Amsterdam Savings Bank v. Marine Midland Bank, 39 N.Y.2d 983 (1976)
Sureties bound by separate instruments are not considered co-sureties with a right to contribution unless they are bound for the same debt.
Summary
This case addresses the right to contribution among co-guarantors. The New York Court of Appeals held that separate instruments of guarantee do not automatically establish co-suretyship. For a guarantor to prevail on a claim for contribution, they must demonstrate that their obligation secured the same debt as the other guarantors. The fact that separate guarantees contain open-ended collateral provisions is insufficient to establish co-suretyship if the underlying debts and principals differ.
Facts
In 1957, Yavers executed a guarantee. Also in 1957, Druce and Mandell executed a separate guarantee. In 1964, Druce and Mandell, as principals, obtained a $15,000 loan from Amsterdam Savings Bank and pledged a bond as security. Amsterdam Savings Bank sought to establish that Yavers was a co-guarantor with Mandell and Druce on the same debt, so that they could seek contribution from Yavers’s assignor, Marine Midland Bank.
Procedural History
The case originated in a lower court. The Appellate Division’s order was appealed to the New York Court of Appeals.
Issue(s)
Whether Yavers was a co-guarantor with Mandell and Druce on the same debt such that contribution was required.
Holding
No, because the separate instruments of guarantee did not establish that they secured the same debt. “[T]here would be no right to contribution among sureties unless it be found that they are bound as sureties for the same debt.”
Court’s Reasoning
The court reasoned that a presumption of co-suretyship exists when sureties are bound by the same instrument. However, this presumption does not apply when sureties are bound by different instruments. In such cases, a right to contribution arises only if the sureties guaranteed the same debt. The bond pledged in 1964 secured a distinct $15,000 loan to Mandell and Druce as principals. This obligation differed from Yavers’s obligation, which was created seven years earlier. The court found that the open-ended collateral provisions in both instruments were insufficient to establish that the instruments related to the same debts owed by Amco Financial. The court stated: “[T]he open-ended ‘collateral’ provisions in the 1957 and 1964 instruments are insufficient to overcome the distinction between different debts with different principals.”