Majority
p. 151Clark & Tubbs, executors of Barney, against Bush, impleaded with M’Cracken.
Headnote
Assumpsit upon a note given by the defendants to the testator of the plaintiffs, dated November 2d, 1815, for $2000, . . payable October 9th, 1820, with interest, to be paid annualJy. Bush, one of the defendants, pleaded the general isA fcond ev covenant by the creditor to aave harmless
p. 152
sue, payment and a release ; to which pleas was also subs joined a notice that there would be given in evidence on the trial, a release of the testator of all debts, dues, claims and demands, of what name or nature sever existing against the firm of Bush & M’Cracken, with the necessary and proper averments, &c. ; also that the testator, in his life time, together with M’Cracken, the defendant, executed , n 7 . to Bush, a bond, bearing date October 1st, 1816, in the 'Penal sum °f $3000, with condition that if Barney, (the testator of the plaintiffs) and M’Cracken, their heirs, &c. should well and truly, at all times, indemnify and save harmless, Bush, his heirs, &c. from and against all debts, dues, claims and demands, of what name or nature soever, existing agains*- the firm of Bush §■ M’Cracken, (the same before named) including as well all debts and demands then due by and ^rGm 6™, as all contracts theretofore made by them in and about the firm of Bush & M’Cracken. by means of which contracts Bush might, in any manner thereafter, be made ]¡a]3]e . then, &c. else, &c. 3
On the plea of payment, the plaintiffs took issue ; and to P^ea °f a release they replied non est factum.
The cause was tried before (the late) Mr. Justice Yates, at the Washington Circuit, June 14th, 1822. The plaintiffs proved the' note declared on, upon which was endorsed $140, November 2d, 1816, for interest. The balance due being $2807,33.
The defendant, Bush, then produced and proved the bond set forth in his notice.
The counsel for the plaintiffs then produced and proved the two following receipts or instruments in writing, signed by Bush, and insisted that the penalty of the bond being satisfiéd, it did not operate as a release of the plaintiff’s de
against the debt, operates theVebt.aSe °f
A and B ^af-Sool and then B bound in the pOOtMo- inf demnify A apartnership1*16 debts ‘ due the $2000¡ debt due to C, tierng one of them; and C •ttas* bond^to the amount of wayPoTÍndeinnifying A a-debts due from the firm of A and B, and then brought his action against A upon the note to Ci Held, that he should recover ; for he shall not be hoiden to pay beyond the penalty of his
bond ; more ¿especially as he was a mere surety; and the bond shall not operate as a release of a debt Which he could not be called upon to pay.
A surety is not liable beyond the penalty of his bond.
The rule seems to be the same as to the prinpipal.
The English apd American cases upon these two heads considered.
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mand, or in any manner bar their right to recover. The receipts were as follows; “ Whereas judgment was obtained in the Court of Common Pleas of the county of Washington, in favour of William, A. Moore, against Amos T. Bush, in May term, 1818, which judgment was obtained on a demand against the late firm of Bush & jWCracken ; damages, $1417,16, and costs $28,36, making in all, as specified in the execution issued thereon, $1445,52, the interest thereon up to this 21si June, 1819, $106,80—whole amount $1552,32, the above judgment having been obtained on demands against which the said Amos T. was indemnified by a certain bond given by one James Barney, (deceased) and said Charles McCracken, to said Amos T. bearing date the 1st October, 1816, as by reference to said bond will fully appear; and such proceedings being had whereby the executors of the said James Barney, deceased, have agreed to settle the above sum of $1552,32. And I, the said Amos T. Bush, do hereby certify that I have this day received of George Clark, of Fort Ann, one of the executors of the said James Barney, deceased, the above sum of one thousand five hundred and fifty two dollars and thirty two cents, on the account of the said bond, and which said bond is so far cancelled as may relate to said demand above in part specified. Dated 21si June, 1819. Amos T. BushM “Received, Fort Ann, 19th May, 1820, of George Clarke one of the executors of the within named James Barney, deceased, on the within mentioned bond, the further sum of one •thousand four hundred forty eight dollars and thirty nine cents, making in all paid to me by said George Clark, as .one of the executors as aforesaid, in virtue of said bond, thq sum of three thousand dollars, and fW-
Amos T. BushM
The counsel for the defendant, Bush, insisted that he had shown enough to defeat the right of action, and that, therefore, the plaintiffs ought not to recover. His honour, without deciding the question, directed that a verdict should be
p. 1541. The bond was in the nature of a release to Bush, of all demands due from Bush McCracken, to Barney, the testator,[1] bond being for indemnity against all these de- mands, was not satisfied by payment of the penalty, especiahy after the death of Barney. 3. The demand of the testator, having been once released by the operation of the bond, could never he revived by payment of the penalty after the death of Barney, It is a well settled rule, that paying the penalty of a bond dicharges the condition. If this had been a mere covenant to save Bush harmless, it would be different; but the obligors’ liability is limited by a penalty. How, then, can it operate as a release of sums beyond the amount of the penalty. Here is no circuity of action to be guarded against ; and the construction contended for would be grossly inequitable. No action could be maintained upon this bond by Bush, for any debts which he might pay to third persons, and the note in question stands on the same footing. The Court should look at the intent of the parties in every contract. Is there a doubt that they intended to limit the liability of Barney to the penalty ? If this be not so, there are no terms by which the parties can limit themselves. Upon what principle can this defendant say to the payees, “ You shall take up the note which I owe to you ?” Weston, in reply. If this - writing had been a covenant, secured by a penalty, there is no -doubt the covenantee might have disregarded the penalty, and proceeded for all his damages upon the covenant. The difficulty, then, is one of form merely. There is no real difference, whether the defeasance be underwritten in a bond, or included in a cov
found for the plaintiffs for $2807, with leave for the .defen- ' ^ant *0 make a case, and to turn the same into a bill of exceptions if he pleased ; and the jury found accordingly.
