Gansevoort Bank, Respondent, v. Empire State Surety Company, Appellant

Gansevoort Bank, Respondent, v. Empire State Surety Company, Appellant. First Department, February 8, 1907. Pleading — allegation of performance of conditions precedent under section 533 of the Code of Civil Procedure — complaint against surety. In alleging the performance of a condition precedent in a contract under section 533 of the Code of Civil Procedure, while it is not necessary to state the facts constituting the performance, yet the plaintiff must allege that he has duly performed all the conditions precedent on Ms part to be performed; a mere allegation of general performance is. insufficient. Thus, a plaintiff suing to recover on a hdnd guaranteeing the payment of a loan who merely alleges that-every condition was fulfilled and all things happened and all times elapsed necessary to enable the plaintiff to maintain this action for recovery on the foot of said bond, etc., does not state the performance of conditions precedent under said section. However, when such complaint alleges that a borrower duly executed and delivered to the plaintiff for value received his promissory note by which he promised to.pay the plaintiff $5,000 at a time, stated and that it was to secure the „ payment of this loan that the bond in question was given, the complaint states ... á good cause of action and is not defective in failing to show that the plaintiff ’ loaned the money secured by the bond. The allegation that that note was duly executed and delivered for value received, etc., and that the borrower wholly failed to discharge ‘ ‘ the said indebtedness of $5,000 ” sufficiently alleges that the amount was loaned. Houghton, J., dissented. ‘ Appeal by the defendant, the Empire State Surety Company, from an interlocutory judgment cf the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Hew York on the 29th day of October, 1906, upon the decision of the court, rendered after a trial at the New York Special Term, overruling the defendant’s demurrer to the amended complaint; Benjamin Reass, for the appellant. William MeArthúr, for the respondent. [MAJORITY — McLaughlin, J.:] McLaughlin, J.: The defendant demurred to the complaint upon the ground that it did not state facts sufficient to constitute a cause of action. The. demurrer was overruled, and defendant' appeals from-the interlocutory judgment. One Newman, according to the allegations of the complaint, applied to the- plaintiff for a loan of $5,000-,. upon his promissory-note for that amount, payable four months after date. The plaintiff declined to make the loan without additional security, and there- . upon the bond of the defendant was delivered to the plaintiff and the loan made. The note was not paid when due, was duly protested for non-payment, and this action brought upon the .bond. The bond is dated the 2-fth' day of October, 1904, is under seal, and recites that Newman, as principal, and-the surety company, as surety, are held and firmly bound to-the plaintiff in the sum of $10,000, payment of which Newman and the surety company bind themselves jointly and severally to make. Then follow these provisions: ■“ Whereas the.said Randolph M. Newman has applied to the Gansevoort Bank of New York for a loan of Five Thousand Dollar's ($5000) upon his promissory note dated this 24th day of October, 1904, and payable four months after date, And Whereas, the said Gansevoort Bank has declined to make said loan upon said note without additional and collateral security therefor, and for the faithful payment of said loan, And Whereas, the Empire State Surety Company, as an inducement to said Gansevoort Bank of New York to make said loan, executes this certain bond or obligation, “Now, Therefore, the condition of this bond or obligation'is such that if the above bounden Randolph M. Newman shall faithfully discharge and pay the said indebtedness of Five Thousand Dollars ($5000), then and in that event this obligation to be- void and of no effect, otherwise to remain in full -force and virtue.” A copy of the bond is annexed to and made a part of the complaint. The complaint specifically charges: “ III: — That on or about the 25th day of October, 1904, at the City of New York, one Randolph M. Newman duly executed and delivered to the plaintiff, for value received, his certain promissory note, in writing, wherein and whereby he did promise to pay to the plaintiff above-named, four months after said date, $5,000 ; ” and that the note here referred to is the same one mentioned and referred to in the bond. The complaint then charges that the note, at maturity, was presented for payment; was.dishonored; that the same was duly protested ; that Newman had wholly failed to discharge and pay the said indebtedness of $5,000, or any part thereof, except $1,500, and by reason thereof there had been a breach of the condition of the bond prior to,the commencement of the action; then follows the 9th paragraph, which contains an allegation that before the commencement of the action “every condition was fulfilled and all things happened and all times elapsed necessary to entitle the plaintiff to maintain this action for recovery on foot of said bond of the amount of said note therein mentioned * * * less by the said $1,500.” • The court at Special Term, as appears from the opinion, reached the conclusion that there was no allegation in the complaint that plaintiff loaned $5,000 to Newman ; that that was the- condition of the bond and the allégations-as to the delivery of the note by Newman and acceptance by plaintiff were not equivalent to an allegation that the plaintiff loaned Newman $5,000, for which reason the complaint was defective so far as any attempt was made to set out a common-law averment of performance, but that the 9th paragraph of the complaint might be construed as having alleged performance under section 533 of the Code of Civil Procedure. I am of the opinion that the 9th paragraph of the complaint does not allege performance under the section of the Code referred to. This section of the Code provides that in pleading the performance of a condition precedent in a contract, it is not necessary to state the facts constituting performance, but the party may state generally that he, or the person whom he represents, has duly performed all the conditions on his part. When the 9th paragraph of this complaint is carefully considered, I am unable to discover where there is any allegation in it that the plaintiff has duly performed all the conditions on its part to he performed; at most there is an allegation of general performance, and this, I think, insufficient. However, I am of. the opinion, under the liberal, system of pleading which now prevails, that the complaint states a cause of action irrespective . of the 9 th paragraph. It shows that Hew-man duly executed • and delivered to the plaintiff, for value ■ received, his promissory note,- by which’ he promised to pay to the plaintiff, at a time stated, $5,000, and that it was to secure'the payment of this note, that the bond in question was given. -Some-effect must be given to the words' “ duly executed and delivered,” as well as “ for value received.” The note was for $5,000. This is the amount which Hewman promised to pay for value received. - This necessarily implies, as it seems to me, that that amount was loaned, and certainly so when this. allegation is taken' in connection with the other-allegation that Hewman had, prior to the commencement of the action, “ wholly failed to discharge and pay the said indebtedness of $5,000.” The judgment appealed from, therefore, should 'be affirmed, with costs, with leave to the defendant to withdraw the demurrer and interpose an answer on payment of the costs in this court and-in the court below. Patterson, P. J., Soott and Lambert,- JJ., concurred.; Houghton, , J., dissented. Judgment affirmed, with costs, with leave to defendant to withdraw demurrer and to answer on payment of costs in this court and iff the court below. Order filed.