People ex rel. Hill v. United Surety Co. of Baltimore

Majority

p. 655

The People of the State of New York ex rel. Charles Hill and the Said Charles Hill, Appellants, v. United Surety Company of Baltimore, Md., and Maynard N. Clement, as State Commissioner of Excise, Respondents.

Third Department,

June 25, 1907.

Headnote

. Intoxicating liquors — bond—liability of surety—costs.

The bond given under section 18 of the Liquor Tax Law by a certificate holder does not measure his entire liability, nor can the surety be compelled.to respond for every liability incurred by the principal'. .The surety becomes liable for the full amount of the bond on any single violation by the principal of the provisions of the act.

By virtue of the statute only the State Commissioner of Excise can recover on the bond, and the sums so recovered must be paid to'the State Treasurer. Hence, the bond is not given to indemnify a private individual who institutes, a proceeding to revoke a' liquor tax certificate, and although he succeeds, . thti surety is not liable to him or his assigns for the costs awarded in the proceeding.

Appeal by the plaintiffs from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the

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county of - Albany on the- 10th day of April,. 1901, upon the decision of the court, rendered. • after a trial at the Albany Special Term, sustaining the defendants’ demurrers'to the complaint.

Under subdivision 2 of section 28' of the Liquor Tax Law’(Laws • of -1896, chap: 1.12, as amd. by Laws of 1905,. chap. 680^[1] on the petition of Miles Tompkins,'a taxpayer, the liquor tax certifícate of Martha E. Mulberry was invoked. Said statute provides for such a proceeding -by- the State Commissioner of Excise, his deputy,- or a, taxpayer, and that. “ costs upon such proceeding may be awarded in favor óf and against the petitioner or the certificate holder in such sums as in the discretion' of the justice,, judge or court before which the petition is heard may,seem proper.” Pursuant thereto costs, were awarded the said petitioner and against the'certificate holder! An effort for the/, collection. thereof having proved, unsuccessful by reason of her insolvency such costs- were assigned to the plaintiff Charles Hill and the present.action was instituted for the recovery thereof against the surety bn-the bond of said certificate holder. The State Commissioner of Excise is made a defendant as required by section 6 of said láw.^[2] The defendants interposed sepárate demurrers challenging' the sufficiency of the" complaint and also' raising the question of a lpisjoinder of -parties .plaintiff.

J. S. Frost, for the appellants.

Dudley B. Wade, for the respondent United Surety Company of Baltimore.

Russel Headley and Samuel H Salisbury, for the respondent Maynard H. Clement, as State Commissioner of Excise

. The bond in question is the ordinary bond given by the holders ■of liquor tax certificates Under section 18-of the Liquor Tax Law. (Laws of 1896, chap., 112, as amd. by Laws of 1903, chap..486). That section provides for. “ a bond to the People of the State of New York in the penal sum of the amount plus oue-lialf of the-tax for one year upon the kind of traffic in liquor to. be carried on by

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such applicant, where carried on, but in no case for less than five hundred dollars, conditioned that if the tax certificate applied for is given, the applicant or .applicants will not, while the business for which such tax certificate is given shall, be. carried on, suffer or permit any gambling to be done in the place designated by the. tax certificate-in which the traffic in liquors is to be carried on, or in any yard, booth, garden or any other place appertaining thereto or connected therewith, or suffer or permit such premises to become disorderly, and will not violate any of the provisions of the Liquor Tax Law; and that all fines and penalties which shall accrue during the time the certificate applied for is held, and any judgment or judgments recovered therefor, will be paid, together with all costs taxed or allowed.”

It is clear from an inspection of the entire statute that the said bond does not measure all the liability of the certificate holder and that 'the surety on the bond cannot be compelled to respond for every liability incurred by the principal. For any single violation of the provisions of the act the bon'd is forfeited and the surety becomes liable for the full amount thereof.- That, however, is the extent of his liability. But the principal is liable not merely for the amount of the bond, but may also be liable to a fine-in a criminal prosecution and in, additiqn thereto to a penalty in a civil action. Let us take the present case as an illustration. The certificate in question was revoked because of the sale of liquor to minors. For that violation of law both the principal and the surety became liable for the full amount of' the bond. In addition thereto the principal might be made liable under section 34 of the act^[3] to a fine in a criminal action, and under section 42^[2] to a penalty in a civil action. The principal might also be liable indefinitely for fines and penalties for other violations, the artiotrlit of which liability would depend only on the number of such violations.' Those fines- and penalties might also be recovered "by the State Commisr sioner of' Excise against the surety under the provisions of the bond, but the extent of any -recovery against tile surety would be limited by thp amount of the' bond.' The foregoing views find

† † Amd. by Laws of 1897, chap. 313.— [Rep.

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expression in the cases' of Lyman v. Shenandoah Social Club ( 39 App. Div. 459 ) and Lyman v. Rochester Title Lnsurance Company (37 id. 234). If the proceeding for the revocation of the certificate in the present case had been instituted by the State Commissioner of Excise and the costs in question had been awarded to him, although that would constitute an additional liability against the holder of the certificate, it would not increase liability under the bond. Liability thereunder because of the sale of liquor to a minor or for any- other- violation is fixed and certain and is for the full amount of the bond whether the certificate be revoked or not, and if it be revoked such liability under the bond' is not increased. In. fact, section 18 of the act, as amended by chapter 486 of the Laws of 1903, expressly limits a recovery in an action brought on the bond by the State Commissioner of Excise to the penal sum therein expressed. It is evident from the foregoing discussion that if the costs in question had been awarded the State . Commissioner of Excise in a proceeding instituted by him the bond would afford him • no effective remedy for the collection of such costs.

The statute nowhere in terms gives the petitioner in a revocation proceeding a right to resort to the bond. A cause of action is expressly given by saidy section 18 to the State Commissioner of Excise “ for the recovery of the penalty for the breach of any condition of any bond or for any penalty or penalties incurred or imposed for- a violation of the Liquor Tax Law,” the amount of recovery being limited to the penalty of the bond. The statute^[3] provides that all moneys so recovered shall be paid to the State Treasurer. Such bond is evidently intended to indemnify the State and not private individuals who institute prosecutions under the act. Were the plaintiffs to succeed herein it is evident that ■ the recovery would not affect the surety on this bond, but would in effect be paid out of the State treasury, inasmuch as the surety is liable for the definite amount of the penalty of the bond, irrespective of the - costs of the revocation proceeding. Had the surety béfore the commencement of this action paid the full amount of this bond to the State Commissioner of Excise, as it was its duty to do if the

* See Laws of 1896, chap. 112, §§ 9, 13, 18, as amd. by Laws of 1903, chap. ■ 486.— [Rep.

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certificate holder sold liquor to minors, very clearly all liability under the bond would have been extinguished. Neglect or refusal to make such payment cannot give plaintiffs a cause of action Avhich would not exist if the surety had promptly performed such duty. It is very plain, therefore, that this action cannot be maintained.

The demurrer was also properly sustainéd on the ground of a misjoinder of parties plaintiff.

The interlocutory judgment should be affirmed, with costs.

All concurred; Kellogg, J., in result.

Interlocutory judgment affirmed, with costs.

Footnotes

* See Laws of 1896, chap. 113, § 84, subd. 2, as amd. by Laws ofT900,'chap. 367; Id. § 30, subd.-1, as amd. by taws of 1897, chap. 312.—[Rbp.

Cases cited

Lyman v. Fidelity & Deposit Co. 39 App. Div. 459 N.Y. App. Div. 1899-04-07 p. 658