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486), bonds (Sager v. Blain, 44 N. Y. 445), and certificates of deposit (Robinson v. Stewart, 97 Mich. 454, 56 N. W. 853).

[7] The statute at one time provided for the replevin of "beasts, or goods, or chattels of any person" (1 Revised Laws, 91), but all things so described have been carried into our present statute under the word "chattel," and the courts have brought under this statutory term things such as are usually defined choses in action-things dissimilar in nature and use from beasts, goods, and chattels. Why should a certificate of stock be regarded as a chattel and a liquor tax certificate not? It will not be asserted that a note negotiable may be replevined, and that a note nonnegotiable may not be. A nonnegotiable instrument is as useless in a thief's hands as a liquor tax certificate, and would probably cause the owner less damages. A liquor tax certificate is legally known as personal property, is capable of assignment, commonly used as proper collateral for loans, and is recognized as transferable as collateral security by the decisions and statute, and provision by statute made for the registration of the transfer and proving the same. If the plaintiff may not protect his property rights by recovering the possession of the certificate, the value of which ebbs day by day, how may he be protected then? In Matter of Lyman, 160 N. Y. 96, 54 N. E. 577, it was said:

"The holder may invoke the general rules of law for the protection of property in any proceeding having for its object the forfeiture or destruction of the right which the certificate confers."

That sentence means little, if the assignor may consume the res. The interlocutory judgment should be reversed, with costs, and the demurrer overruled, with costs. All concur.

SEXTON v. FENSTERER et al.

(Supreme Court, Appellate Division, First Department. January 10, 1913.) 1. CILLS AND NOTES (§ 121*)-PARTIES-PRINCIPAL, SURETY, and Guarantor. Under an arrangement whereby a drawer of drafts in Germany agreed to put New York bankers in funds 15 days before each draft was due, and they requested a Berlin correspondent to pay the drafts and to charge them on a general account, guaranteeing the correspondent against loss therefrom, the correspondent, on acceptance of a draft as between itself and the holder, became bound as a principal debtor, but as between itself and the drawer the drawer was the principal debtor.

[Ed. Note. For other cases, see Bills and Notes, Cent. Dig. §§ 255, 256; Dec. Dig. § 121.*]

2. Guaranty (8 74*)-DISCHARGE OF GUARANTOR-PAYMENT.

Defendant, doing business in New York and in Germany, guaranteed to put K. & Co., New York bankers, in funds to meet his drafts on a German bank 15 days before each was due. K. & Co. then requested the German bank to pay the drafts and charge them on general account, guaranteeing it against loss. K. & Co. failed at a time when the German bank had accepted drafts not due for more than 15 days and before defendant as drawer had put them in funds. The defendant provided the German bank with money to meet the drafts. Held, in an action by the trustee *For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

in bankruptcy of K. & Co., that defendant thereby performed his obligation to K. & Co. and thereafter owed them nothing upon his guaranty. [Ed. Note. For other cases, see Guaranty, Cent. Dig. § 84; Dec. Dig. § 74.*]

3. SUBROGATION (§ 1*)-Nature and THEORY OF RIGHT.

Subrogation is based on the facts of each particular case, and is generally applied where one person is compelled for his own protection, or that of some interest which he represents, to pay a debt for which another is primarily liable.

[Ed. Note. For other cases, see Subrogation, Cent. Dig. §§ 1, 2; Dec. Dig. § 1.*

For other definitions, see Words and Phrases, vol. 7, pp. 6721–6727; vol. 8, p. 7807.]

4. SUBROGATION (§ 7*)-SURETIES SUBROGATION TO RIGHTS OF CREDITORS. A surety, who pays the debt of his principal, is subrogated to all the securities, liens, and equities held by the creditor against the principal, and entitled to enforce them against the principal in a court of equity. [Ed. Note. For other cases, see Subrogation, Cent. Dig. §§ 17, 18, 2129, 38, 77, 83, 92; Dec. Dig. § 7.*]

5. BILLS AND NOTES (§ 75*)—ACCOMMODATION ACCEPTOR-NATURE OF LIABILITY.

An accommodation acceptor of a bill, as between himself and the drawer, in equity occupies the position of a surety.

[Ed. Note. For other cases, see Bills and Notes, Cent. Dig. § 136; Dec. Dig. § 75.*]

6. SUBROGATION (§ 7*)-SURETIES SUBROGATION TO RIGHTS OF CREDITORS. A surety for the drawer of a bill, on payment, is subrogated to the rights of the holder.

[Ed. Note.-For other cases, see Subrogation, Cent. Dig. §§ 17, 18, 21-29, 38, 77, 83, 92; Dec. Dig. § 7.*]

7. SUBROGATION (§ 7*)-SURETIES SUBROGATION OF PRIOR SURETY.

A prior surety, compelled to pay a debt, will be subrogated to the rights of the creditor against the subsequent surety.

