Blossom v. Farnham

1 Cl. Ch. 158

• Court: New York Court of Chancery
• Decided: February 15, 1840
• Status: Published

Opinion

The Vice Chancellor.

Upon two points the testimony in this cause is not clear, or not absolutely clear.

1. The amount of labor actually performed by Rathbun upon Blossom’s house, and value of materials furnished therefor, up to Aug. 1, 1836. My ' judgment is, upon reading the testimony, that such amount was not equal to the amount of cash paid by Blossom to Rathbun upon that contract, up to that time, viz: $2,730.

2. Whether the suit against Rathbun and his sureties on the building note, was directed to be brought by Blossom or Farnham. My inference from the testimony is, that it must be deemed to have been brought by the direction, and at the request of Farnham. Blossom having obtained Farnham’s note, with a good endorser for the amount, had no further interest in the building note, except to have it speedily collected—to avoid the necessity of the renewal of the note given to him by Farnham, while Farnham had a vital interest in the building note, as he, himself, understood at the time it was directed to be put in suit after the settlement between him and Blossom.

There is no positive proof that Blossom agreed to prosecute this building note successfully to judgment, and in the absence of such proof, it must be assumed that its prosecution would be directed and controlled by the party who had the most interest in its collection, viz: Farnham.

A question which seems to be considered of importance in this cause, is whether the sureties for Rathbun on the building note were discharged from their obligation by the contract made between Blossom and Rathbun, of May 12,1836. If I can draw an inference from the fact that the plaintiff’s attorney suffered a non pros in the suit against the sureties on that note, I should suppose that the plaintiff’s attorney himself considered that the contract of May 12, was a sufficient defence, on behalf of the sureties. •If he came to such a conclusion, it seems to me he came to a conclusion clearly erroneous. Blossom became possessed of this building note, April, 9, 1836. This building note required Rathbun to do a specific amount of building within a reasonable time after receiving thirty days notice, and such notice was to be given as soon as the 1st November, 1836. The holder of this note had a right to call upon Rathbun to perform its conditions whenever he pleased, but he was not ‘bound to call upon him before the first of November. The sureties to the note become liable for Rathbun’s performance, during the whole extent of the contract. In May, 1836, the holder of the note makes a bargain with Rathbun to build for him, to the amount of $5,460, to be paid for as .the work progresses ; the three first payments in cash, and the building note to apply on the three last payments, From the prompt and rapid manner in which this work was done and in which it is known all Rathbun’s work was done, it was apparent that the building would be erected and paid for long before Nov. 1,1836. Rathbun had in fact earned by the contract a right to receive, and did receive thereon, in cash, three payments amounting to #2,730, within 20 days, the same energetic industry would have completed the whole contract in less than a month more. But Rathbun failed—that was his misfortune —the sureties misfortune—Blossom’s misfortune. It was the very event against which the sureties had guaranteed by putting their names to Rathbun’s paper. If Blossom, as holder of their obligation, had done nothing to release the sureties from their liability, the sureties could, of course, have no defence on that ground; and I cannot see that Blossom’s contract with Rathbun can, in any view, have the legal effect to work such release to the sureties.

This is the material ground set up by Farnham to show that his note given to Blossom, of Aug. 8, 1836, for $2,681 33 was fraudulently obtained, by the suppression of the fact, at that time, that a contract existed between Blossom and Rathbun which would operate to destroy the legal effect of the building note. The fact was suppressed, or rather it was not communicated, but if I am right, its legal operation would not be to destroy the building note and the liabilities of the sureties thereon; and consequently the omission to mention the fact, could have been no fraud upon Farnham. He was liable to Blossom as guarantor upon this building note. This was a good consideration for his note of 8th August, and Blossom having acquired the note fairly, could at that time have made such a contract as he pleased for its transfer to Palmer. If Blossom had undertaken to collect the building note against Rathbun an(j kjs gUreties, he might have been liable to Farnham for his negligence. But as I have at first re- , , , . , , marked, the testimony does not seem to warrant that ¡nference) an(j that will dispose of the question of costs of the non pros. If Rathbun had performed more work upon Blossom’s house, at the time of his failure, than Blossom had paid him for, over and above Blossom’s damage for delay, &c. that might have given Farnham an offset to the amount of the excess of work done by Rathbun over payments by Blossom. But the testimony does not seem to warrant me in the inference that there was any such excess.

If there was any such equitable offset in favor of Farnham, he could have availed himself of it in his answer. It was not necessary to resort to a cross bill for this purpose. A cross bill was not necessary to obtain a discovery from Blossom, as his answer on oath is waived. And it does not seem to be proper to mix up Palmer with the foreclosure suit. The cross bill must be dismissed with costs to be taxed. The complainant in the original bill must have a decree for the amount of his mortgage, and to save the expense and delay of a reference to a master, the court will compute the amount and direct the ordinary decree of sale for such an amount.