Case ID: tenn_21/html/0500-01.html
Source: Caselaw Access Project
Author: {"author": "Reese, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Polk, Governor, vs. Plummer, et als.
    
    1. The act of 1837, ch. 107, sec. 9, requires the cashier of the Bank of thd State and its branches, to give bond with security for the performance of his duty,-payablo to the governor of the State. Dale, cashier of the branch at Columbia, gave the bond payable to Newton Cannon, governor, and his successors in offices. Suit was instituted on this bond in the name 'of James K. Polk, governor of the State of Tennessee, for the use of the president and directors of the Bant of the State of Tennessee: Held, that when a statute directs bonds for the public benefit to be made payable to the governor, or other functionary having legal succession, the office is the payee, and the successor, whether described, so nomine, either in the statute or bond or not, may maintain the action, such officer being made by form- of the statute, and for the public benefit, quoad hoc, a corporation sole.
    2. Bonds and other deeds may be good in part and void for the residue, where the residue,is founded in illegality, but notmalum^ in se; and this is so, not only with regard_ tp? bonds or deeds containing conditions, covenants or grants not malum in se,'but also with regard to those containing conditions, covenants or grants, illegal by the express provisions of statutes.
    3. The only ’exception to this rulo, is where the statute has not confined itspro^ hibitions to the illegal conditions, covenants or grants, but has expressly or by necessary implication annulled the whole instrument to all intents and purposes.-
    In the yearl837-8, the legislature passed a law establishing a State bank with branches. One of these branches was located at Columbia. The law required that the cashier of each of these branches should “give bond with two or more securities to the satisfaction of the directors, payable to the governor of the State, in a sum not less than one hundred thousand dollars, conditioned for the faithful performance of his duty.” E. W. Dale was appointed cashier of the branch at Columbia, and gave bond on the 9th day of July, 1839, with Turney, Plummer, Johnson and Duncan as his securities. They bound themselves by penal bond “unto Newton Cannon, governor of the State of Tennessee, and his successors in office, in the sum of one hundred thousand dollars.”
    This bond recited that it was to be void upon condition, first, that said Dale should perform all the duties of the office with fidelity; second, that he should indemnify the bank for áÜ losses and damages that might be sustained by reason of any default, neglect, fraud, failure or delinquency of said Dale; third, the condition of the bond recited that, it was agreed that “one recovery shall not satisfy or discharge this obligation,” but that it should be good and available against them, “notwithstanding any previous recovery or recoveries* so long as any cause of action” should “exist against them.”
    It further recited, that “no temporary or occasional absence of the cashier from the bank” should “impair the validity of this bond.”
    During the time which said Dale occupied the office of Cdshier, Some thirty or forty thousand dollars had been illegally and clandestinely abstracted from the bank. The legislature directed the district attorney, James H. Thomas, to institute suit upon the bond against Dale and his securities; In accordance with this mandate, Thomas* on the 23d day of May, 1840, instituted an action of debt for the penalty of the bond above set forth, in the circuit court of Maury county, against Dale, Turney, Plummer, Johnson and Duncan. The writ was in the name of James &J^iS?^sieSJapr of the State of Tennessee, for the use and and. directors df the Bank of the State of Te
    The attorney general filed the declaration on behalf bank, at the August term, 1840, in which it was changed that Dale had not performed his duties with fidelity, and that be had not indemnified the bank against all losses, &c., with other breaches, which it is not necessary here to set forth.
    The defendants filed a demurrer to the plaintiff’s declaration, and set down and assigned the following causes of demurrer:
    L The act of the general assembly, establishing the State bank and the branches, requires each cashier to give bond with two or more securities, “payableto thegovernorof theState,”andthe bond sued upon is not made payable as the law requires, but is made payable to “Newton Cannon, governor of the State of Tenn., and his successors in office;” the words “and his successors in office” not being authorised by law, said bond is not a good bond under the statute,
    2. Said bopd contains a provision that said cashier Dale should be responsible for losses which'might accrue during his temporary absence, and a recovery on the bond, to the full amount of the penalty should not be a satisfaction of the. bond, and other provisions and stipulations not prescribed by law, nor authorised by the statute.
    The plaintiff joined in the demurrer, and the cause was continued till the July term, 1841, when it was argued before Dillahunty, judge, who being of the opinion that the law was with the defendants sustained the demurrer. The plaintiff appealed in error to the supreme court.
    
