Summary
In Foo Long v. American Sur. Co. (146 N.Y. 251, 253, 254) the court noted that, as to a surety's liability upon a bond for appeal, the question was "whether the original judgment was affirmed within the true intent and meaning of the undertaking."
Summary of this case from LaRocco v. Federal InsuranceOpinion
Argued May 2, 1895
Decided May 21, 1895
Charles J. Buchanan for appellant.
S.B. Brownell for respondents.
The undertaking bound the surety in case of the ultimate affirmance of the judgment. Its liability was not terminated by the reversal of the judgment by the General Term, but continued and was enforcible in case, on appeal to this court, the order of the General Term should be reversed and the original judgment affirmed. ( Robinson v. Plimpton, 25 N.Y. 484.) The only question presented by this record is whether the original judgment was affirmed within the true intent and meaning of the undertaking. The plaintiff Foo Long appealed to this court from the order of the General Term reversing the judgment against Chu Fong in his favor and granting a new trial, giving the usual stipulation. This court by its judgment and order, entered January 12, 1891, reversed the order and judgment of the General Term and affirmed the original judgment. The judgment recited that it was entered upon the stipulation of the parties to the appeal. It appears that the stipulation was made by the parties and their attorneys, and upon filing the stipulation, and upon application to the court made before the case was reached on the calendar, the court, without argument or consideration of the case upon its merits, directed the judgment above mentioned. Judgment in conformity with the direction of the court was entered in the court of original jurisdiction, and this action was subsequently commenced against the defendant on the undertaking. In substance the original judgment was reinstated by the consent of the parties thereto. Chu Fong, the defendant, in the judgment consented to forego the advantage secured by the reversal by the General Term, and to have restored the original judgment against himself, thereby relieving Foo Long from the hazard of his appeal and depriving himself of the chance of securing, by an affirmance in this court of the order of the General Term, judgment absolute in his favor. We are of the opinion that the verdict was properly directed for the defendant. The obligation of a surety is to be determined by the terms of his contract, construed if ambiguous in the light of the surrounding circumstances. The defendant, at the request of Chu Fong, executed the undertaking. It recites that Chu Fong, feeling aggrieved by the judgment against him, intends to appeal therefrom to the General Term. The appeal was taken to secure if possible a reversal of the judgment, and the undertaking was given to comply with the statute regulating appeals, and to stay proceedings until the hearing and decision of the appeal. It cannot be assumed there was any other purpose on the part of Chu Fong in giving the undertaking, or on the part of the defendant in executing it. The judgment and decision of the appellate court, in due course on the very case, was what the surety became obligated for, if the judgment appealed from should be affirmed. The plaintiff accepted the undertaking with full knowledge of its terms and purpose. The interests of the parties to the judgment were hostile, the plaintiff being interested to maintain his judgment and Chu Fong to reverse it. By giving the undertaking the latter was placed in a position to secure the decision of an appellate tribunal upon the validity of the judgment against him before further proceedings should be taken to enforce it. The defendant's undertaking was executed in view of the situation of the parties to the action at the time. The undertaking was to pay the judgment if it should be affirmed, or the appeal should be dismissed, and this, under the circumstances, referred to an affirmance or dismissal in the ordinary course of judicial procedure, and not an affirmance or dismissal by consent of parties. The plaintiff was entitled to proceed on the appeal according to the usual practice. He could take an affirmance of the judgment by default if the practice of the court permitted that to be done. But to construe the undertaking as permitting the parties to agree upon the judgment to be rendered would subject a surety to a hazard which could not, we think, have been contemplated. The present case is an apt illustration of the danger of such a construction. After the General Term had reversed the judgment Chu Fong, the principal, being insolvent, without the knowledge or consent of the surety, agrees with his adversary that he should prevail on his appeal from the order of the General Term, and they together procure a reversal of the order and an affirmance of the original judgment. It would sacrifice substance to form to hold that an affirmance obtained in this way was an affirmance within the true meaning of the undertaking. It was an affirmance by act of the parties, and not in any true or real sense an affirmance by judgment of the court. It was not the judicial sentence upon the rights of the parties contemplated by the undertaking. The question of fraud or collusion is not presented. But it seems difficult to escape the conviction that the purpose of the arrangement was to subject the defendant to liability on its undertaking. None of the cases on the construction of bonds indemnifying against suits or judgments, or upon appeal bonds, which have come to our attention, presents the peculiar feature of this case, of a consent by a party who has succeeded on the appeal taken by him to a reversal of the judgment in his favor and to a restoration of the original judgment against him.
It was held in Conner v. Reeves ( 103 N.Y. 527), which was an action on an indemnity bond given to a sheriff on the seizure of property, indemnifying him against all suits, actions or judgments, that a judgment rendered against him by consent in good faith was prima facie evidence against the surety in an action upon the bond. The words of the bond in that case were very comprehensive and there was no suggestion that the judgment exceeded the legal liability of the sheriff.
In the present case the undertaking related to a specific matter, namely, the action of the court, and the principal consented to judgment against him at the instance presumably of his adversary, although the General Term had determined that the judgment which he consented should be reinstated was without legal validity. The point that the defendant was indemnified for becoming surety by Chu Fong, and if compelled to pay the judgment has in its hands a deposit out of which it can obtain reimbursement is irrelevant. The case turns upon the true construction of the contract. We hold that the pro forma affirmance of the judgment against Chu Fong, based exclusively on the stipulation of the parties and without any hearing or adjudication by this court on the merits, was not an affirmance within the meaning of the undertaking.
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.