Foote, J.:
The ground upon which a verdict in favor of defendant was directed is that by the contract between the two banks [328]*328the liquidation was to be performed and completed by the German Bank; that defendant and his co-obligors on the guaranty agreement were entitled to such complete performance by the German Bank before they became hable and that performance by its receiver, or assignee, did not fulfill the contract; also that the guaranty was to the German Bank alone and was not assignable, or at least until after complete performance by it.
These same grounds are urged here to sustain the judgment. No doubt the guaranty agreement and the liquidation agreement should be read together to ascertain the intent of the parties to the former. Without quoting the liquidation agreement in full it will be sufficient to summarize the provisions to be performed by the German Bank. The agreement begins with recitals to the effect that it has been thought desirable by the officers and directors of the Metropolitan Bank that it should go into a voluntary liquidation and thereby avoid the expenses incident to a receivership, and that party of the second part (German Bank) is willing to undertake such liquidation upon the terms thereinafter stated. The agreement then provides that the Metropolitan Bank pledges to the German Bank “ all and singular its assets, property and effects, of every name, nature and kind, as security for the advance hereinafter specified.” The German Bank agrees that it will advance to the Metropolitan Bank sufficient moneys to pay all its depositors in full; also such sums as shall be needed for the purpose of carrying certain real property in the city of Buffalo owned by the Metropolitan Bank, but subject to incumbrances, but not including the principal of these incumbrances. For all these advances the German Bank is to receive interest at the rate of six per cent per annum until reimbursed, and the sum of $20,000 “for its services in the matter of such liquidation.” It agrees to use due diligence in the management of the property so pledged to it and in the conversion of the assets, the same to be made as rapidly as can be done without undue sacrifice, and its board of directors is at all times to have the controlling voice as to the method of such conversion. Mr. Dilcher, the president of the Metropolitan Bank, is to be employed to assist in the conversion of the assets upon a salary at the rate [329]*329of $4,000 per year to be paid out of these assets, as are also the necessary attorneys’ fees which may be incurred. Also, “ Each of the parties shall devote its best energies to the conversion of such assets as speedily as possible, having due regard to the avoidance of sacrifice with respect thereto.’’ The German Bank is given the custody of the books and papers of the Metropolitan Bank and the latter is to receive no further deposits, and agrees that the influence of its officers shall be directed to secure to the German Bank the accounts of its depositors. No receivership of the Metropolitan Bank is to be applied for without the consent of the German Bank, “ nor shall any of the assets handed over to it or pledged to it be taken from its possession, except through conversion, until it shall have been fully paid for all sums theretofore advanced by it, including interest thereon and its compensation as herein-before fixed.’’ The Metropolitan Bank agreed to change its place of business to the banking office of the German Bank. The final clause is this: “Eleventh. The party of the first part [Metropolitan Bank] agrees that it will procure and deliver to the party of the second part a proper guaranty of certain of its directors and stockholders against any and all loss which it may in any wise sustain by reason of any advance by it made, pursuant to this agreement. No such guaranty shall render any one director liable for the engagement of another, nor for more than the par value of his stock.’’ Both agreements bear date August 10, 1901.
At the time of the appointment of the receiver of the German Bank, December 21, 1904, there had been realized from the liquidation $671,831.26, and it had advanced to pay depositors $792,284.12. The receiver thereafter realized $3,459.26, and the plaintiff after it became purchaser of the German Bank assets realized the further sum of $34,122.50. The final disposition of assets took place on October 13, 1908, when plaintiff sold what remained at public sale and realized therefor $5,000.
Both parties seem to concede that upon the passing of the German Bank into the hands of a receiver and its dissolution the liquidation provisions of the contract came to an end and were thenceforth impossible of performance, that the services contracted for were those of the German Bank alone, and that no receiver or assignee could take its place or [330]*330fulfill its obligations. Assuming that to be so, the question arises as to the effect of the civil death of the German Bank upon the liability assumed by the defendant and his associates under the guaranty agreement.
Defendant contends that he became absolutely discharged from liability, that the paper he signed was a special guaranty running to the German Bank alone, that under it he could not be made liable until a complete performance by the German Bank and a complete liquidation by it and no one else of the-Metropolitan Bank assets.