[Ed. Note.-For other cases, see Subrogation, Cent. Dig. §§ 17, 18, 2129, 38, 77, S3, 92; Dec. Dig. § 7.*]

8. PRINCIPAL AND SURETY (§ 147*)-RIGHTS OF CREDITOR-RECOURSE TO INDEMNITY TO SURETY.

A creditor, whose debt is due, is subrogated to the benefit of securities and indemnities furnished by the principal to the surety, since the securities in the hands of the sureties having been appropriated by the debtor to pay the debt, and constitute a trust which equity will enforce for the benefit of the creditor.

[Ed. Note.-For other cases, see Principal and Surety, Cent. Dig. §§ 402-412; Dec. Dig. § 147.*]

9. PRINCIPAL AND SURETY (§ 147*)-PARTIES TO BILLS AND NOTES-ACCEPTOR. Where defendant guaranteed to put bankers in funds 15 days before the time his drafts should become due, and they guaranteed a foreign correspondent against loss on the payment of such drafts, the correspondent, on acceptance of such drafts, was subrogated to the securities and guaranties of the drawer held by the bankers, including defendant's guaranty of funds, so that defendant's voluntary payment to the correspondent of drafts which it had accepted, but not charged to the bankers, amounted to a discharge both of his bankers' obligation to the correspondent and his guaranty to his bankers.

[Ed. Note. For other cases, see Principal and Surety, Cent. Dig. §§ 402-412; Dec. Dig. § 147.*]

McLaughlin, J., dissenting.

For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

Action by Lawrence E. Sexton, as trustee in bankruptcy, etc., of Kessler & Co. against Gabriel Fensterer and Francis H. Ruhe, copartners as Fensterer & Ruhe. Verdict was directed for the defendants, and plaintiff took exceptions, which were ordered to be heard in the first instance by the Appellate Division. Exceptions overruled, and judgments ordered for defendants on the verdict.

Argued before INGRAHAM, P. J., and MCLAUGHLIN, LAUGHLIN, MILLER, and DOWLING, JJ.

Wallace Macfarlane, of New York City, for plaintiff.
Francis H. Kinnicutt, of New York City, for defendants.

INGRAHAM, P. J. There was no substantial dispute as to the facts. At the end of the trial both parties moved for the direction of a verdict. The court denied the plaintiff's motion for the direction of a verdict in favor of the plaintiff, and granted a motion directing a verdict for the defendants, to which the plaintiff excepted, and ordered the exceptions to be heard in the first instance by this court.

Kessler & Co., the bankrupts, were bankers doing business in the city of New York, and the defendants were engaged in business in New York and Germany. Mr. Gabriel Fensterer, one of the defendants, was in Germany and carried on business there in connection with the business carried on by his firm in New York; the business of the defendants' firm being transacted in New York by Mr. Ruhe, the other member of the copartnership. There was a firm of Leffler, Thiele & Co., with whom the defendants had business transactions in Germany. The bankrupts failed on October 30, 1907, and on that day made a general assignment for the benefit of creditors. On November 8, 1907, a petition in involuntary bankruptcy was filed against the bankrupts, and they were subsequently adjudicated bankrupts, and the plaintiff was appointed trustee. There was also a firm doing business in Berlin, in the empire of Germany, under the firm name of Delbruck, Leo & Co. For a number of years prior to April, 1906, there had been what was called a credit arrangement between the bankrupts and the defendants, which had for its object the giving of defendants credit in Germany in their financial transactions there, and on April 9, 1906, to continue this arrangement, the defendants wrote to the bankrupts, requesting the bankrupts to issue

"a credit to us for the firm of Leffler, Thiele & Co., No. 47 Murray St., drawn to the favor of Mr. G. Fensterer, of Berlin, Germany. We, the undersigned firm, guarantee the payment of any drafts drawn by our Mr. G. Fensterer in Europe under this letter of credit. The letter of credit to be issued to the above-named firm, Leffler, Thiele & Co., to be M20,000 per month and to be in force until canceled."

In consequence of this application the bankrupts wrote to Messrs. Delbruck, Leo & Co., on April 10th, as follows:

"By these respects we ask you to kindly pay, as heretofore, the 90 days' sight drafts of Mr. Gabriel Fensterer, Berlin, for account of Messrs. Leffler, Thiele & Co., New York, and to debit us therefor each time under advice to us. The drafts of said gentleman may read M20,000 per month, and this credit is to remain in force until cancellation on our part."

And Delbruck, Leo & Co., under date of April 21, 1906, acknowledged the receipt of this letter, and noted that the bankrupts— "accredit with us until further notice Mr. Gabriel Fensterer, of Berlin, on account of Leffler, Thiele & Co., of New York, to the amount of 20,000 marks monthly, to be drawn in drafts at 90 days after sight."