      Ewing and Thomas, for the plaintiff.
    1. It is objected that the bond was not made in accordance with the statute in reference to the obligee, On this point, see 3 Monroe Ky. Rep. 391: 3 Wendall, 48: 3 Hawks, 167: Angelí & A. on Corporations, 137-8, and the authorities there cited: Angelí & Ames on Corporations, 16, and the authorites there cited: 4 E. Common Law Rep. 249: 3 Dev. 284: A. & A. on Corp. 55:4 Haywood, 215: 4 Yer. 489: 1 Hay. 144: 4 Dev. 65.
    2. it is objected that there are conditions inserted in the bond not authorised by the statute creating the bond, and oppressive upon the defendants. On this point see Comyn’s Digest, Tit. Action M.,4: Covenant A. 2: Chitty’s PI. vol. 1, page 108: 4 Dev. 529: 2 Leigh’s N. P. 740: Wild vs. Clarkson, 6 Term, 303: Hurls, on Bonds, 107: 2 Yerg. 71: 2 Saunders, 412: 6 East, 507: Ilurlst. on Bonds, 33-4-5: Minor, et ais. vs. M. Bank of A., 1 Peters, 69: A.B. vs. A., 12 Pickering, 303: 10 John. 27: 2 Hawks, 93: 12 Wend. 306: IWend. 464: 17 Wend. 67.
    
      Nicholson, for the defendants.
    1. The bond on which this suit is brought, is made payable to Newton Cannon, governor of the State, and his successors in office. The action is brought by James K. Polk, as the successor of Newton Cannon. If it be a good statutory bond, the suit is properly brought; if it be not a good statutoiy bond, the suit should have been brought in the name of Newton Cannon or his legal representative. 10 Yerg. 465, Hibhits vs. Canada.
    
