§ 2507.Justification of surety

Subd (a) of this section is derived from CPA § 852, part of the first sentence of § 156, the first sentence of § 854, all but the last sentence of § 1106, the second sentence of § 1526, the third sentence of § 955, the fifth sentence of § 1104, and the second, third and sixth sentences of § 151. The special venue provisions found in CPA §§ 852, 1106, and 1526, which pertained to undertakings on arrest in replevin and for security for costs are superseded by CPLR §§ 2212 and 2213.

The provisions in the second and third sentences of former § 854 which concerned adjournment and reduction of the examination to writing are also omitted. It is unlikely that a court would adjourn the examination of bail sureties for an undue length of time; and the matter of reduction of the examination to writing should be left to the practice and discretion of the court.

The provision for a reference in former § 151 is replaced by CPLR § 4317, prescribing when a reference to determine may be used. The provision of former § 151 that the court might direct either party to pay the expenses of the reference is covered by CPLR rule 4321, relating to fees and expenses of referees.

The third sentence of this subdivision takes the place of the sixth sentence of former § 151, which covered justification generally, and the first sentence of former § 855, which covered justification of bail sureties. The requirement in the former of notice to the “expectant” of the allowance was unnecessary, since under this subdivision that person will have had notice of the motion. The first sentence of former § 855 also required that the examination be annexed to the undertaking, but under former § 854 the examination would not have been reduced to writing unless the plaintiff’s attorney so required and under this subdivision the matter depends on the court’s practice and discretion. The requirement in former § 855 that the indorsed undertaking be filed is covered by CPLR § 2505. The fourth sentence of this subdivision replaces that part of the first sentence of former § 156 which provided for justification by fidelity and surety companies. Since the certificate of qualification issued under § 327(2) of the Insurance Law is evidence of the company’s sound financial position, no reason to require further proof of stability exists. The last sentence of former § 156 is omitted since its provisions are adequately covered by § 327(1) of the Insurance Law.

The provision of former § 852 that the place of residence and occupation of each of the sureties be specified in the notice of justification was not made applicable to undertakings generally. The surety’s place of residence is noted on the affidavit to accompany the undertaking. See CPLR § 2502(a). Inquiry into such facts as the surety’s occupation may be made at the time of justification.

Subd (b) of this section is derived in part from CPA § 863 and replaces the seventh sentence of former § 151. Section 160 of the New York City Municipal Court Code provides in part that “[i]f the sureties fail or refuse to justify after service of the notice of exceptions, the respondent may proceed as if no undertaking had been executed.” This is interpreted to mean that the failure of the sureties to justify has no effect on the undertaking itself, but it does vacate the stay which the undertaking creates, and permits the adverse party to proceed. The undertaking is left in full force and effect—only the stay is vacated. Thus, sureties may not use their own failure to justify as a defense to liability on the undertaking, where the exception is not withdrawn. Fried v Rivkin, 96 Misc 697, 161 NY Supp 94 (Sup Ct 1916). It has been objected that “ ’[t]he respondent cannot have the dual right to enforce the judgment pending the appeal as if no undertaking had been given, and at the same time, treat it as valid security for the payment of the judgment.’ . . . [But] from an equitable standpoint, the execution and filing of the undertaking procures some stay. Before an execution can issue, the stay created by the filing of the undertaking must be annulled by a notice of exception and the failure of the sureties to justify. This may be but a few days, but it may be of real importance to the judgment creditor and may also enable the judgment to avoid payment. This is sufficient . . . consideration for the undertaking and makes it entirely equitable to enforce the undertaking against the sureties.” Id. 96 Misc at 702-03, 161 NY Supp at 96-97. Since the principal may never give a new undertaking, it might be unjust to hold the sureties liable indefinitely upon the original undertaking. This subdivision permits the court to release the sureties from liability on the original undertaking when justice and fairness dictate the necessity of such action.

Add, L 1962, ch 308, § 1, eff Sept 1, 1963; amd, L 1984, ch 805, § 8, eff Sept 1, 1984.