On April 23, 1906, Mr. Gabriel Fensterer wrote Delbruck, Leo & Co., at Berlin, stating that he had been informed by his firm in New York that a credit of 20,000 marks per month had been opened in his favor by that firm through the New York banking concern of Messrs. Kessler & Co., and that he would, as on former occasions, dispose of this amount by drawing his drafts at 90 days' sight, these drafts to be covered in New York as in former cases through his New York firm in accordance with the arrangement made with the New York firm of Kessler & Co. In reply to such letter Delbruck, Leo & Co. confirmed the arrangement that Kessler & Co., in New York, had opened with them in Mr. Fensterer's favor, on account of Leffler, Thiele & Co., a credit of 20,000 marks monthly, which is to be disposed of by drafts at 90 days after sight until recalled. The arrangement was thus completed, and the manner of transacting this business seems to have been that Mr. Fensterer, in Germany, drew drafts at 90 days' sight on Delbruck, Leo & Co.; that Delbruck, Leo & Co. accepted these drafts, information of which was transmitted to the bankrupts in New York, for which the defendants paid to the bankrupts 15 days before the drafts became due to the amount required to meet the drafts in Germany; and this sum was then transmitted by the bankrupts to Delbruck, Leo & Co. to provide for the payment of the drafts. Thus before the drafts became payable the defendants had provided the money through the bankrupt firm to meet the payments in Berlin. All the drafts that had become payable prior to the time of the bankrupts' failure had been provided for under this arrangement, but there were outstanding at the time of the bankrupts' failure a number of drafts drawn by Mr. Fensterer on Delbruck, Leo & Co., and accepted by them, but which were not then due. No funds had ever been received from the bankrupt firm to cover these outstanding acceptances of Delbruck, Leo & Co. Kessler & Co., the guarantors, having failed, Delbruck, Leo & Co. entered into negotiations with one of the defendants, Gabriel Fensterer, who had drawn the drafts, and demanded of Gabriel Fensterer the payment of the drafts drawn by him, and which had been accepted by Delbruck, Leo & Co., whereupon Mr. Gabriel Fensterer himself, in the name of the defendants, provided the funds with which these drafts were paid, and, having been paid, no claim was made against the bankrupts on account of these acceptances. During all this time Mr. G. Fensterer was the agent of Leffler, Thiele & Co. in Germany, buying goods for them, and the funds obtained by Gabriel Fensterer for the discounting of these notes were expended in making purchases for the account of Leffler, Thiele & Co.

[1, 2] It thus appears that, in the arrangement between the defend ants and the bankrupt firm of Kessler & Co., the defendants guaranteed the payment of any drafts drawn by "our Mr. G. Fensterer" in Europe, and upon that guaranty Kessler & Co. requested Delbruck,

Leo & Co. to pay the 90-day sight drafts of Mr. G. Fensterer, and to debit Kessler & Co. therefor. Under this guaranty no obligation of defendants existed until Delbruck, Leo & Co. had paid the drafts drawn by G. Fensterer. So far as appears by the arrangement, there was no agreement that Delbruck, Leo & Co. should accept these drafts, although undoubtedly such an acceptance was contemplated as necessary to carry out the arrangement which was made; but under the guaranty the obligation to pay arose upon payment, not upon acceptance. The actual method adopted by the parties was for the defendants to furnish Kessler & Co. in New York with money to pay the maturing drafts 15 days before the due day, to enable Kessler & Co. to transmit that money to Delbruck, Leo & Co. in time to meet the drafts when due. Thus at the time of Kessler & Co.'s failure the outstanding drafts which are involved in this action had not become due, nor had there arisen any obligation on behalf of the defendants to furnish Kessler & Co. money to pay the drafts, as they were all due more than 15 days after the bankrupts' failure, and therefore the defendants had not furnished Kessler & Co. the money to pay the drafts, nor had Kessler & Co. furnished Delbruck, Leo & Co. the money to meet them when due.

The situation that then existed, therefore, was that one of the defendants had drawn its draft upon Delbruck, Leo & Co. which was payable 90 days after sight, which draft Delbruck, Leo & Co. had accepted, and thus became bound as principal debtors to the holders of the draft. But, as between Delbruck, Leo & Co. and the defendants. the drawer of the draft, one of the defendants, was the principal debtor. If Delbruck, Leo & Co. had paid these drafts, they could have quite clearly recovered from the drawer of the drafts, one of the defendants, the amounts that they had paid. It is true that Kessler & Co. had undertaken that, if Delbruck, Leo & Co. had paid the drafts, they could debit Kessler & Co. with the amount of the payments, and defendants had guaranteed to Kessler & Co. that these drafts would be paidclearly meaning, I think, they would be paid by the drawer of the draft, who was a member of the defendant's firm. The object was, not to protect the holders of the accepted drafts, but to protect Delbruck, Leo & Co. from having to pay drafts drawn by G. Fensterer, in case G. Fensterer did not furnish the funds necessary to pay the drafts. In other words, Kessler & Co. guaranteed Delbruck, Leo & Co. against any loss by payment of the drafts, and the defendants guaranteed Kessler & Co. from any loss in consequence of their guaranty to Delbruck, Leo & Co. Under this arrangement, as I view it, the principal debtor remained G. Fensterer or the defendants and no obligation ever existed as against Kessler & Co. or the defendants until Delbruck, Leo & Co. had actually paid the drafts. If this is the correct situation it seems to me entirely clear that the principal debtor, G. Fensterer or the defendants, not only had the right, but they were bound, to provide funds to meet these drafts, accepted by Delbruck, Leo & Co., before they became due, and if they performed that obligation no liability of Kessler & Co. existed, and there was nothing due by the defendants to Kessler & Co. under their guaranty.

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