    2. To make a good statutory bond, the requisitions of the statute must be pursued in all essential points, and no other or greater obligations must be imposed by the bond than the statute authorises. 4 Yerg. 156: 6 Yerg. 363: 2 Dev. 12.
    I insist for the defendants, that the bond- contains several provisions, each one of which imposes other and greater obligations than the statute authorises. The statute provides that every cashier shall give bond with two or more securities, payable to the governor, in a sum not less than one hundred thousand dollars, conditioned for the faithful performance of his duty. A bond made in pursuance of this authority must be a bond with a penalty. There is no restriction or limitation as to the amount of the penalty, except that it must not be less than one hundred thousand dollars, yet a definite sum must necessarily be adopted to be in conformity to the statute. Whatever amount might be adopted as the penalty of such bond would be discharged by one'recovery on the bond in an action of debt.
    Hence, if the bondjaken, either, has no definite amount as a penalty, or if a stipulation is inserted, which would authorise more than one recovery, it cannot be a good statutory bond.
    1. The bond sued on contains one hundred thousand dollars as a penalty, but after providing in the conditional part for the faithful performance of the duty of the cashier, in conformity with the statute, this further stipulation is added: that the said cashier shall also be responsible to, and indemnify the Bank of Tennessee for all sums of money that might become due, and all losses or damages that might be sustained by reason of any default, neglect or fraud df the cashier.
    The statute, in providing for-the taking of a bond, does not au-thorise it to impose any “responsibility” on the cashier to the Bank of Tennessee, nor to require the cashier to “indemnify” the bank for losses or damages. The only obligation prescribed is one to the governor of the State. Yet this condition in the bond creates a responsibility to the bank, which is a different obligation from that required by the statute. Again: This stipulation virtually and effectually enlarges the responsibility of the obligors to an indefinite amount beyond the penalty. If the bond had been made with a penalty of $100,000, conditioned for the faithful performance of the cashier’s duties, as the statute requires, then the securities to the bond could have been made liable for no more than the penalty for any default, neglect or fraud of their principal. 5 Bac.' 156, (Obligations:) Cooke, 268: 2 Yerg. 71. But by this additional stipulation, they agree to be liable for “all sums” and “all losses or damages,” although the amount might greatly exceed one hundred thousand dollars. The design of the draughtsman of the bond, no doubt was, to enlarge the responsibility of the obligors beyond the penalty, for the purpose of securing any “losses” or “damages” over and above the amount of the penalty, and at the same time to avoid the rule of law which limits' the liability of the securities to the penalty. This object has been attained; but the consequence is, that in effect it is made a bond without any definite penalty, which is in violation of the express requisition of the statute.
    2. But to attain, effectually the object of the draughtsman, it was not enough to stipulate for the indefinite enlargement of the responsibility of the obligors; there was still a principle of law, through which, liability beyond $100,000 might be escaped. I allude to the principle that the liability upon the bond might be discharged after one recovery. Hence we find the further stipulation, that one recovery should not satisfy or discharge the obligation. By virtue of this stipulation, the obligors are precluded from relying upon the principle just stated, a principle which would attach to the bond, no matter how great the amount of the penalty, if drawn in pursuance of the statute. It is clear that if the bond had been taken in the penalty of $100,000, with the stipulation that one recovery should not discharge or satisfy the obligation, still that amount of the penalty would be the utmost extent of the responsibility of the securities. But by virtue of the two stipulations, the one enlarging the responsibility indefinitely, and the other enlarging the remedy indefinitely, every possible chance of escape was provided against. Yet if the bond had conformed to the statute, the liability of the securities would have been measured by the penalty, and the remedy against them limited to a single recovery.
    3. The bond provides, that no temporary or occasional absence of the cashier from the bank shall be averred or alleged as impairing the foi’ce of the obligation. If this stipulation mean any thing, it must mean that the obligors should be responsible in any event, even though a loss should accrue during a temporary absence, unconnected with negligence, or fraud. That such was the design, we are forced to infer from the exceeding caution with which the whole bond was prepared; and if such was the design it surely imposes an obligation never contemplated by the statute.
    The conditional part of a bond is for the benefit of the obligors, and is not to be construed so as to extend beyond the recital in the bond. 3 Saund. 412. As if the recital be that A. is appointed cashier for one year,, and the condition is, that A. shall be responsible for losses during his continuance in the office; this will be construed to limit the obligation to losses occurring within the year. It is a rule of construction adopted in arriving at the intention of the parties, but can never be used to defeat that intention when expressed without ambiguity. The bond under consideration is an entire contract, and in construing it, the leading object of the court will be to ascertain the- real intention of the parties. When the intention is plain, no rule of construction'will be allowed to vary or alter it.
    In the case now under consideration, the parties agree in the debtor part of the bond, that the obligors are bound in the sum of one hundred thousand dollars, and in the conditional part they agrée that their liability shall be continuing, and that they will be responsible to and indemnify the Bank for “all losses or damages” that may occur. The court cannot, by any rule of construction, so alter or modify the plain intention of the parties as to say, that the obligors shall not be responsible for “all losses and damages,” but that they shall only be responsible for $100,000. That would be the making of a new contract for the parties.
    
      Attorney General, in behalf of the plaintiff, in reply.
   Reese, J.

delivered the opinion -of the court.

This is an action of debt upon a bond. E. W. Dale was appointed cashier of the branch of the State Bank at Columbia. The act establishing the Bank, (1837, ch. 107, sec. 9, art. 9,) provides that “every president and cashier, before he enters on the execution of his duty, shall give bond with two or more securities to the satisfaction of the directors, payable to the governor of the State, in a sum not less than one hundred thousand dollars, conditioned for the faithful performance of his duty.” E. W. Dale and his securities gave bond in the penalty of one hundred thousand dollars, payable to Newton Cannon, governor of the State of Tennessee, and his successors in office, “conditioned that Dale should well and truly, and with diligence, integrity and fidelity discharge and perform all and singular the duties appertaining to the said office, and should be responsible to and indemnify the Bank of Tennessee, for all sums of money that might become due, and all losses or damages that might be sustained by reason of any default, neglect, fraud, failure or delinquency of the said Dale, (which it was thereby covenanted that he should do and perform,) then the obligation to be void,” &c. After this, in the above bond, is found the following: “And it is understood and agreed that one recovery shall not satisfy or discharge this obligation, but that it shall be good and available against us, notwithstanding any previous recovery or recoveries, so long as any cause of action exists against the said E. W. Dale, cashier as aforesaid, and that no occasional or temporary absence of said cashier from the said branch of said Bank, shall be averred or alleged as impairing the force of this obligation, or of said conditions, but that the same, notwithstanding any such absence, shall continue in full force and virtue.” Suit upon this bond was brought in the name of James K. Polk, governor of the State of Tennessee. A demurrer was filed to the declaration, which the circuit court upon argument saw proper to sustain, and the plaintiff in error has appealed to this court.

