FIRST DEPARTMENT, JUNE TERM, 1898.

[Vol. 31. day of December, 1892, the note was not in fact given until after the fourth of December. This demand note was not given in renewal or in place of the notes then held, nor was it intended by that note to extend the time of payment of any other notes which fell due on the first of December, but it was given simply that the bank might have in its possession a note which was not in terms and necessarily overdue and thereby avoid the criticism of the bank examiners for carrying past due paper. The company paid $500 on that note and subsequently the other guarantors paid their proportionate amounts, leaving unpaid only the proportion which the defendant had agreed to pay by the terms of her guaranty. This action was brought to recover that proportion.

The defendant insists, in the first place, that the guaranty is not a continuing one; that it provided only for the payment of notes upon which money was actually advanced, and did not provide for or require the defendant to guarantee the payment of notes which were received in renewal of other notes, upon which the money had not been actually advanced. This contention is clearly erroneous. The consideration of the guaranty in terms is, that the bank shall loan to the company such sums as from time to time it may require, and the agreement is to guarantee the payment to the bank of all notes which the bank might receive from or discount for said company, and it is to pay to the bank any notes which might remain unpaid within a year from the date of the guaranty, not exceeding the sum of $10,000. This agreement had plainly in view the ordinary course of business between a bank and its customers, and clearly provided for such advances of money as might ordinarily be expected to be made by a bank to a person in business and requiring loans from time to time. The money was not to be advanced in one sum, but the agreement of the bank was to loan the company such sums from time to time as it might require. There was no limit to the purposes for which those loans might be made, and the bank was entitled to make them, not only for the purpose of being used in the business of the company, but for the purpose of renewing other loans which had previously been made by the discount of new notes. Money advanced for either of these purposes was clearly within the terms of the guaranty. The rule of construction of papers of this kind does not seem to be clearly understood. It has

App. Div.]

FIRST DEPARTMENT, JUNE TERM, 1898.

been claimed that all contracts of suretyship should be most strictly construed in favor of the surety. But that is not the rule. The rules to be applied in the construction of contracts of suretyship are precisely the same rules that are to be applied in the construction of any other contract between the parties. But when the construction has been ascertained, the application of the contract is not to be extended unduly against the surety and in favor of the principal, so as to hold the surety any further than is required by the express terms of the paper as construed under the ordinary rules. (Smith v. Molleson, 148 N. Y. 241.) The guaranty expired by its terms on the 4th day of December, 1892. The paper which was due at that time amounted to $10,500, and payment could have been demanded by the company on the first of December, and it at once could have proceeded to collect from the defendant her share of the amount which was then due upon the guaranty.

There can be no doubt that on the first of December the bank was in a situation to enforce the guaranty against those people who had signed it; but the defendant claims that by the giving of the note of December first, payable on demand after date, the term of payment of the paper was extended so that, as a matter of fact, on the fourth of December, when the guaranty, by its terms, expired, there was no unpaid paper then due, and, therefore, she was not liable. This note was dated on the 1st day of December, 1892. It was payable, by its terms, on demand after date and it became due at once under the Laws of Ohio. (Union Central Life Ins. Co. v. Curtis, 35 Ohio St. 357.) But even if it be said, as is claimed by the defendant, that because the note was due on demand after date, no demand could be made until the day after the date of the note, yet that construction would make the note payable on the second day of December. As a matter of fact, however, it appears that the note was given after the day of its date, and, it was due, therefore, like any other demand note, immediately upon its delivery, and it could have been sued at once. (Me Mullen v. Rafferty, 89 N. Y. 456.) It did not, therefore, operate to extend the time of payment or in any way discharge the surety. The seven original notes became due on the first day of December. There was no time

after that date in which this payment was not actually due and could

FIRST DEPARTMENT, JUNE TERM, 1898.

[Vol. 31.

not have been actually demanded and payment compelled, so that these notes were precisely within the terms of the guaranty as becoming due and remaining unpaid within one year from the 4th day of December, 1891. The court, therefore, at the Trial Term, was correct in the conclusion which it reached, that the defendant was liable to the bank for her proportionate part of her guaranty, which was the amount which it was permitted to recover.

It appears that after the commencement of this action the other guarantors, exclusive of the defendant, paid to the plaintiff the amount owing from the defendant. By that payment they clearly became subrogated to the rights of the bank against the defendant (Brandt on Guar. & Sur. § 269; Cuyler v. Ensworth, 6 Paige, 32; Townsend v. Whitney, 75 N. Y. 425, 430), and were entitled to receive from the bank the principal undertaking itself and to enforce as against the defendant the same right which the bank, the principal creditor, might have enforced. The interest of the bank was, therefore, transferred to them; and, pursuant to the express rule of the Code of Civil Procedure, the action might be continued in the name of the bank which was the original party. (Code Civ. Proc. § 756.)

