Meyn v. Schutte
| Decision Date | 26 February 1959 |
| Citation | 20 Misc.2d 471,186 N.Y.S.2d 965 |
| Parties | Fred MEYN, Plaintiff, v. Henry SCHUTTE and Lena Schutte, Defendants. Henry SCHUTTE and Lena Schutte, Defendants and Third-Party Plaintiff, v. Ralph O. ANDERSON and Nick Koster, Third-party Defendants. |
| Court | New York Supreme Court |
Caragol & Carson, Floral Park, for plaintiff.
McLean, Ferris, Ely & Fain, New York City, for defendants Schutte.
Mebel & Sessa, Brooklyn, for third-party defendant Anderson.
These are three motions for summary judgment. The plaintiff Meyn moves for judgment in his action based on a series of promissory notes, of which 42 at $100 each still remain unpaid. The defendant Schutte moves for judgment on a claim over against the third-party defendants Anderson and Koster on a contract of indemnity, and Anderson moves for summary judgment on a counterclaim which he has asserted against Meyn.
The notes were originally given by Schutte to Meyn when he purchased a grocery store from him in 1953. The notes were secured by a chattel mortgage which provided, among other things, that in the event the business were to be sold, the entire unpaid balance would become due at the option of the mortgagee (Meyn).
Later in 1953 the business was in fact sold by Schutte to Anderson, the latter endorsing the notes, assuming the mortgage and agreeing to indemnify Schutte and hold him harmless from any and all claims in connection therewith. Meyn joined in this agreement in token of his assent to the sale.
In 1956 the business was again sold, this time by Anderson to Koster. Meyn again acquiesced in the sale and joined in the agreement. At the same time he released Anderson, but reserved his rights against Schutte. Schutte was not a party to this agreement and knew nothing of it.
Thereafter Koster defaulted on the notes and mortgage, the chattels were repossessed and sold by Meyn and a net amount of $190.60 was realized on the sale, in which amount it is conceded, the defendants are entitled to a set-off.
It is Schutte's contention that after the sale to Anderson he became a surety on the obligation, and that the subsequent release of Anderson by Meyn without his consent, under familiar principles of the law of suretyship, operated to discharge him as a matter of law. National Mechanics' Banking Ass'n v. Conkling, 90 N.Y. 116.
Meyn's response to the effect that Schutte cannot be a surety and Anderson the principal obligor because of their contrary position on the promissory notes, to wit: the former as maker and the latter as endorser, overlooks the controlling effect of the contract of indemnity, which as between the parties was of course competent to change their relationship.
For this same reason we must look elsewhere than in the Negotiable Instruments Law for the effect of the reservation of rights against Schutte. While Section 201, subd. 5 of that law provides for survival of liability of one secondarily liable, even after release of the primary obligor if rights are reserved against him, since in this case the rights do not flow from a negotiable...
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