In re the Estate of Thurber

This proceeding was commenced by an application made by the American Surety Company of Bew York, under section 812 of the Code of Civil Procedure, to be released as surety upon the bond of Fannie C. Thurber, the committee of Edmund G. Thurber, an incompetent person.

In October, 1897, Edmund G. Thurber was adjudged a lunatic, and Fannie C. Thurber was appointed his committee upon giving a bond in the usual form in the penalty of $50,000. The bond was given on the 20th of August, 1898, the American Surety Company signing the same as surety in consideration of $50, paid down by Mrs. Thurber, and the agreement to pay $25 a year annually thereafter while the bond was in force. Before signing the bond the surety company

In February, 1899, while the bond' was still in force, an order was granted, upon the petition of the company, requiring Mrs. Thurber to show cause why she should not furnish new sureties and render an account as committee orbe removed from that position. She tried to show cause by presenting an affidavit establishing perfect regularity of procedure on her part as committee, and alleging that the company was acting through ulterior motives induced by the lunatic’s relatives, who had refused to recognize her as his wife or their child as his legitimate son. She charged that their object was to prevent her from prosecuting certain actions to set aside contracts, made by the lunatic, in which one of their number was interested. She made out a strong case of hardship and injustice, which would have authorized the court, if its power is discretionary, to exercise its discretion by denying the motion. The Special Term denied the application upon the ground that section 812 of the Code was not intended to apply to the case of a surety for consideration, as distinguished from a gratuitous surety. Among the recitals of the order, as finally entered, is the statement that the company, on the argument of the motion, offered to return to Mrs. Thurber the premium paid by her.

The Appellate Division stated in its order of affirmance that it was “ made upon the ground that the provisions of sec

As it appears in the order appealed from that the determination of the Appellate Division was based on a want of power to grant the application, a question of law is presented which it is our duty to review, even if the courts below might have denied the application in the exercise of discretion. (Tolman v. S., B. & N. Y. R. R. Co., 92 N. Y. 354 .) The order states in effect that the court simply decided the question of power without considering the question of discretion.

The power of the court depends on the construction of section 812 of the Code of Civil Procedure, which occurs in an article entitled “ General Eegulations respecting Bonds and Undertakings.” It is provided by section 810, which is the beginning of the article, that a bond or undertaking given in an action or special proceeding must be acknowledged or proved and certified in like manner as a deed to be recorded. Section 811 provides, among other things, that “ the execution of any such bond or undertaking by any fidelity or surety company authorized by the laws of this state to transact business, shall be equivalent to the execution of said bond or undertaking by two sureties, and such company, if excepted to, shall justify through its officers or attorney in the manner required by law of fidelity and surety companies.” Section 812 requires the bond to be joint and several in form where two or more persons execute it, and “ except when executed by a fidelity or surety company, or when otherwise expressly prescribed by law, it must be accompanied with the affidavit of each surety ” as to his qualifications. After making other regulations relating to the subject, the section further provides that “ the surety or sureties, or the representatives of any surety or sureties upon the bond of any trustee, committee * * * or other

The argument in support of the position taken by the courts below is that while the general words “ surety or sureties ” are broad enough to embrace surety companies, as the legislature, when referring to such a company elsewhere in the section or the one preceding, named it in terms, and did not so name it

That part of the Code of Civil Procedure which went into effect on the first of September, 1877, embraced sections 811 and 812, which then contained no authority to surety companies to sign bonds or undertakings, and no provision authorizing any surety to apply for the relief now authorized by the latter section. (L. 1877, ch. 318.) In 1881 an act was passed authorizing the acceptance of certain corporations as sureties upon bonds an„d undertakings required or allowed by law, and in 1893 another act was passed of the same character with more elaborate provisions. (L. 1881, ch. 486; L. 1893, ch. 720.) In 1886 section 811 of the Code was so amended as to authorize the execution of bonds or undertakings by fidelity or surety companies authorized to transact business in this state. (L. 1886, ch. 416.) In 1892 section 812 was amended so as to authorize sureties upon certain official bonds to petition for release from liability, and this is the first appearance of any provision upon that subject in the Code which we have been able to discover. (L. 1892, ch. 568.) In 1895 said section was further amended by inserting in the earlier part thereof the provisions relating to fidelity and surety companies, which now appear therein. (L. 1895, ch. 511.) At this time surety companies had been doing business throughout the state for a number of years, as the legislature, from its own action, is presumed to have known. When, therefore, it inserted a general provision relating to fidelity and surety companies in the earlier part of the section, if it had intended to except such companies from the provisions of the latter part, applying to sureties generally, the presumption is it would have said so in terms. It cannot be presumed that when amending the forepart of the section its members failed to read the remainder, or to comprehend the effect of the amendment upon the section as a whole. It allowed the general language, which theretofore had included all sureties authorized to sign bonds given in judicial proceedings, to-

Surety companies are a convenience to the community, and it is important that they should continue sound and able to respond to their obligations. The legislature doubtless intended to promote their stability by extending the same protection to them that it extends to other sureties. The contracts of such companies are usually based upon an annual premium for a continuing bond. If the premium were not paid after the first year and the company could not avail itself of the privilege of the statute, its responsibility would continue with no compensation, for the bond would still be in force. Ho company can do business on such a basis. Moreover, if the annual premiums are paid, but the principal is squandering the estate, how can a surety company protect itself % Through its officers it may inform those interested, and request action on their part, but if they reply, “ you are good and we are-safe,” what relief is there unless it is under this ■section ? If it cannot induce those ultimately entitled to the money or property to act, its condition is hopeless and bankruptcy may be the result. These considerations, and others •of like character, may well have influenced the action of the legislature when it amended the section under • consideration.

The provisions of the statute authorizing the company to

The appellant claims that the provisions of the section are-mandatory, as the word “must” ordinarily excludes discretion. That word, however, is occasionally used in the Code without the imperative meaning which it usually has. (Spears v. Mayor, etc., 72 N. Y. 442 ; Wallace v. Feely,. 61 How. Pr. 225 ; affirmed, 88 N. Y. 646 .) The provision requiring the court to “ issue an order to show cause ” implies-that cause may be shown. It is more than a substitute for a notice of motion, for it is a specific requirement in a statute creating a special remedy, of which it is a part. There is no reason why the principal should be required to show cause, if no cause can be shown under any circumstances. When all the provisions of the section are read together, we think the-court has a discretion to exercise depending on the facts of the case, and is not commanded to make a decree regardless-of those. facts. In other words, we construe the expression “ a decree must be made ” under the circumstances to mean “ a decree may be made,” and hence the Special Term had a-discretion to exercise in the first instance and the Appellate Division by way of review. Neither court, however, exercised its discretion or considered the subject, because both held that section 812 did not apply to a surety company. The application of the company, therefore, has not yet been fully passed upon, so we are compelled to reverse the order appealed from and remit the proceeding to the Appellate Division for further action.

Parker, Ch. «L, O’Brien, Bartlett, Haight, Martin and Landon, JJ., concur.

Order reversed, etc.