People v. . Backus , 117 N.Y. 196 ( 1889 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] No citation of authorities is needed to show that the contracts of sureties are to be construed like other contracts so as to give effect to the intention of the parties. In ascertaining that intention we are to read the language used by the parties in the light of the circumstances surrounding the execution of the instrument, and when we have thus ascertained their meaning we are to give it effect. But when the meaning of the language used has been thus ascertained, the responsibility of the surety is not to be extended or enlarged by implication or construction, and is strictissimi juris.

After the contract system in the state prisons was abolished, and manufacturing therein could be done only on state account, the amount of money deposited in this bank by the agent and warden largely increased, and it is now claimed on behalf of the defendants that their responsibility as sureties was largely extended beyond what was contemplated at the time of the execution of their guaranty, and that they are, therefore, discharged.

By the statutes in force at the time of the execution of the bond and guaranty, the agent and warden of the prison was required to deposit all the moneys received by him from any source in the bank. It is not reasonable to suppose that the sureties, when they signed their guaranty, had in mind the particular source from which the agent and warden received the money. They must have known that they became responsible for all the moneys, from whatever source, coming into his hands to be deposited. It cannot be supposed that they had in mind that the system of labor then in force at the prison would remain unchanged for an indefinite time, or that they cared anything about it. Much stress is laid upon the words in the bond, "certain moneys," which had been and were proposed to be deposited. We think those words have reference to the moneys to be deposited by the agent and warden of the prison, as distinguished from other moneys of the state. They were intended to point out the source from which the moneys of the state to be deposited should come; and the words "such deposits," used later in the bond, have reference to the deposits to be made by the agent and warden of the prison. So, the bond, in the most general terms, covers and applies to all the money to be deposited in the bank, under the direction of the comptroller of the state, by the agent and warden of the prison. The words "certain moneys" and "such deposits" do not indicate that the parties then had in mind the source from which the agent and warden should receive his money or the particular moneys which he had theretofore deposited. But they manifestly have reference to all the moneys which, under the direction of the comptroller, he might deposit in the bank. The bank desired to get all the deposits it could, and the defendants, who were directors and officers of the bank, desired to secure all the deposits. It cannot be supposed that they contemplated, at the time they signed their guaranty, that their liability was to be limited or restricted to the amounts which had been previously deposited, or that those amounts had any influence whatever upon their action. They must, therefore, be held to the plain language of their guaranty, and, in holding that, it covers moneys deposited subsequently to 1884, we do not extend their responsibility by implication or construction, but simply hold them to the responsibility plainly expressed in the language of the bond and the guaranty.

It is still further claimed, on the part of the defendants, that they are discharged from any liability on their guaranty on account of the extension of the existence of the corporation in 1883, before any default on the part of the bank. And for this contention the learned counsel for the defendants cites:Thompson v. Young (2 Ohio, 334); Union Bank v. Ridgely (1 H. G. 324); Bank of Washington v. Barrington (2 Pa. 27);Brown v. Lattimore (17 Cal. 93). None of those cases are precisely like this in their circumstances, but, so far as they uphold the contention of the defendants, we are quite unwilling to follow them. The contrary doctrine was held in Exeter Bank v. Rogers (7 N.H. 21); and we think our decision in NationalBank of Poughkeepsie v. Phelps (97 N.Y. 44), is ample authority for the maintenance of this recovery, notwithstanding the extension of the corporate existence of the bank. In the latter case, under the provisions of the national banking act, and of chapter 97 of the Laws of 1865, the state bank was transformed into a national bank, and it was held to be but a continuance of the same body under a changed jurisdiction; that between it and those who had contracted with it, it retained its identity and might, as a national bank, enforce contracts made with it as a state bank; that where a state bank, at the time of its change to a national bank, held a continuing guaranty of loans made by it upon the strength of which it had made loans, and after the change had made further advances, an action was maintainable by the national bank upon the guaranty, and that the guarantor was liable for the loans made, both before and after the change. Here a new corporation was not formed; but there was a mere prolongation of the existence of the same corporation whose corporate identity was not changed or lost. The bank which defaulted was the same bank for which the defendants became bound. There were not two banks in succession, but all the time one bank. Its charter was amended so as to extend its existence; and in the original national banking act (§ 67), it was provided that congress could, at any time, "amend, alter or repeal this act." It would certainly be a very inconvenient rule to hold that all the contracts of sureties to the bank, and of sureties by the bank to other persons, should be destroyed by every material change or alteration in its charter. The contract was entered into by the sureties with knowledge of this law, and it became a part of their contract as if they had stipulated that the changes or alterations might be made. The act of 1882 was a mere amendment or alteration of the previous banking act.

We do not deem it important to consider the effect that should be given to the fact that these various defendants, as officers of the bank, procured the extension of its existence, of which they now seek to take advantage.

For the reasons we have already given, and those so well expressed in the opinion of the learned referee before whom the case was tried, we think the judgment should be affirmed, wiih costs.

All concur.

Judgment affirmed.