Davis v. Copeland ( 1875 )

Joseph F. Daly, J.

The limiting clause in the defendant’s bond as surety, viz.: “ This bond to be binding for one year •only from date,” must refer to the transactions between Gleason and the bank, although indefinite in its terms. Literally it would seem designed as a limitation of the legal effect of the instrument which, being a specialty, was binding for twenty years, but no such construction is claimed by defendant. The object of the bond was plainly to give Gleason credit at the bank, and enable him to have paper discounted and checks certified (Louisville Mfg. Co. v. Welch, 10 How. U. S. 461). Upon his failure within five days after maturity thereof to take up .and pay any paper discounted for him, the obligor in the bond was to become liable within the amount of his undertaking. It is claimed by defendant that the limitation of one year applies to the time of maturing of the paper discounted, but it may be more properly claimed by the other side that it applies to the •discounting of paper and certifying of checks. If the giving credit to Gleason were the object of the bond, there would be a considerable period before the expiration of the year in which no appreciable credit could be given in case all his paper was to mature within the year of the bond. In fact, certification of his checks could hardly be made by the bank if the condition of their recovering from the surety was, not the certifying within the year, but the payment on presentation within the year; and thus one object of the giving of the bond, certifying checks of Gleason, would be, by the terms of the bond itself, destroyed; since the presentation of the certified check for payment is a matter over which the bank would have no control. If the bond were intended to give Gleason credit at the bank, and it must be so considered, such a construction should be given to its terms as would best promote that object. In point of fact it would be indifferent to defendant whether his liability was to depend upon what paper matured within the year and was not paid, or what paper was discounted within the year maturing afterwards. His liability was limited in any event to $2,000, and he could always know, during the year and at the end of the year, what paper of Gleason’s was outstanding. There is no reason why we should be asked to incorporate in the bond a limitation not expressed in it; but it should be construed as if it read that the bond should be binding “ so far as the dealings of said Gleason with the said bank are concerned,” for one year only from date. The dealings of Gleason with the bank, as appears by the bond itself, were those of depositor and of customer needing the certification of his checks and the discounting of his paper, and it is reasonable to infer that when the defendant gave the bond, all parties intended the limitation to apply to a fixed period of dealing, and to no other matter or thing.

The other questions in the case do not require comment. The defense of usury was not available to any person, principal or surety in respect of a note made by, or bill accepted by, a corporation. The validity of the paper is not affected by the agreement to discount at a greater rate than seven per cent. (Rosa v. Butterfield, 33 N. Y. 665).

The judgment should be affirmed.

Charles P. Daly, Ch. J., concurred.

Loew, J., dissented.

Judgment affirmed.