J?. Weston, for the defendant, made the following points ;
Z. R. Shipherd, contra.
p. 155®aant. The equity is the same ; the remedy of the obligor is suspended ; and if the bond operates as a release for a moment, it is not denied (indeed it will not admit of diseussion) that it will always continue so. Perhaps we could not maintain an action of debt. The forms of law would be against us ; but the question is not whether we are to have an action : it is whether we are to retain what we already have in our bands. This is like a sum paid by an infant on his promise, or an insolvent upon a debt barred by his discharge, or by a debtor, the demand against whom is barred by the statute of limitations. The forms of law are against the remedy to compel either; but the money, when once paid, cannot be recovered back.
Curia,
(After stating the facts.) It is contended by the counsel for the defendant Bush, 1. That the bond operated by way cf release ; 2. That its operation is not changed by the payment of the penalty; 3. That payment of the penalty was not a discharge of the liability of Barney.
If the condition of the bond was not discharged by payment of the penalty, then the bond must operate by way of release to prevent circuity of action ; for it would be useless for the plaintiffs to recover on the note, if the defendant Bush might turn round and recover the whole amount back on the bond. ( 2 John. Rep. 186 . 8 id. 58, 59.)
On the question whether the obligor in a bond can be compelled to pay more than the penalty, the decisions have not been uniform. In Lowe v. Peers, (4 Burr. 2228,) the questions were, 1. Whether the £1000 mentioned were stipulated damages ; 2. Whether the contract was lawful. Lord Mansfield, in giving his opinion, says, ‘‘ There is a difference between covenants in general, and covenants secured by a penalty or forfeiture. In the latter case, the obligee has his election. He may either bring an action of debt for the penalty and recover the penalty; (after which recovery of the penalty he cannot resort to the covenant; because the penalty is to be a satisfaction for the whole ;) or if he does not choose to go for the penalty, he may proceed upon
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the covenant, and recover more or less than the penalty to* ties quo tie sM This dictum of Ld. Mansfield was not called for by the case, nor is any adjudged case cited. It is, however, considered good law by Epinasse in his law of nisiprius. (2 Esp. N. P. 279.) In Branguin v. Perrot in the C. P. (2 Bl. Rep. 1190,) the defendant moved to pay into Court the penalty of the bond, the condition being to indemnify a parish againstthe maintenance of a bastard child. This was opposed on the ground that the action was for a single breach; after which the penalty should remain to answer subsequent breaches, in infinitum. But De Greyj Ch. J. said, “ This is really so plain a case that one knowá not what to say to make it clearer. The bond ascertains the damage by consent of parties. If, therefore, the defendant pays the plaintiff the whole stated damages, what can he desire more ?” The other Judges, Gould, Blackstone & Nares, concurred. In White v. Sealy et al. (Doug. 49,) the defend, ants gave a bond in a penalty of £600, conditioned for thd payment of a yearly rent by another peréon of £5 70. Two5 judgments had been recovered on the bond; and to the third action the defendants pleaded the first judgment in bar. The question was, whether the bond was a standing security for the rent for the whole term of 22 years, or only to the amount of the penalty. Butter, J. at first, thought that the plaintiff might assign breaches under the statute and recover more than the penalty ; but finally concurred with Ld. Mansfield 8/ Ashhursl that the defendants were liable only for the penalty. Jlshhurst, J. thought that though a recovery beyond the penalty might be right as to the principal, it would be inequitable as against the sureties. Afterwards, in Lonsdale, v. Church, (2 T. R. 388,) the question arose on a bond executed by the defendant and others. The defendant, as receiver of the harbour dues of Whitehaven, entered into three bonds of £2,000 each, conditioned to account for* all sums received by him. He moved for a stay of proceedings on the payment of the penalty of two of the bonds. Butter,. J. declared that he was not satisfied with the decision in White v. Sealy ; and cited Elliot v. Davis, (Bunb. 23,) Col. lins v. Collins, (Burr. 820,) & Holdipp v. Otway, (2 Sound. 106) where the plaintiff had been allowed to recover morpf