The defendant had notice of the fact that the other guarantors had paid the amount claimed by the plaintiff upon this guaranty and sought to be recovered from her, and that they claimed to be subrogated to the plaintiff's rights and intended to continue the action in its name. If she had desired, she might have procured the other guarantors to be substituted as plaintiffs in the place of the bank; but, not having done this, she is not now in a situation to insist that the action should not proceed to judgment in the name of the original plaintiff. (McGean v. Metropolitan Elevated Ry. Co., 133 N. Y. 9.)

The judgment was clearly right, and should be affirmed, with

costs.

VAN BRUNT, P. J., PATTERSON and INGRAHAM, JJ., concurred. Judgment affirmed, with costs.

App. Div.]

FIRST DEPARTMENT, JUNE TERM, 1898.

JAMES E. LYON, Respondent, v. MARY BROWN, Appellant.

Evidence — stenographer's minutes not of themselves competent evidence in another action as to statements made by a witness declarations of an alleged agent.

Where, upon the trial of an action, the defendant denies that she has testified in a certain way in an action in another court, the stenographer's minutes of her testimony given on the previous trial are not in themselves competent evidence as to her statements contained therein, but such statements should be proved by the stenographer, who should be interrogated as to what the witness testified to, and in his answers he may make use of the minutes to refresh his memory.

The declarations of an alleged agent to a third party are not competent to establish, as against his principal, the fact of his agency.

APPEAL by the defendant, Mary Brown, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 22d day of November, 1897, upon the verdict of a jury, and also from an order entered in said clerk's office on the 15th day of November, 1897, denying the defendant's motion for a new trial made upon the minutes.

Norman J. Marsh, for the appellant.

A. G. N. Vermilya, for the respondent. PATTERSON, J.:

There are errors in the admission of evidence in this action for which the judgment must be reversed. The plaintiff's recovery was had upon the first cause of action set out in the complaint, it being for the balance of a sum of money alleged to be due on a sale by the plaintiff to the defendant of 650 shares of the Midvale Mining Company at the price of $2,500, which, it is alleged, the defendant promised and agreed to pay to the plaintiff. A credit of $500 on account is given in the complaint. On the trial of the cause the plaintiff's own testimony showed that he never had one word of conversation with the defendant, nor any writing from her in any way referring to the transaction of the alleged sale, but, on the contrary, the whole of it was a matter between himself and S. D. Brown, the defendant's husband. The plaintiff testified to the language of S. D. Brown in the negotiations ending in the sale, and

FIRST DEPARTMENT, JUNE TERM, 1898.

[Vol. 31. that the relator used the first person and always spoke of himself as the buyer. Under such circumstances it was incumbent upon the plaintiff to prove that S. D. Brown was the authorized agent of the defendant in the transaction out of which this cause of action arose, and that the sale was made to her. The plaintiff sought to prove that in all matters connected with the affairs of the mining company or dealings relating to that company or its securities, S. D. Brown was the agent and representative of his wife, and that he was so acting in this transaction. It was shown in a general way that the defendant held the legal title to the Midvale mining property, and that a corporation was formed to work that property; that S. D. Brown was connected with it, and that various transactions were had by him with many parties concerning that corporation and its stock, and the claim was made by the plaintiff that in all these transactions S. D. Brown was the representative and acted for his wife, and that all dealings with him were on that understanding. But respecting the specific transaction of the purchase of these shares, it was incumbent upon the plaintiff to bring it within the scope of a real authority from the defendant to her husband. Her answer contains a general denial of the allegations of the complaint as to this cause of action, and her testimony is explicit to the fact that she never authorized her husband to buy the shares, and that she never gave him authority to transact all her business. The plaintiff attempted to overthrow her testimony and to show that, in a judicial proceeding in another court and in another action, she had testified that her husband was her general agent, and was authorized to act for her in all her business. She denied having so testified; thereupon stenographer's minutes of testimony in the proceeding referred to were offered in evidence, and were received under objection and exception. The stenographer should have been interrogated as to what was testified to. He might have used those minutes to refresh his memory, but they could not be made original evidence and introduced as a document containing declarations or statements of the defendant.

But further, it is quite apparent that very prejudicial testimony was allowed to be given by the witness Peter B. Vermilya. He was permitted to testify, in substance, that S. D. Brown told him that he (Brown) was the defendant's agent in all business trans