possesses which might have enabled him to obtain satisfaction of his debt, the promise of a third person to pay the debt in consideration of such relinquishment is an original, and not a collateral, promise. Su such reason exists in the case at bar, and the cases are therefore clearly distinguishable upon principle. In Tighe v. Morrison, 116 N. Y. 263, 22 N. E. Rep. 164, the defendant applied to the plaintiff to sign an administrator's bond, claiming that lie had an interest in the estate, and that it was indebted to him, and upon his oral guaranty to save the plaintiff from loss he executed the bond. The principal in the bond defaulted, and plaintiff suffered loss. In an action on this guaranty it was held that the case was not within the statute; that the promise was an original one, and legally beneficial to the defendant only; and the court lay down what seems to be the real •distinction between a collateral and original undertaking, and hold that, to bring a promise within the statute, it must be made to persons entitled to enforce the liability assumed by the promisor. In this case the court says: “In order to attain a position which be represented would be of pecuniary value to himself, the defendant promised to indemnify the plaintiff against-the consequences of an act necessary to enable him to enjoy said position. One of the consequences was his own possible default.” Within all these• authorities, the promise was clearly an original one; and the court adds: “Moreover, the rule seems well settled that a promise not made to a person-entitled to enforce the liability assumed by the promisor is not within the-statute.” In the case at bar the promise was made to the payee of the note, the one primarily entitled to enforce the liability. The note was payable to-him or order. Without stopping to denote the distinguishing features of the-case at bar from those cited and relied upon by the learned counsel for the respondent, we think them all distinguishable upon principle. In Kingsley v. Balcome, 4 Barb. 138, the court, in discussing this statute, says: “The true-rule is that the new original consideration spoken of must be such as to shift the actual indebtedness to the new promisor, so that, as between him and. the original debtor, he must be bound to pay the debt as his own, the latter standing to him in the relation of surety.” Farley v. Cleveland, 4 Cow. 432; Barker v. Bueklin, 2 Denio, 45; Baker v. Dillman, 21 How. Pr. 444; Carville v. Crane, 5 Hill, 483. Upon the facts in this case we are clearly of the opinion that the promise proved, if capable of being construed into an agreement to indemnify the plaintiff against his indorsement of this note, was within, the statute of frauds, and therefore void. If right in this conclusion, it is -' unnecessary to discuss the other points raised by the appellant on this appeal. The judgment should be reversed. Judgment reversed, referee discharged,., and a new trial ordered, costs to abide the event.

Landon, J., concurs.

Learned, P. J.,

(concurring.) The referee-finds that the testator or Ed— . win B. Nash verbally requested plaintiff to indorse an accommodation note-of Melvin A. Nash, in order to have it discounted at the bank, and promised him that if Melvin A. failed to pay he would pay, and would hold plaintiff harmless: that, relying upon that promise, plaintiff, on the 16th of May, 1888, indorsed a note to Melvin A. for $1,500; that this note was not paid, but was-renewed several times in the same form. On the trial the plaintiff called. Melvin A. as a witness, and then executed and delivered to him a general release, which specially released Melvin A. from any liability on account of paying the note or the existing renewal thereof. Without discussing the validity of the indemnity, I am of the opinion that Edwin B. was discharged--by the-renewals. If, as plaintiff claims, the testator’s liability became fixed when, the first note became payable, still the plaintiff extended the time by making a new note. After he had done this, if Edwin B.-had paid the plaintiff he could not have sued Melvin A. until the new note became payable. Melvin. A. bad then taken up the original note, and was no longer-liable thereon.. Edwin B, liad agreed to indemnify plaintiff for indorsing the first note, not-for indorsing numerous renewals thereof. He might be willing to take the-risk that Melvin A. would pay the first note, which came due August, 1888,. but not that be would pay, or would be liable to pay, a note which came due in March, 1890. Furthermore, I think that byreleasing, in open court, Melvin A. from all liability on the original note, and on. the existing renewals thereof, the plaintiff discharged the testator’s estate. Melvin A. was the principal debtor, and a release of the principal debtor is a discharge of the surety or guarantor. There was no longer anything to guaranty. This defense could not have been pleaded; the act took place on the trial. For these-reasons I concur in the result of my Brother Mayham’s opinion.  