On the other hand, it is the contention of the plaintiff that the guaranty agreement was not a technical guaranty but an original promise to indemnify, or in the nature of insurance, which would not be released by the dissolution of the German Bank, or if construed as a technical guaranty, still that defendant and his associates were not entitled to be relieved from liability by the application of technical rules pertaining to mere voluntary sureties or guarantors, because they were stockholders and directors of the Metropolitan Bank, having a personal interest in the economical and efficient liquidation of its assets, whereby a surplus might be realized to them as stockholders or their statutory and constitutional liability as stockholders for debts of the bank avoided or minimized.
The question is not free from difficulty, but we have reached the conclusion that defendant’s contentions should be sustained.
At the time of the dissolution of the German Bank it had no cause of action against defendant or his coguarantors. Its receiver acquired no more than it had. He acquired even less for he did not step into its shoes as liquidator and his only right to deal with the assets or even to their possession was because of the right of the German Bank as pledgee to which he no doubt succeeded. As liquidator the German Bank was vested with a greater discretion and latitude in dealing with the assets than a mere pledgee who could dispose of uncollected assets only by public sale and who is otherwise limited and controlled in his action by statute. As the receiver did not have the wider powers and greater discretion of liquidator, he could not and did not transfer any such powers to plaintiff. Those powers have, therefore, never [331]*331been exercised over these assets since the powers of the German Bank came to an end. An important, and what defendant has a right to regard as an essential part of the contract between the two banks has not been performed and is now impossible of performance.
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Foote, J.:
The ground upon which a verdict in favor of defendant was directed is that by the contract between the two banks [328]*328the liquidation was to be performed and completed by the German Bank; that defendant and his co-obligors on the guaranty agreement were entitled to such complete performance by the German Bank before they became hable and that performance by its receiver, or assignee, did not fulfill the contract; also that the guaranty was to the German Bank alone and was not assignable, or at least until after complete performance by it.
These same grounds are urged here to sustain the judgment. No doubt the guaranty agreement and the liquidation agreement should be read together to ascertain the intent of the parties to the former. Without quoting the liquidation agreement in full it will be sufficient to summarize the provisions to be performed by the German Bank. The agreement begins with recitals to the effect that it has been thought desirable by the officers and directors of the Metropolitan Bank that it should go into a voluntary liquidation and thereby avoid the expenses incident to a receivership, and that party of the second part (German Bank) is willing to undertake such liquidation upon the terms thereinafter stated. The agreement then provides that the Metropolitan Bank pledges to the German Bank “ all and singular its assets, property and effects, of every name, nature and kind, as security for the advance hereinafter specified.” The German Bank agrees that it will advance to the Metropolitan Bank sufficient moneys to pay all its depositors in full; also such sums as shall be needed for the purpose of carrying certain real property in the city of Buffalo owned by the Metropolitan Bank, but subject to incumbrances, but not including the principal of these incumbrances. For all these advances the German Bank is to receive interest at the rate of six per cent per annum until reimbursed, and the sum of $20,000 “for its services in the matter of such liquidation.” It agrees to use due diligence in the management of the property so pledged to it and in the conversion of the assets, the same to be made as rapidly as can be done without undue sacrifice, and its board of directors is at all times to have the controlling voice as to the method of such conversion. Mr. Dilcher, the president of the Metropolitan Bank, is to be employed to assist in the conversion of the assets upon a salary at the rate [329]*329of $4,000 per year to be paid out of these assets, as are also the necessary attorneys’ fees which may be incurred. Also, “ Each of the parties shall devote its best energies to the conversion of such assets as speedily as possible, having due regard to the avoidance of sacrifice with respect thereto.’’ The German Bank is given the custody of the books and papers of the Metropolitan Bank and the latter is to receive no further deposits, and agrees that the influence of its officers shall be directed to secure to the German Bank the accounts of its depositors. No receivership of the Metropolitan Bank is to be applied for without the consent of the German Bank, “ nor shall any of the assets handed over to it or pledged to it be taken from its possession, except through conversion, until it shall have been fully paid for all sums theretofore advanced by it, including interest thereon and its compensation as herein-before fixed.’’ The Metropolitan Bank agreed to change its place of business to the banking office of the German Bank. The final clause is this: “Eleventh. The party of the first part [Metropolitan Bank] agrees that it will procure and deliver to the party of the second part a proper guaranty of certain of its directors and stockholders against any and all loss which it may in any wise sustain by reason of any advance by it made, pursuant to this agreement. No such guaranty shall render any one director liable for the engagement of another, nor for more than the par value of his stock.’’ Both agreements bear date August 10, 1901.