Two questions have been discussed before us. 1. As the statute directs that the bond shall be made payable to the “governor of the State,” and as the bond in the record was made payable to “Newton Cannon, governor of the State of Tennessee, and his successors in office,” whether James K. Polk, although governor of the State, and successor of Newton Cannon in office, can maintain the action? For the plaintiff it is said that the action may well be brought either in the name of “the governor of the State” without more, or in the name of the governor at the time, or if not in office, in the name of his successor, stating himself as governor; that the bond and the action in this case are according to the legal effect of the statute, and sufficiently pursue it; but even if this were not so, that the words “Newton Cannon,” “successors in office” and “James K. Polk” may all be rejected as surplusage, and then the bond and the action are in the name of the “governor of the State;” that when a statute directs bonds for the public benefit, to be made payable to the governor or other functionary, having legal succession, the office is the payee, and the successor, whether described, eo nomine, either in the statute or bond, or not, may yet maintain the action, such officer being made by form of the statute and for the public benefit, quoad hoc, a corporation sole. Upon this branch of the case, the counsel for the plaintiff have referred to various authorities; among others to 1st Hay. 144: 4 Ba. Ab. 411: 4 Rep. 65: 4 Inst. 249: Strange, 452: 4 Dev. 656.

The counsel for the defendants in this court, do not controvert the point which these authorities were cited to maintain. And wé think on this branch of the case no obstacle exists in the way of the plaintiff maintaining this action.

2nd. In the second place it is contended,- that this bond is statutory, made payable to a public functionary, having no right, or power, or interest, apart from the statute, to take any bond at all touching the duties and functions of a cashier of a bank j and that¿ therefore, no other, or different bond can be taken by him, thaii that which the statute designates; and that if other and different stipulations than those pointed out by the statute be inserted in such a bond, it is thereby rendered void, not as regards such other and different stipulations merely, but so much also of the bond, as may be conformable to the statute; that in the bond before us, the superadded conditions, or stipulations on the subject of one recovery not satisfying or discharging the obligation, and on the subject of the temporary or occasional absence of the cashier, are of this character, and make the whole bond bad, and void as a statutory bond.

On the other side it is said, that these superadded stipulations may be void, and if void, they do not invalidate the balance of the bond, that they stand distinctly apart from the other Stipulations, are readily separable from them, and that in fact, without these stipulations the bond is entire, complete and in exact conformity with the statute.

This question has profited by the ample research, and clear and vigorous discussion of Mr. Justice Story, in the case of the United States vs. Bradley. That case indeed has exhausted the subject. The court there remark: “That bonds and other deeds may, in many cases be good in part, and void for the residue, when the residue is founded in illegality, but not malum, in se, is a doctrine well founded in the common law, and has been recognized from a very early period;” and Mr. Justice Story goes on to show that the case was the same, when the illegality arises under a statute, except in some cases, such as those under the statute of 33 Henry 6, ch. 9, as to sheriffs taking bonds, which are in terms by the statute declared void, unless taken as set forth therein.

And having reviewed several cases in England and the United States, he concludes with this general declaration, that “there is no solid distinction, in cases of this sort, between bonds and other deeds, containing conditions, covenants or grants, not malum in se-, but illegal at the common law,- and those containing conditions^ covenants or grants, illegal by the express prohibitions of statutes.In each case, the bonds or other deeds are void as to such conditions, covenants or grants, which are illegal, and are good as to all others which are legal and unexceptionable in their' purport.The only exception is, when the statute has not confined its prohibition to the illegal conditions, .covenants or grants, but has expressly or by necessary .implication, avoided the whole instrument to all intents and purposes.”

