Opinion ID: 1550309
Heading Depth: 1
Heading Rank: 2

Heading: Liability of the Surety.

Text: Appellant contends that the judgment in favor of the surety company should be reversed because the petition pleads a violation of the conditions of the above bonds executed by it. The petition does so plead. Since we hold that the principals in the bonds are not liable, the question of liability of the surety becomes a question of whether the surety on these bonds is liable when the principals, for reasons hereinbefore given, cannot be held liable. Appellant cites United States v. Perkins, 8 Cir., 280 F. 546; Seneca Independent School District v. Traver, 63 S.D. 68, 256 N.W. 365; Burkland v. Bliss, 62 S.D. 91, 252 N.W. 25; 46 C.J. 1068 and 1071; 22 R.C.L. 496, 497, 586 and 587. In none of these citations is involved the legal issue before us. The rule of law which governs the liability of sureties upon bonds generally is that the surety is not liable unless the principal is and, therefore, may plead any defense available to the principal. To this general rule there is a recognized exception which has been broadly stated as follows: That the surety is not excused where the principal, when sued, takes advantage of a matter of defense which is altogether of a personal character, or where the extinction of the principal's obligation arises from a cause which originates in the law (21 R. C.L. 974, Section 27). [3] The only authority we have been able to find which bears directly upon the issue here is Anderson v. Manley, 181 Wash. 327, 43 P.2d 39. In that case, suit was against a prosecuting attorney and the surety upon his official bond for malicious prosecution. The holding was that the act of the prosecuting attorney upon which suit was brought was within his official immunity and that both he and the surety were immune. We have found three South Dakota cases which deal with or contain expressions concerning the liability of a surety where the principal may escape liability but none of these was a case where the principal was immune because of the public policy treated in the earlier point in this opinion. [4] Since we find no guiding decision from the Supreme Court of South Dakota, from the Supreme Court of the United States or from this Court and since we find but one decision in other jurisdictions, we deem it proper to examine the matter. The considerations hereafter stated move us to deny liability of the surety here. The immunity given the principals of these bonds is in no sense a personal privilege nor is it one arising from any legal incapacity in them. The sole basis of such immunity is a public policy resting entirely upon the public good to be brought about by having the official action of certain classes of public officials entirely uninfluenced by apprehension of personal civil liability. Spalding v. Vilas, 161 U.S. 483, 498, 16 S.Ct. 631, 40 L.Ed. 780; Yaselli v. Goff, 2 Cir., 12 F.2d 396, 406, 56 A.L.R. 1239, affirmed per curiam 275 U.S. 503, 48 S.Ct. 155, 72 L.Ed. 395. To allow recovery against the surety as to such official acts would (a) result in weakening (if not entirely destroying) the effectiveness of this public policy or (b) it would make it burdensome or impossible to secure official bonds. (a) It is a matter of general knowledge that there are decided practical advantages in having as surety on official bonds companies which made a business of such suretyship. It is equally well known that such companies nearly always have contracts of reimbursement from the principal upon such bonds. If they have no such contracts, the law implies such. Howell v. Commissioner, 8 Cir., 69 F.2d 447, 450, certiorari denied Howell v. Helvering, 292 U.S. 654, 54 S.Ct. 864, 78 L.Ed. 1503. This rule of reimbursement is applicable whether the surety be such a company or an individual. In South Dakota this right of reimbursement to the surety against the principal is given by statute. Comp.Laws, S.D.1929, secs. 1471, 1508 and 1509, and see John Deere Plow Co. v. Tuinstra, 47 S.D. 555, 200 N.W. 61; Heinrich v. Magee, 52 S.D. 371, 217 N.W. 631. Therefore, the situation is that, if the surety has to pay, it turns back upon the principal  the immune official  for full reimbursement. Thus the official is liable, in a roundabout way, for the official action which this rule of public policy declares he shall not be liable for directly. Such a situation weakens, if it does not destroy, all real effect of the public policy. (b) If it be contended that this result could be avoided by extending the immunity of the official to such actions for reimbursement to the surety, then the obvious result would be great difficulty in securing official bonds  most of which (as here) are required by statute. We think the proper course to pursue is to extend this immunity to the surety. By so doing, the full effect of the purpose of this public policy will be preserved. The judgments here involved should be and each of them is affirmed.