Bennett v. Draper , 69 N.Y. Sup. Ct. 524 ( 1891 )

Daniels, J.

The ground upon which the defendant’s liability was asserted in this action was a bond executed by her as a surety in January, 1881; and this isa copy of that bond: “Know all men by these presents, that we, John H. Draper and George T. ICellock, composing the firm of John H. Draper & Company, of the city of New York, as principals, and Frances S. Draper, of the same place, widow, as surety, are held and firmly bound unto H. C. Bennett & Company in the sum of forty thousand dollars, lawful money of the United States of America, to be paid to the said H. C. Bennett & Company, their successors or assigns; for which payment, well and truly to be made, we bind ourselves, our heirs, executors, and administrators, jointly and severally, firmly by these presents. Sealed with our seal and dated the 15th and 28th days of January, in the year one thousand eight hundred and eighty-one. Whereas, the said Johu H. Draper & Co. have borrowed, and expect, from time to time, to borrow, divers sums of money from the said H. 0. Bennett & Co., and are desirous of giving to H. 0. Bennett & Co. a continuing security for any moneys that the said firm of John H. Draper & Co. now owes, or shall at any time owe, said H. C. Bennett & Co., their successors and assigns, not exceeding the sum of twenty thousand dollars at any one time; and said H. C. Bennett & Co. having required said firm of John H. Draper & Co. to furnish such security: Now, the condition of this obligation is such that if the above-bounden obligors, their heirs, administrators, or executors, shall well and truly pay, or caused to be paid, to' the above-named obligees,'their successors or assigns, all sums, and every sum, of money, not, however, exceeding in the aggregate the sum of twenty thousand dollars, which shall at any time be due or owing from the said John H. Draper & Co. to the said obligees for or on account of any loans or advances made, or any credit granted, by the said obligees, their successors or assigns, to the said John H. Draper & Co., then the above obligation to be void; otherwise to remain in full force and virtue. It being expressly understood that this obligation is a continuing security for the sum of twenty thousand dollars, but that nothing herein contained shall be so construed as to require said obligees, their successors or assigns, to allow the indebtedness of John H. Draper & Co. to reach said sum of twenty thousand dollars, or to require said obligees, their successors or assigns, to loan or advance to said firm any sum whatever, or to grant them any credit or accommodation whatever.” When it was given, the firm of H. C. Bennett & Co., named in the bond, consisted of Hiram C. and Daniel H. Bennett. Hiram C. Bennett died on the 30th of November, 1884, and another person of the same name was then brought into the firm, and that firm continued to exist down to the time of the commencement of this action. The money for the recovery of which the action was brought, amounting to the sum of $13,500, and interest thereon, was loaned and advanced by this new firm to the firm of John H. Draper & Co., the principal debtors mentioned in the bond; and whether the firm advancing this money is entitled to recover it under the terms of the bond is the legal point presented for decision in this action.

There is no doubt as to the legal principles which each party has appealed to,—that the obligation of the defendant as a surety in the bond must appear to a reasonable degree of certainty to have been created by its language or provisions; and that, while the bond is to be strictly construed for the protection of the surety, it is still to have the fair import of its language ascertained for the benefit of the plaintiffs. Those principles have been enunciated repeatedly in the authorities, and may be said to be throughly well settled. People v. Pennock, 60 N. Y. 421; Ward v. Stahl, 81 N. Y. 406; Schmitz v. Langhaar, 88 N. Y. 503, 506; Douglas v. Reynolds, 7 Pet. 113. And it is equally as well settled that the contract of a surety entered into for the benefit of one or more ascertained parties cannot, without language contained in it indicating that to have been the intention, be so far extended as to become a security for the benefit of others. Barns v. Barrow, 61 N. Y. 39. This bond, it is true, by the repeated use of the phrase “successors or assigns,” does in a measure sustain the contention of the plaintiffs that it was not only intended to be a security to the firm of Draper & Co., as it was then constituted, but also as it might afterwards be changed in its membership. But still the controlling purpose of the instrument appears to be to secure loans of money made by the firm of H. C. Bennett & Co., as that firm was constituted at the time when the bond was executed and delivered. In the first paragraph of the "bond this limitation or restriction is clearly indicated, for the other obligors, as well as this surety, declared themselves to be held and bound to the firm of H. C. Bennett & Co., and no other firm, even though engaged in business under that name, when it should be constituted by different members; and it was this firm which it was intended, according to this portion of the bond, to advance the money for which it was given as a security for the firm of Draper & Co. And it was only for money advanced by that firm to these obligors that the obligation was declared to be to pay the firm advancing the money, or their successors or assigns. This was not an obligation to pay money advanced by the successors or assigns of the firm, but it was an obligation to pay these successors or assigns such money as should be advanced by the firm of H. C. Bennett & Co.; and that was designed to include only that company as it then existed. In this respect this paragraph of the bond is clear and explicit, disclosing the intention of the surety at least to have been to become obligated to the firm for the money that it might advance to the other obligors, and to pay that money to that firm, or to its successors or assigns; and this expressed restriction in this manner made is an important circumstance, indicating the intention which should govern the construction of this instrument; for, as a general proposition, it lias-been stated to be the law, and seems to be well sustained by the authorities, where there may be repugnance or incompátible provisions or clauses contained in an agreement, that the earlier shall prevail,—the rule in this respect differing from that which is applied to the construction of a will. 2 Pars. Cont., (6th Ed.) 513, and cases cited in the note.