At the time of the appointment of the receiver of the German Bank, December 21, 1904, there had been realized from the liquidation $671,831.26, and it had advanced to pay depositors $792,284.12. The receiver thereafter realized $3,459.26, and the plaintiff after it became purchaser of the German Bank assets realized the further sum of $34,122.50. The final disposition of assets took place on October 13, 1908, when plaintiff sold what remained at public sale and realized therefor $5,000.
Both parties seem to concede that upon the passing of the German Bank into the hands of a receiver and its dissolution the liquidation provisions of the contract came to an end and were thenceforth impossible of performance, that the services contracted for were those of the German Bank alone, and that no receiver or assignee could take its place or [330]*330fulfill its obligations. Assuming that to be so, the question arises as to the effect of the civil death of the German Bank upon the liability assumed by the defendant and his associates under the guaranty agreement.
Defendant contends that he became absolutely discharged from liability, that the paper he signed was a special guaranty running to the German Bank alone, that under it he could not be made liable until a complete performance by the German Bank and a complete liquidation by it and no one else of the-Metropolitan Bank assets.
On the other hand, it is the contention of the plaintiff that the guaranty agreement was not a technical guaranty but an original promise to indemnify, or in the nature of insurance, which would not be released by the dissolution of the German Bank, or if construed as a technical guaranty, still that defendant and his associates were not entitled to be relieved from liability by the application of technical rules pertaining to mere voluntary sureties or guarantors, because they were stockholders and directors of the Metropolitan Bank, having a personal interest in the economical and efficient liquidation of its assets, whereby a surplus might be realized to them as stockholders or their statutory and constitutional liability as stockholders for debts of the bank avoided or minimized.
The question is not free from difficulty, but we have reached the conclusion that defendant’s contentions should be sustained.
At the time of the dissolution of the German Bank it had no cause of action against defendant or his coguarantors. Its receiver acquired no more than it had. He acquired even less for he did not step into its shoes as liquidator and his only right to deal with the assets or even to their possession was because of the right of the German Bank as pledgee to which he no doubt succeeded. As liquidator the German Bank was vested with a greater discretion and latitude in dealing with the assets than a mere pledgee who could dispose of uncollected assets only by public sale and who is otherwise limited and controlled in his action by statute. As the receiver did not have the wider powers and greater discretion of liquidator, he could not and did not transfer any such powers to plaintiff. Those powers have, therefore, never [331]*331been exercised over these assets since the powers of the German Bank came to an end. An important, and what defendant has a right to regard as an essential part of the contract between the two banks has not been performed and is now impossible of performance. Assuming, as we do, that the instrument which defendant signed is a special guaranty to the German Bank and to no one else, that it is not an original agreement of indemnity but collateral to the primary liability of the pledged assets, we think the contract is to be construed strictissimi juris and that defendant has the rights of a surety. He is entitled to strict performance of the liquidation contract before he can be subjected to liability. His guaranty is that the assets will be sufficient to reimburse the German Bank for its advances, provided they are handled, nursed and finally liquidated by it with the aid of its organization and resources and the advantage of the new relation it was expected to sustain as bankers for the persons owing the obligations to be liquidated. Defendant may well have assumed that debtors so situated would make greater effort to pay the German Bank than a receiver or a purchaser on speculation. The case is in principle like Evansville Nat. Bank v. Kaufmann (93 N. Y. 273). Nor is defendant’s position as surety destroyed or weakened by the fact that he had some personal interest to serve in the liquidation. His interest and that of his cosureties as stockholders was relatively small. Altogether they had little more than one-quarter of the shares of the Metropolitan Bank. They assumed a possible liability, nearly three-fourths of which would have fallen upon the other stockholders but for these contracts. In this respect the case is to be distinguished from those where similar contracts made by the sole or principal owners of corporations have been held not to entitle them to the rights of sureties because made for their own benefit. (Winne v. Mehrbach, 130 App. Div. 329; Guardian Trust Co. v. Peabody, 122 id. 648; affd., 195 N. Y. 544.)
We think the case was rightly disposed of at the trial, and that the judgment and order should be affirmed.
All concurred.
Judgment affirmed, with costs.