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than the penalty by way of damages, being the interest due by the condition of the bond, or costs. And the Court refused a stay of proceedings. Another case (Knight v. Maclean, 3 Br. Ch. Rep. 596) came before Buller, J. sitting for the Lord Chancellor, and exceptions were taken to the report cf the master, because in calculating interest on a bond for the payment of money, he had only computed interest to the amount of the penalty ; and Buller allowed the exception, deciding that the master should have gone on with the interest, notwithstanding it might exceed the penalty ; and he said that White v. Sealy went upon the defendants’ being sureties. But Ld. Thurlow, the Chancellor, on a re-argument, overruled the exception, on the ground that the penalty was the extent of the obligor’s liability. He had just before decided the same thing in Tew v. The Earl of Winterton, (3 Br. Ch. Rep. 490.) The question came again before the K. B. in Wilde v. Clarkson, (6 T. R. 303,) on a bond to indemnify the parish against the maintainance of a bastard child. The motion was, that satisfaction should be entered on payment of the penalty ; and the case of Lonsdale v. Church was cited against it. But Ld. Kenyon said “ I cannot accede to the authority of that case. Ax-cording to that, an obligor who became bound in a penalty of £1000, conditioned to indemnify the obligee, may be called upon to pay £10,000, or any larger sum however enormous. In actions on bonds, or any penal sums for perform™ anee of covenants, the act (8 & 9 W. 3 . ch. 11, s. 8,) says there shall be judgment for the penalty ; and that the judgment shall stand for further breaches : but the obligor is not answerable in the whole beyond the amount of the penalty.” The authority of this last case, and the c orresponding class of cases was expressly recognized by the Court of K. B. in M’Clure v. Dunkin, (1 East, 436,) and by the C. B. in Hefford v. Alger, (l Taunt. 218.)
The few American decisions that are to be found are also at variance. In Tunison v. Cramer, (South. Rep. 498,) an intimation is given, that there are cases in which a recovery maybe had beyond the penalty; but it was held, in terms, that this could not be against a surety. In Graham v. Bick
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ham, ( 4 Dall. 149 , 4 Yeates' Rep. 32 , S. C.) it was decided that where the penally is not in the nature of stated and ascertained damages, the injured party may recover beyond the penalty. That case was on r< contract not under seal for the transfer of stock. In Harris v. Clap, ( 1 Mass. Rep. 308 ,); the same thing was holden of a bond, and against a surety, Sedgwick, J. dissenting. But in Payne v. Ellzey, ( 2 Wash. Rep. 143 ,) in debt on a prison bounds bond, against the surety, the Court of Appeals in Virginia decided that though the plaintiff may recover less, he can not recovei more than-the penalty; and they lay this down as a general rule, without distinguishing between a surely and principal. In United States v. Arnold, ( 1 Gall. Rep. 348 , 360.) Story, J. remarks, “ Noticing some contrariety in the books, 1 think the-true principle supported by the better authorities is, that the Court cannot go beyond the penalty and interest thereon, from the time it becomes due by the breach.” On error, the judgment in that cause was affirmed by the Supreme Court. ( 9 Cranch, 104 , 120, S. C.) But- the amount to be recovered was not drawn in question.
The weight of these authorities is, I think, in favour of the doctrine, that in debt on bond nothing more than the penalty can be recovered, at any rate, nothing beyond that and interest, after a forfeiture, even against the principal obligor-
But, admitting the doctrine to apply as laid dow by Ld Mansfield in Lowe v. Peers, and that an action of covenant would he on the bond in question, in which form Bush might recover the whole amount necessary to a complete indemnity, (see also Winter v. Trimmer, 1 Bl. Rep. 395, and Perkins v. Lyman, 11 Mass. Rep. 83 ;) still it is clear that this can hold only as to McCracken, the principal ; but not against Barney, who was a surety, and the extent of whose liability is the penalty of the bond. All the cases agree in this, with the single exception of Harris v. Clap ; and this was against the opinion of Sedgwick, J.
The plaintiffs are, therefore, entitled to judgment.
Judgment for the. plaintiffs.