Viaders v. Stacom — 12 N.Y. St. Rep. 114

Majority

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Samuel Viaders, App’lt, v. William Stacom and Michael Morton, Resp’ts.

(New York Common Pleas, General Term,

Filed December 5, 1887.)

Headnote

Auctioneer's bondsmen—To whom and to what extent liable.

The sureties upon a bond given by an auctioneer in the city of New" York, under the provisions of section 113 of the Consolidation Act, on, applying to the mayor for a license, are not liable for breach of contract with or of duty towards persons consigning goods for sale, on the part of the auctioneer, and an action can be maintained upon such bond only by those who have been defrauded by false or fraudulent representations in the sale of goods by such auctioneer.

Appeal by plaintiff from the judgment of the general term of the city court sustaining the demurrer of the' defendant Stacom, and reversing the order of the special term of said court overruling such demurrer.

The plaintiff entrusted certain goods of the value of $100 to one Joseph Morton, Jr., a duly licensed auctioneer in the city of New York, to sell at public auction. Morton sold a part of the goods and received for the same sixty-. nine dollars, but never accounted to plaintiff for the same, nor for the goods unsold, but converted them to his own use and absconded to parts unknown.

This action is brought upon the bond given by Morton as-auctioneer with the defendants Stacom and Michael Morton as sureties, to recover $100 damages. The bond is. dated and was delivered September 25, 1883, and is made to the mayor, aldermen and commonalty of the city of New York in the penal sum of $2,000, and recites that Morton has applied to the mayor of the city of New York for a license to engage in and carry on the business and occupation of an auctioneer, and that the mayor has, previous to the granting of the same, required the filing of this bond, pursuant to statute. The condition of the bond is that Morton, his copartners, clerks, agents and servants, shall well and truly carry on his said business of auctioneer, and in all things obey and conform to all laws of the state' of New York, and all ordinances and resolutions of the common council of the city of New York, now in force or hereafter to be enacted or adopted, relating especially to' the business of auctioneer in the city of New York, and shall refrain from all fraudulent, deceitful and dishonest practices, and especially from those mentioned in the act of the legislature of the state of New York, passed April 9, 1853, entitled, “An act to punish gross frauds and to suppress mock actions.”

The defendant Stacom demurred to the complaint: 1. For non-joinder of Joseph Morton, Jr., his principal, as-defendant. 2. That the complaint does not state facts.

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sufficient to constitute a cause of action against said defendant. The demurrer was overruled, the court holding that the plaintiff was injured by the acts of the auctioneer secured against by the bond. The general term reversed the judgment of the special term, and held that the bond is penal in its character, given as a protection to the general public against the gross frauds known as mock auctions, which the statute of 1853, referred to in the bond, was enacted to suppress.

The bond in question on September 25, 1883, was given under and pursuant to the requirements of the New York consolidation- act of 1882, which took effect March 1, 1883, that act making special provision for the giving of bonds by licensed auctioneers in the city of New York. The object of the bond, as plainly appears from the several provisions of the act in question, is to furnish indemnity to those persons who are defrauded by the auctioneer in the cases specified in said act. By section 113 of the consolidation act it is provided that the mayor shall have authority to license auctioneers on their filing a bond in $2,000, and that upon the complaint of any person defrauded by the auctioneer, or his clerk, agent or assignee, he is directed to take testimony under oath relating thereto, and if in his opinion the charge be sustained he shall revoke the license and direct the bonds to be forfeited.

More specific and full provision as to the giving of the bond, its approval and the filing thereof, are made in sections 1985 and 1986; and the fraud or fraudulent practices which the bond is to secure against and the proceedings for the forfeiture of the bond are fully set forth in sections 1992, 1993 and 1994.

_ By section 1992, it is made a misdemeanor for an auctioneer to make any false or fraudulent representations or statement in respect to the character of such sale, or the party authorizing the same, or the quality, condition, ownership or value of any property put up for sale, or to put up for sale any property as to which any such false or fraudulent statement has been made to his knowledge. By section

1993, it is provided that any person who shall purchase any property at public auction in respect to which any such false or fraudulent representation shall have been made to his knowledge, may sue and recover from the auctioneer conducting such sale, or in whose name it shall been conducted, a penalty of $500 additional to any damage sustained by him by reason of such false or fraudulent statements or representations. By section 1994, it is provided that the mayor, on complaint of any person having been defrauded by any auctioneer, or the clerk, agent or

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assignee of such' auctioneer doing business in the city and county of New York, is authorized and directed to take testimony under oath relating thereto; and if the same charge shall, in its opinion, be sustained, then he shall revoke the license granted and commit the parties for trial according to law, and direct the bonds to be forfeited.

This express provision of law as to when, in what manner and in what case the bond is to be forfeited, excludes all other cases, and limits the objects of the bond to those specified. The bond is to be forfeited after examination as to the offenses for which the auctioneer may be committed for trial, and those offenses are, of course, such as are declared to be misdemeanors in a preceding section. The bond is undoubtedly to be forfeited for the benefit and indemnity of the persons who make the charge against the auctioneer, in which he is examined by the mayor, and who have been defrauded by the false or fraudulent representations which are so declared to be misdemeanors, and to whom the statute gives an action for a penalty of $500, in addition to damages sustained. No other fraud or injustice practiced by the auctioneer will give a right of action upon his bond, because the bond is to be forfeited for the fraud specified in the act and no other.

The plaintiff in this action was not defrauded by any of the practices specified in the statute. He is a contract creditor of the auctioneer as to his demand for the proceeds of that portion of the goods which have been sold, and has a claim for damages for that portion of the goods converted. The frauds enumerated in the statute are those practiced upon purchasers at auction sales. Breach of contract with, or of duty towards persons consigning goods for sale on the part of the auctioneer, is not embraced among the causes for which the auctioneer’s bond may be forfeited, and for which an action upon it may be, therefore, maintained.

It is argued by the appellant that the bond being also conditioned that the auctioneer iC shah well and truly carry on his said business of auctioneer,” is intended for the protection and indemnity of all persons against any breach of duty on the part of the principal in the bond, and that as to such persons there is no necessity for the forfeiture of the bond in proceedings for that purpose before the mayor, but that such breach of duty is a breach of the condition of the bond, and that an action may be maintained thereon without any preliminaries. To this it is sufficient to answer that when the statute prescribes a particular mode of proceeding by which the bond is to be forfeited, that and no other must be followed, and that mode is indispensable. Bésides, how can it be reasonably maintained that the legislature intended that persons injured by gross and criminal

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frauds of the auctioneer should have their remedy postponed until they had instituted and carried to a successful termination a prosecution before the mayor, while others, whose position is, in fact, that of contract creditors, should have immediate recourse to the bond.

It is this special statutory enactment providing in what cases the bond may be forfeited, which distinguishes the fxresent case from those cited and relied upon by the appelant.

The judgment should be affirmed.

Van Hoesen, J., concurs in the result.