Emerson S. Crandall, Respondent, v. Philip Moston, Appellant, Impleaded with Others

Emerson S. Crandall, Respondent, v. Philip Moston, Appellant, Impleaded with Others. Sureties—who are—liability of, how restored, after being discharged by a failure to prosecute the principal. Whore a note is signed by a collector of taxes and two others, sureties on the collector’s bond, and is delivered to the payee, who, in consideration thereof, pays to the county treasurer the amount of certain taxes on the tax roll not yet collected, in order to give the collector two months more within which to collect such taxes and pay the payee, the parties so signing the note with the collector hear to him the relation of sureties. Where the sureties have been discharged by the neglect of the payee to enforce payment of the note from the collector, such defense is not waived by their mere acknowledgment of liability. In the absence of an estoppel in pais, such defense can he waived only by an express and unequivocal promise to renew the liability, made with full knowledge of all the facts. Lardón, J., dissented. Appeal by the defendant, Philip Moston, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the cleric of the county of Warren on the 22d day of June, 1897, upon the vepdict of a jury. This action is upon a promissory note signed by Robert and J ames Whitaker and by the defendant, Philip Moston, dated November 17,1885, payable two months after date, with interest. The defendant Moston set up two defenses: First, that the action was barred by the Statute of Limitations; and, secondly, that he had signed such note as a surety, and that he was discharged from liability because of the neglect of the plaintiff to prosecute it when requested to do so. To these defenses the plaintiff now replies that both had been waived by written acknowledgment contained in a letter, of which the following- is a copy : “ Wevertown, N. Y., Feb. 13, 1892. “ E. S. Crandall : “ Dear Sir. — Yours at hand. I am going to try to have the note settled in some way in - a short time. -Mr. Whitaker has offered his garnet at a reduced price if they will let him have money to pay the note yon hold, but I have little hopes from that company. James Whitaker’s son is in the woods to work; when he comes home I will see all of them and see what can be done. I am anxious to have it settled as it is growing more every year. If I have to pay it myself will you accept of it in installment, as I cannot very well spare so much out of my business in one payment ? - “ Yours, truly, “P. MOSTON.” Upon the trial judgment was rendered for the plaintiff, and from such judgment the defendant brings this appeal. J. A. Kellogg, for the appellant. King & Angell, for the respondent. [MAJORITY — Parker, P. J.:] Parker, P. J.: Without discussing the question whether the letter of Moston operated to revive, as against him, the cause of action upon the note, there is another question presented by this record, the decision of which must result in a reversal of this judgment. Upon the trial the defendant Moston claimed that he was a surety with James Whitaker for the principal debtor, Robert Whitaker, and offered to show that, in the early part of 1890, he asked the plaintiff to prosecute the note to judgment while it was collectible, and reminded him that it would soon outlaw; that at that time the principal, Robert Whitaker, was pecuniarily responsible,, and the note could have been collected from him ; that the plaintiff did not sue upon the note until the present action was brought in December, 1896; and that, in the meantime, Robert Whitaker became insolvent, and the note outlawed as to his cosurety, James Whit-alter. The trial court excluded all this evidence, holding that neither the defendant Moston nor James Whitaker were sureties, and, therefore, refused to allow such defense to be considered in the case. It is clear that Robert Whitaker was the principal debtor and that James and the defendant Moston were his sureties. The evidence of the plaintiff himself shows such to be the case. Robert was collector of the town. The others were his sureties on his bond to the town as such officer’.. Plaintiff was treasurer of the county, and when Robert was called upon to settle as such collector it appeared that there were about $600 of taxes upon the roll not yet collected by him. Plaintiff thereupon agreed with him that he would advance to the town the amount so uncollected, and that Robert could have two months longer to collect and repay him therefor; and the note in suit was given in consideration thereof, James Whitaker and defendant Moston signing to secure the debt so contracted. Surely, as between