Queen City Bank v. Brown , 82 N.Y. Sup. Ct. 259 ( 1894 )

HAIGHT, J.

This action was brought to recover the amount due ■on promissory note made by the defendant M. Fillmore Brown, indorsed by the defendant Libbie T. Brown, and discounted by the plaintiff. The defendant Libbie T. Brown did not appear or answer. The defendant M. Fillmore Brown answered, setting up a •counterclaim in which he alleged that the plaintiff, in discounting this and other notes, had unlawfully and wrongfully compelled him to pay, for the use of the money, a greater sum than the rate of interest allowed by law, and that by reason thereof the plaintiff had become indebted to him in the sum of $45.46, which amount he desired to counterclaim upon the amount due upon the note, and thereupon he offered to allow the plaintiff to take judgment against him for the balance due upon the note. This offer was accepted by the plaintiff, and judgment entered against the defendant M. Fillmore Brown for the sum of $286.50, and against defendant Libbie T. Brown for the sum of $329.80. Thereupon a motion was made to correct the judgment by reducing the recovery against Libbie T. Brown to the amount of the recovery against M. Fillmore Brown. "The special term ordered that the defendants, upon payment of the amount of the judgment entered against M. Fillmore Brown, with the interest thereon, to the plaintiff or its attorney, within 10 days from the service of the order, should receive satisfaction and discharge of the judgment, but, if not so paid, the motion was denied, with $10 costs to the plaintiff. From this order the plaintiff appealed.

We do not understand that the relief asked for under the motion was discretionary with the special term, and it therefore had no right to impose the condition embraced in the order. But the defendants have not appealed. Therefore, the order may be permitted to stand, if they were entitled to the modification of the judgment asked for. It appears that the defendant Libbie T. Brown was the indorser, and as such became surety for the defendant M. Fillmore Brown, who was the maker of the note, and primarily liable for its payment. If she is compelled to pay the amount of the note, she has a right to recover the amount so paid from the principal. But her principal has agreed with the plaintiff that the amount of his claim for unlawful interest collected from him by the plaintiff should be deducted from the amount of the note, and that judgment taken against him should be only for the balance due. If she is therefore compelled to pay the full amount of the note, and he to reimburse her for the amount so paid, he is thus deprived of the benefit of his agreement, and of his right of action against the plaintiff. We do not understand that this can be done. It is quite possible that l^is counterclaim, as pleaded, could not have been allowed in that action, for the reason that his claim was in the nature of a penalty. But the plaintiff, by allowing it, and accepting his offer, in effect credited that amount upon its claim upon the note, thereby reducing it to the amount for which judgment was entered against him. We understand the rule to be that, when the principal and surety are sued together, a successful recoupment by the principal inures to the benefit of the surety, even though the surety could not, if sued alone, avail himself or herself of the defense. Springer v. Dwyer, 50 N. Y. 19-22; Gillespie v. Torrance, 25 N. Y. 306. It follows that the defendants were entitled to the relief asked for in their motion, and that therefore the order should be affirmed, with $10 costs and disbursements. All concur.