Case ID: ad_166/html/0358-01.html
Source: Caselaw Access Project
Author: {"author": "Kellogg, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William W. Farley, as State Commissioner of Excise of the State of New York, Respondent, v. James F. Patterson and National Surety Company, Appellants.
    Third Department,
    March 3, 1915.
    Intoxicating liquors — guaranty and suretyship — action against holder of liquor tax certificate and his surety to recover penalty of bond — evidence — judgment convicting principal of violation of statute.
    In an action against the holder of a liquor tax certificate and his surety to recover the penalty of a liquor tax bond for a breach of the condition that the principal will not violate any of the provisions of the statute, a judgment convicting the principal of a violation of the Liquor Tax Law is sufficient evidence of a breach of the bond as against him, but is insufficient as against the surety as to whom other proof must be offered.
    Woodward and Lyon, JJ., dissented in part.
    
      Appeal by the defendants, James F. Patterson and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Schenectady on the 19th day of August, 1914, upon the decision of the court, a jury having been waived, and also from an order entered in said clerk’s office on the 10th day of September, 1914, denying the defendants’ motion for a new trial made upon the minutes.
    
      James A. Quinn, for the appellant Patterson.
    
      Lucius A. Waldo, for the appellant surety company.
    
      A. M. Sperry [Louis M. King of counsel], for the respondent.
   Kellogg, J.:

This action is brought against the principal and his surety to recover the penalty of a liquor tax bond for breach of the condition that the principal will not violate any of the provisions of that law. The bond provided that an action for its breach might be brought without any previous conviction or prosecution of the principal.

The only evidence tending to show a "breach of the bond was a judgment convicting the defendant Patterson of a violation of the Liquor Tax Law. The defendants severally objected that said conviction was not evidence against them, and severally moved for a dismissal of the complaint upon the ground that there was no legal evidence of a breach of the bond.

At the close of the case the court asked if the defendant rested. The surety company replied that it did not know; it desired to discuss whether the judgment might not be some evidence, and that it might want to put in evidence. The court replied that it was evidence against the principal and if the surety company’s motion to dismiss was not granted it could put in proof if it so desired. The court, however, directed judgment against both defendants, and we infer must have held that the judgment of conviction was conclusive evidence of the breach of the bond, the surety company having been accorded no privilege of introducing evidence upon that subject.

A judgment'of conviction is not evidence against the defendant in an action between bim and a third person, as such person is a stranger to it. But it conclusively establishes between the People and the person convicted that he committed the offense. The nature of the action is immaterial. The question is whether the same matter has bee'n litigated "and decided between the same parties. If so it is unnecessary that it again be litigated and decided. It is true that a judgment of acquittal is not evidence against the People in a civil action, for the reason that in a civil action a preponderance of evidence may sustain a judgment while in a criminal action guilt must be proved beyond a reasonable doubt. The acquittal shows only that the guilt of the defendant was not established beyond a reasonable doubt.

The bond in question runs to the People of the State of New York while the Commissioner of Excise is permitted to bring an action upon it for the benefit of the People and certain tax districts of the State. He brings the action and seeks a recovery as a representative of the People, deriving whatever cause of action he has from the People. It is unnecessary, therefore, to try the question again as between the People and the defendant Patterson, or between a representative of the People seeking to recover upon an obligation issued to the People.

As to the surety company another question arises. It was not a party to the criminal action, and under the law was not permitted to intervene or defend. It was, therefore, a stranger to it, not bound by the result.

It is urged, however, that as surety upon Patterson’s bond it was bound by the judgment of conviction entered against him . The question has been much discussed in the cases and text books as to how far a surety is bound by a judgment against his principal.

In Berry v. Schaad (50 App. Div. 132) the Fourth Department unanimously determined that in a case where it was unnecessary to sue the principal before suing the surety, a judgment against the surety, in the absence of notice requiring bim to defend, was not prima facie or conclusive evidence against him.

In Mulry v. Eckerson (149 App. Div. 29) the First Department unanimously held that in the absence of notice and an opportunity to defend, such judgment was not evidence against the surety.

In Miano v. Empire State Surety Co. (153 App. Div. 423, 425) the Second Department unanimously determined that although .the surety had notice but did not defend, such judgment was not evidence against him in cases -where the bond was not given to indemnify the principal but was given to indemnify others against the default of the principal. This bond was not given to indemnify Patterson but to indemnify the People against his wrongful act.

In many cases, by the terms of the bond, the surety becomes liable to indemnify against or pay a judgment, in which case the rule may be different. The defendants’ bond has such a provision with reference to the payment of judgments recovered for fines and penalties. But concededly there has been no breach of the bond in that respect. This action is brought upon contract for the recovery of money agreed to be paid in the event that Patterson violated the provisions of the Liquor Tax Law. The surety guaranteed that he would not violate that law, and to establish a breach of the bond against it proof must be made otherwise than by a judgment of conviction against him.

It follows that the judgment against Patterson should be affirmed, with costs, and judgment against the surety company reversed and a new trial granted, with costs to it to abide the event.

All concurred, except Lyon, J., who voted for affirmance, and Woodward, J., who voted for reversal.

Judgment and order as against defendant Patterson affirmed, with costs. • Judgment and order as against defendant National Surety Company reversed and a new trial granted, with costs to it to abide event.