Robert and the others, the debt was Robert’s. He was primarily liable upon the bond, and the money advanced by plaintiff was advanced at Robert’s request and for his benefit. As the plaintiff testified, it was, in legal effect, “ cash advanced to Robert,” and the liability which it discharged was primarily his. If a note is signed by A., as principal, and B., as surety, the giving of a renewal note by them does not change their relation. So in this case, Robert was at all times primarily liable, and the other two incurred,, liability solely for his benefit. And if either had paid the note in question, beyond all doubt he would have had a cause of action against Robert to recover the amount so paid. Such being the relation of the parties, the facts which the defendant Moston offered to show constituted a clear defense to the plaintiff’s claim. (King v. Baldwin, 17 Johns. 384; Colgrove v. Tallman, 67 N. Y. 95; Toles v. Adee, 84 id. 239.) This is not like the case of Newcomb v. Hale (90 N. Y. 327), where the defendant became a surety upon a new consideration moving directly to himself. The distinction between the cases is there pointed out by Andrews, Ch. J., on pages 331 and 332 of the case. (See, also, Wells v. Mann, 45 N. Y. 330.) An effort is now made to relieve the case from the result of that error, by the claim that the letter above referred to waived such defense. A waiver, as a general rule, to be binding must operate by way of estoppel, or amount to a promise supported by a valuable consideration. (Ripley v. AEtna Ins. Co., 30 N. Y. 136, 164.) Subsequent decisions 'have established the rule that forfeitures in an insurance policy are waived when the company, •“ with knowledge of all the facts, requires the assured, by virtue of the contract, to do some act or incur some expense or trouble inconsistent with the claim that the contract had become inoperative in consequence of a breach of some of the conditions.” (Tupper v. P. F. Society, 140 N. Y. 28.) This line of cases could probably be sustained upon the theory that in each case the elements of an “ estoppel in pais ” existed; but even if it be otherwise as to some of them, they could hardly be deemed authority to overturn the general rule. Forfeitures are not favored in the law, and it is said in People v. Manhattan, etc., Co. (9 Wend. 381), in reference to waiver of forfeitures in a lease, “ it is a technical doctrine introduced and applied by courts for the purpose of defeating forfeitures.” Applying to this letter the general rule controlling waivers, it is clear that it could not operate as such, under the evidence in this case. There are no elements of an “ estoppel in pais” shown to exist. It does not appear that by reason of the letter plaintiff has done any act, or omitted to do any, that has in any way operated to his prejudice. Nor is there any promise contained in it to pay the debt. Certainly there is no express promise in it, and a mere acknowledgment is not sufficient. In this respect the rule differs from that relating to the Statute of Limitations. It is analogous to the case of a new promise operating to revive a debt discharged by bankruptcy. The old indebtedness may constitute the consideration for the new promise (Dusenbury v. Hoyt, 53 N. Y. 521), but the promise itself must be clear and unequivocal. (Allen & Co. v. Ferguson, 18 Wall. 1; Depuy v. Swart, 3 Wend. 135, 139; Sands v. Gelston, 15 Johns. 511, 519; Lawrence v. Harrington, 122 N. Y. 408.) In the latter case, Judge Brown (at p. 413) says: “All the authorities agree that a promise by which a discharged debt is renewed must be express and distinct. It cannot be implied or inferred.” At the time this letter was written the defendant Mos-ton, if the facts which he offered to prove existed, had a complete defense as against the note. Being a surety, he had been discharged from liis liability thereon by the plaintiffs neglect. Nothing expressed in that letter lias operated to estop him from now availing himself of that defense, and no new promise is therein contained by which a new indebtedness lias been created. Moreover, it is to he noted that it does not appear that Moston, at that time, liad knowledge of all the facts which operated'to discharge him as surety. He may not have known that Robert had become insolvent, or that the note had in fact outlawed as to James. A waiver can only be made upon full knowledge of all the facts. It was error, therefore, to exclude such defense upon the trial of this action. • These considerations lead to the conclusion that the judgment must he reversed. All concurred, except Landon, J., dissenting. Judgment reversed and a new trial granted, costs to abide the event.