The recital following the first paragraph of the bond is equally as restricted, for it states the fact to be that the firm of Draper & Co. had borrowed, and expected from time to time to borrow, money from the firm of H. C. Bennett & Co., and were desirous of giving to this latter firm a continuing security for any moneys that Draper & Co. then owed, or should at any time owe, the firm of H. C. Bennett & Co., their successors and assigns, not exceeding the sum of $20,000 at any one time, and that H. C. Bennett & Co. had required Draper & Co. to furnish this security. This recital is further evidence that the parties intended to deliver th.e bond only as a security for the moneys which H. C. Bennett & Co. should'loan or advance to Draper & Co., and, in case of a liability arising in favor of Bennett & Co., that then the liability should still continue in their favor, or might be passed over by them to their successors and assigns. The intention evinced is still to restrict the security to such loans as should be made by H. C. Bennett & Co.; and the condition of the bond, although somewhat differently expressed, is required to be restricted within the operation and effect of these preceding provisions in order to maintain and carry out the intention of these parties. By this condition the obligors in the bond bound, themselves to pay to the obligees, their successors or assigns, all and every sum of money, not exceeding the aggregate mentioned, which should at any time be due or owing from Draper & Co. to the obligees for or on account of any loans or advances made or credit granted by the obligees, their successors or assigns. An extended .construction of this language, without reference to what was previously made a part of the bond, would include loans by the successors or assigns of the firm of Bennett & Co. But, inasmuch as the preceding portions' of the bond were clearly restricted to loans and advances made only by Bennett & Co., what was probably intended to be secured by the additional language contained in the condition was the protection of the successors or assigns of the firm in their right to collect such loans and advances as should be made by their predecessors who were members of the firm when the bond was given; for no intention has been expressed in the condition to enlarge the construction of what had been previously stated to define the obligations this surety was designed to take upon herself. The succeeding clause of the bond also indicates this to have been what was intended by the parties to it; for it is there added that the bond should not be so construed as to require Bennett & Co., or their successors or assigns, to allow the indebtedness of Draper & Co. to reach the sum of $20,000, or to require the obligees, their successors or assigns, to loan or advance said firm any sum whatever, or grant to them any credit or accommodation whatever. This paragraph in no manner enlarges the obligation previously created and declared. And to so far extend it as to include loans made by the new firm within the scope of the bond, other and more decisive language, evincing that purpose, should have been inserted in the instrument, if that was what was intended to be accomplished by it. The design which the parties appear to have had in view was to secure the loans or advances which Bennett & Co., as that firm existed at the time when the bond .was delivered, should make to Draper & Co., and to obligate the surety, as well as the principal debtors, to repay those advances either to the firm of Bennett & Co. as it then existed, or to their successors or assigns, which might become erititied to demand and receive the money so advanced. It would be an unauthorized extension of the controlling paragraphs contained in this bond to so enlarge it by anything in this ambiguous and uncertain manner expressed in the condition as to include within the security the advances made to the principal debtors by the new firm. The judgment sustaining the demurrer accordingly appears to be right, and it should be affirmed, with costs.

Van Brunt, P. J„ concurs.