Clement v. Smith — 128 A.D. 859

Majority

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Maynard N. Clement, as State Commissioner of Excise of the State of New York, Appellant, v. David H. Smith and Federal Union Surety Company, Respondents.

Second Department,

November 27, 1908.

Headnote

Intoxicating liquors — principal and surety—violation of law by principal in localities not covered by bond.

A bond given to secure the observance of the Liquor Tax Law by one to whom a certificate is issued secures only the observance of the law on the premises for which the license is issued, and there can be no recovery against the surety because the principal violated the law in other localities.

Hooker, J., dissented.

■ Appeal by the plaintiff, Maynard H. Clement, as State Commissioner, etc., from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Westchester on the 28th day of March, 1908, upon the dismissal of the complaint by direction of the court at the close of the plaintiff’s case upon a trial at the Westchester Trial Term.

Albert O. Briggs [Russel Headley with him on the brief], for the appellant.

Thomas F. Curran [William F. Bleakley with him on the brief], for the respondent Smith.

Charles S. Mackenzie [ Walter F. Wood with him on the brief], for the respondent Federal Union Surety Company.

It is conceded that there is no case directly in point in support of the plaintiff’s contention on this appeal, and' this is due, in all

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probability to the fact that no one else ever conceived the idea that a surety bond given for a particular purpose was to be construed to cover the general conduct of the principal. In the case now before us the action is brought against David H. Smith, principal, and the Federal Union Surety Company, under a bond issued by the latter under the provisions of the Liquor Tax Law.^[1] The bond was in the usual form, and provided that “ The above bounden principal is about to apply for a Liquor Tax Certificate in the sum of four hum. dred and fifty dollars ($450) authorizing said principal to traffic in liquors at Cor. James and John streets in the city of Yonkers, county of Westchester, State of New York, under subdivision 2 of section 11 of the Liquor Tax Law of the State of New York.^[2] Now,. Therefore, the Conditions of this Obligation are such, that if the said Liquor Tax Certificate applied for is given unto the said principal, and the said principal will not, while the business for which such Liquor Tax Certificate is given shall be carried on, suffer or permit any gambling to be done in the place designated by the Liquor 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, * * * then the above obligation to be void; otherwise to remain in full force and virtue.”

On the trial the plaintiff introduced evidence tending to prove that the defendant Smith, through his agents, had sold liquors without securing a liquor tax certificate therefor in various places in Westchester and Dockland counties, and this was not contested by the defendants. At the close of the evidence, on motion of defendants, the court directed a verdict in their favor, on the ground that there was no liability under the bond. There can be no reasonable question as to the correctness of this action on the part of the court; any other ruling would tend to defeat the very purpose of the Liquor Tax Law as a revenue measure by making it practically impossible for any man to get sureties. The bond clearly related and was confined in its operations to the premises for which the liquor tax certificate was to be issued; this was the fair contract of

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

† † Amd. by Laws of 1903, chap. 115.— [Rep.

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the surety company. It undertook to guarantee that as to the pre'm. ises which were to be licensed for the traffic there should be no gambling and no disorderly conduct, and generally that there should be no violations of the conditions of the license. To construe the contract as extending to the conduct' of the principal in any and every part of the State, wherqmhe might be represented by agents, in dealing in liquors either with or without a certificate, would be to enlarge the contract beyond any reason, for there is nothing in the instrument to indicate that the surety had in contemplation anything more than the conduct of the defendant Smith on the premises for which the license was issued. If Hr. Smith has illegally sold liquors in other places, the law provides for dealing with him; he may even be called upon to forfeit the license issued under this bond, but as to the things guaranteed by the bond they have no relation to the defendant Smith outside of the premises at the corner of James and John streets in the city of Yonkers. If the Legislature had intended to have a general surety bond for the good conduct of persons to whom liquor tax certificates were issued, it would have provided for this in the statute itself, and not have left it to depend upon the wording of the bond. The whole legitimate purpose of the bond is served, and the clear intent of the surety company in its contract with the State is carried out, by confining its operation to violations of the law occurring upon the premises intended to be under the protection of the liquor tax certificate, and this truth is so obvious that it would not seem to be necessary to cite authorities under the well-known rules in reference to those acting as sureties.

The judgment appealed from should be affirmed, with costs,

Jenks, Rich and Miller, JJ., concurred ; -Hookeb, J., dissented.

Judgment affirmed, with costs.