Everett v. Mitchell — 23 A.D. 332

Majority

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William W. Everett, Respondent, v. George H. B. Mitchell, Appellant.

Headnote

Bond — agreement by a surety that the bond shall remain valid notwithstanding the discharge of one of the principals — effective notwithstanding the failure of the other surety to execute the agreement.

The complaint in an action brought against one of the sureties upon a joint ancl several bond given in an action to restrain the infringement of' letters patent and to ' recover damages for such infringement, conditioned for the payment of such damages as should he awarded for goods thereafter manufactured and sold by the defendants, alleged that the plaintiff recovered a judgment in the action, which included-a recovery against two of the defendants, one John W. Haulenbeck and one William L. Mitchell, as copartners, and also a recovery against John W. Haulenbeck individually for goods manufactured after the bond was given; that after the bond was given, and before the recovery of the judgments, a • contract under seal was entered into between the plaintiff, the present defendant and Mitchell, as a member of the firm of Mitchell & Haulenbeck, whereby it was agreed that a payment, which, Mitchell contracted to make to the plaintiff, should be accepted in discharge of all Mitchell’s liability (which was that of a copartner with Haulenbeck) in the action, over and above, the amount secured .by the bond, but that the bond should remain in force as to the individual liability of Haulenbeck ; that Mitchell paid this amount and was discharged by the plaintiff, but that there had been no payment of the amount secured by the bond...

Meld, upon the hearing of a demurrer interposed to the complaint, that it stated ' a cause of action;

That the allegation in the complaint admitted by the demurrer, that the agreement was duly entered into by the parties executing it. was not negatived by the fact that the name of the other surety was mentioned in the agreement, hut that he did not join in its execution;

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That even if the making of the agreement operated to release the other surety from all liability upon the bond, the defendant was, in view of the express provision of the agreement that the bond should remain in force as to the individual liability of Haulenbeck, estopped from claiming to be released.

Appeal by the defendant, George H. B. Mitchell, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Hew York on the 12th day of May, 1897, upon the decision of the court rendered, after a trial at the Hew York Special Term overruling the defendant’s deinurrer-to the complaint.

Edwards H. Childs, for the appellant.

John Hunter, Jr., for the respondent.

The action was brought to recover on a bond against one of the sureties. The ground of the-demurrer was that the complaint did not state facts sufficient to constitute a cause of action. The complaint alleged, in brief, that the bond was made April 15,1891; that prior to that time an action was pending in the Circuit Court of-the United States in favor of the plaintiff in this action, and against William L. Mitchell, John W. Haulenbeck and Peter Haulenbeck, to restrain the -infringement of letters patent, and- to recover damages for infringement of such letters patent; that an order was made in such action restraining the defendants therein from manufactur- ' ing the goods which were alleged to be an infringement of the patent unless- the defendants should file and execute a bond for $1,000 with two sureties conditioned for the payment of whatever might be ultimately recovered for such goods as should be thereafter manufactured or sold by the defendants, and that in compliance with that order the bond in question was given, executed by the .defendants in that action as principals, and by the defendant in this action and one Charles F. Haething as sureties ; that the bond was ' joint and several, and conditioned as required by the order; that after the giving of the bond the plaintiff - ultimately recovered against Haulenbeck & Mitchell, as a firm, a judgment which included a recovery for goods manufactured after the bond was given

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of $650.80, and a judgment against the defendant John W. Haulenbeck, individually, which included a recovery for goods manufactured after the bond was given of $1,865.50; that before the recovery •of these judgments and after the giving of the bond, and on the 9th ■day of September, 1895, a contract in writing and under seal was made between the plaintiff and the defendant in this action, •and Mitchell as a member of the firm of Mitchell & Haulenbeck, wherein it was agreed that Mitchell, of the firm of Mitchell & Haulenbeck, should pay to the plaintiff the sum of $6,000, on' •or before October 16, 1895, and that the same should be accepted by the plaintiff in full payment and discharge of all claims which lie had against the said Mitchell in that action over and aboyé the amount secured by the bondi, and that the bond should remain in full force and effect, the same as though the agreement had not been made, as to any and all individual liability or otherwise •of the defendant John W. Haulenbeck; that said Mitchell paid the plaintiff the $6,000 pursuant to the agreement and was thereby ■discharged from all further liability under the judgment against him, and this defendant as surety upon the bond was discharged from all liability on the bond for goods manufactured by said firm of Mitchell ■& Haulenbeck. The bond and agreement were annexed to the •complaint, and it wa's alleged that there had been no payment of the $1,000 under the bond.

The $6,000 was paid-in settlement of and for the release of' Mitchell from all liability in the action and under the judgment in the Hnited States court. His liability there was a joint liability as copartner with John W. Haulenbeck. Whether he could make such á settlement and procure his own discharge without releasing ■John W. Haulenbeck, it not appearing that the copartnership had been dissolved (Code Civ. Proc. § 1942), is not material here. Assuming that he could not and that all liability of the firm was thereby released as to both members of the firm, then the sureties on the bond were released from all liability for goods manufactured by the ■firm, that is, for $650.80. They might still be liable for all goods manufactured by John W. Haulenbeck individually, that is, for the •$1,865.50, a much larger amount than the $1,000 named in the bond. We can see no reason why this defendant was released from this liability. It was distinctly provided in the agreement which he

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assented to under seal, that the bond should remain in full force as to the personal liability of-John W.-Haulenbeck.

The plaintiff never received anything on account of this liability. The $6,000 was paid in settlement of Mitchell’s share of the firm’s liability alone, which was alleged in the complaint to be in all $15,17-0.49, and we see no reason why the defendant as surety did not continue liable for the amount recovered for goods manufactured by John W. Haulenbeck- individually, to the extent of the $1,000 provided for. by the bond.

We cannot regard the agreement as incomplete and imperfected because the other surety’s name was contained in it arid he failed to join in its execution. The complaint alleged that the agreement was duly entered into by the persons who did execute it, and this allegation was admitted by the demurrer. The mere fact that the name of the other surety was in the agreement, and that he did not join in the execution thereof, would not negative the allegation and the admission that the agreement was duly entered into by, those who did execute it.

Even if by the making of the agreement the other surety Avas released from all liability on the bond, the defendant would not thereby be also released in Avhole or in part from his individual several liability. Having joined in the agreement and consented to the release, the defendant could not be heard to claim that he was released by the agreement which expressly provided that the bond should, notwithstanding the agreement and the payment of'the $6,000 and receipt of the same by the plaintiff, remain in full force as to the goods manufactured by John W. Haulenbeck.

The demurrer was properly overruled and the judgment should be affirmed, Avith costs, with leave to defendant to withdraw demurrer and answer upon payment of costs in the court below and in _ this court.

Van Brunt, P, J., Patterson, O’Brien and Ingraham, JJ., concurred.

Judgment affirmed, with costs, with leave to defendant to withdraw demurrer and answer upon payment of costs in this court and in the court below.