■ In the same'case, Judge Story remarks, that “a bond may by mutual mistake or accident, and wholly without design, be taken in a form not prescribed by the act. It would be a very mischievous interpretation of the act, to suppose, that under such circüm-stances, it was the intendment of the act, that the bond should be' entirely void. Nothing, we think, but very strong and exj press language should induce a court of justice- to adopt such an interpretation. When the act speaks out, i-t would be our duty to follow it. When it is silent, it is a sufficient compliance with the policy of the act, to declare the bond void as to any conditions which are imposed upon a party, beyond what the law requires. This is not only the dictate of the common law, but of common sense.” It is true, indeed, that in the case of the United States vs. Bradley, as well as in other cases, the court held, that the United States, being a body politic, had a general power to hold voluntary bonds in the absence of statutory enactments. But the reasoning of the case does not proceed upon that distinction, and the dis-' cussion is not based upon that principle. The result, it would seem, would have been the same, if the-bond in question had, by the sta--tute, been made- payable to the Secretary of War, of the Treasury, or other person. The general principle embraces both cases. Whether the bond, by the statute, be payable to the United States, or to some public functionary for their benefit-, the conditions not imposed by the statute are void, and the balance good. And the' court refers, as an authority to-sustain their judgment in the case' of the United States vs. Bradley, to the case of the Supervisors of the county of Alleghany vs. Van Campen, where the payees of the bond had none other than statutory power to take the bond. 3 Wend. 48. So also in a late case in England, in the Common Pleas, it was held by all the judges, that a bond payable by a collector of taxes to commissioners of the revenue, which in part did not pursue the statute, was void as to that part, and good as to th® balance. Tindal, C. J., remarked, “that the rule of law is, that if a bond be conditioned for the performance of a thing, malum in se, or against a positive law, not only is the condition void, but the bond also, and the question is whether the conditions of this bond are for the performance of a thing malum in se, or contrary to the statute under which the bond was taken. If the conditions had been solely to pay to the commissioners, it would have imposed an illegal act, and the bond would have been void. But it becomes unnecessary to consider that, because there is. a separate condition under which the obligor is to pay to the receiver general. I cannot see why we are to call in aid a distant condition which may be illegal, to vitiate that which is clearly legal. Gaselee, judge, said, “there is no provision in the act, that the bond shall be taken in any particular form, and the condition to pay to the commissioners, does not render the whole bond void. In Newman vs. Newman, 4M. & S. 66, Lord Ellenborough, C. J.,said, “admitting the condition of the bond to be ill, as to one part of it, it seems it may be well as to the other parts; for you may sepárate at the common law the bad from the good.” 7 Bingham, 423.

The question therefore, in general, and also as to bonds merely statutory, seems upon authority well settled, and that superadded and distant conditions, not imposed by the statute, may be rejected as illegal, and the conditions required by the statute be enforced as valid. In the case before us, it will be observed .that the directions of the statute are comprised in very general language; the form of the bond is not prescribed. To hold in. such a case, that if the draughtsman of the bond, in fi lling up its conditions in detail, should insert some, which might be.construed as not falling within the general scope of the statute, the entire bond should be thereby rendered void, would be of most mischievous consequences, injuriously affecting all the fiscal interests of the State, and all the'fiduciary relations of society committed to the public ministration. As the superadded conditions in the case before us, may be rejected as void, it is scarcely necessary to inquire into their meaning and legal effect. If the clause, relating to one recovery not discharging the obligation, be understood to refer to actions of covenant within the limits of the penalty, then it only asserts what the law would operate without it. If it is to be understood to. mean, that more than one recovery of the penalty may be had, then it is" repugnant to law, the rules of which it is not competent for individuals by their contract to set aside, and would for that reason be void. We know not whether the other stipulation about absence, would or would not enlarge the measure of accountability intended by the statute. It is unnecessary here to inquire. The stipulation, if not imposed by the legislative intention, may be rejected.

There is somewhat a numerous class.of cases in our own books of Reports which have been referred to in the discussion. But these cases were upon other principles. They were not suits according to the course of common law, but summary, and often ex parte proceedings upon motion, and in most of them the penalty of the bond differed from that presented by the statute, a difference effecting the whole bond. The principle of these cases, therefore, is not in conflict with the conclusion at which we have arrived in the case before us. Upon the whole we are of opinion, that the judgment of the circuit court must be reversed, the demurrer be overruled, and the cause be remanded to the circuit court for further proceedings.