Healy v. Preston

The statement for the judgment in favor of Carrington complies fully with the requirement of the first subdivision of § 383 of the Code. It states the amount for which judgment may be entered, and authorizes the entry of a judgment therefor. The next following words— “this confession of judgment is for a debt justly to grow due to ” (blank) “ and,” are inapplicable to the case, as it after- ' wards appears in-the statement that the purpose of the judgment was to secure the plaintiif against a contingent liability; and probably the explanation for their appearance in the statement is, that, in preparing it, a printed blank, adapted to the second subdivision of the section named, relating to a case of money due or to become due, more particularly than to the third, which relates to a case like the present, was used. They might, and, for greater clearness and a lawyerlike mode of doing business, should have been omitted; but I do not perceive that they do any harm, as it is immediately added, “the following is a statement of facts upon which said confession of judgment is founded.” The latter words alone were sufficient to introduce and apply what follows.

In regard to the contingent liability, against which it was intended to secure the plaintiif, it is stated to be the indorsement by the plaintiif, for the benefit of the defendant, of a note for $2,000, dated about the 14th of April, 1856, made by the defendant, payable at a bank, naming it, and due on or about the 14th of July, 1856. It is not stated to whom the note was made payable; but I think the fair inference is, that it was payable to the plaintiif, who indorsed it, in the absence of anything showing there was any other party to the note. From indors*24ing it for the benefit of the defendant, it must be implied that the note, when indorsed, was delivered to the defendant, to be used by him. Nor is it. stated that the note had been negotiated by the maker, which was essential to give it vitality, it being accommodation paper; and the omission, it is strenuously urged, is fatal to the judgment as against subsequent judgment-creditors. It is insisted, that as subdivision 3, referred to, requires the facts constituting the liability to be stated, and as a transfer of the note was essential to liability on it, a statement of that fact was indispensable to make the judgment valid as against such creditors. But a contingent liability arose against the plaintiff by his indorsing and delivering the note to the defendant, and thereby lending his credit to the defendant, to be used at the defendant’s discretion without any other act of the plaintiff. He incurred a liability to the amount of the note, contingent on the note being negotiated by the defendant for value, for which purpose it was made, and his being duly charged as indorser. The liability before negotiation, was exposure by the loan of his name, to be used at the mere will of another, to a legal obligation upon a transfer of the note for payment of it; after transfer it would be on the note itself. This contingent liability upon a loan of credit, before the credit was actually used by the borrower, was, I think, one for security, against which a judgment by confession might be taken; and if so, a statement of the note, describing it, and of the fact of the indorsement for the benefit of the defendant, was all that was important, as it gives all the facts constituting the loan and liability. And it was proper to state the object to be to indemnify the plaintiff against all liabilities on the note, that being the ultimate purpose of the judgment.

If it was necessary for accommodation indorsers, and sureties of any kind, to wait until after the legal inception of the paper, or contracts, before taking security by confession of judgment, they would in many cases be precluded from resorting to that mode of indemnity at the time of lending their names, and placing their credit in the power of others.'

The policy of the provisions of the Code, as to the confession *25of judgment, in respect to guarding against fraud, does not appear to require that, in the case of accommodation paper, it should have been actually used before accommodation parties may be secured by a confession of judgment, and that the particular use ot it should be disclosed in the statement. Little, if anything, would be gained, in the way of preventing and securing against fraud, by requiring the disposition of the paper to be stated; and all reasonable means of accomplishing that object are provided for without it. The description of the paper, and the fact of the relation sustained to it by the plaintiff, afford all the protection against fraud that would be of substantial benefit. The plaintiff can use the judgment only for his security, and is at all times subject to be called to account in regard to it by subsequent judgment-creditors.

It is no ground for setting aside the execution on that judgment at the instance of a creditor, that the note had not become due; nor is the description of the judgment in the execution as having been obtained in an action, a substantial defect, it being clear that the proper judgment was.intended.

The remarks already made also apply to similar objections to those, considered, taken to the judgment and execution in favor of Healy. It is further objected to the statement for that judgment, that it expresses the confession to be for a debt due and to grow due, and does not show how much was due and how much to grow due. This discrimination is clearly made in giving the facts upon which the confession is founded; the amount of actual indebtedness and the amount of security are distinctly stated. Another objection to that judgment is, that the statement is not sufficiently full and particular in regard to the facts relating to the actual indebtedness. The language is, “ the sum of two hundred and thirty dollars is for grain purchased of the said plaintiff, William W. Healy, by the said Othniel Preston, on or about the 1st of April, 1856.” This expresses a sale by the plaintiff to the defendant for a specified sum, at a specified time, of grain. This is clearly sufficient, unless as to the omission to state the kind and quantity of grain, and as to that the case must be controlled by the deci*26sion in Schoolcraft agt. Thompson, in this district, at general term. (9 How. Pr. R. 61.) The kind and quantity of grain are no more material than the kind and quantity of goods, wares and merchandises sold and delivered, in the case of a debt thus arising, which this court, in the case cited, held need not be given in a statement for a judgment by confession, in order to uphold it as against a junior judgment-creditor.

The papers do not make- a case of actual fraud in the confession of the judgments.

I am, therefore, of opinion that the order at special term should be reversed, and that the motion to set aside the judgments and executións should be denied.