Court Opinion

ID: 5472746
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:43:37.732765+00
Date Added: 2024-06-11T08:33:22.630391
License: Public Domain

Thompson, J.
delivered the opinion of the court. This is an action of debt upon the penalty of a bond given to the people of this state, (pursuant to the act of the 18th of April, 1786,) by the defendants’ ancestor, as ■security, that Christopher Tappen should well and truly perform the office and duty of one of the loan-officers of Ulster county. The loan-officer having neglected tó pay into the treasury the money by him received, and *337having become insolvent, recourse is now had to his security. The case discloses that the deficiency of the loan-officer began as early as the year 1791, and continued to increase almost every year until 1798, but he was not removed from office until the year 1804. And no entry of any deficiency was made in the minutes of board of examiners of the loan-officers’ accounts, until the the year 1795. The defendants’ ancestor died in the year 1794, and in the year 1798 a suit was commenced, against the loan-officer, who was then solvent, but v/as not prosecuted to judgment, nor were the arrears due from him paid up and settled. Under these circumstances, the first question that arises, is, whether the defendants can, in a court of law, avail themselves of these facts in their defence. And if so, then whether .they are sufficient to exonerate them from the payment of the loan-officer’s deficiencies. I am unable to discover any good reason for sending the defendants into a court of chancery for relief. There is nothing in the nature of the defence, to make it peculiarly a subject of equity jurisdiction. That the ancestor of the defendants was a surety only, appears upon the face of the bond; and whatever would exonerate the security in one court ought also in the other. The facts being ascertained, the rule of law must be the same in this court as in the court of chancery. And this seems to be the light in which the subject was viewed, in the case of Rees v. Barrington, (2 Vez. jun. 542.) The doctrine of this j case clearly is, that whether a surety has been discharged or not, is a legal principle, and that, if the form of the I security and mode of proceeding at law, would authorize | an inquiry into the fact, whether security or not, the defence would be the same at law as in equity. Lord Loughborough says, it is the form of the security that forces these cases into equity. For where the principal and security are bound jointly and severally, the security cannot aver ■. by pleading that he is bound as surety *338but if he could establish that at law, the rule or principle by which his liability is to be determined is a legal principle. The case of The Trent Navigation Company v. Harley, (10 East, 34.) does not appear to me essentially to impugn this doctriné. The laches of the plaintiffs in that case, on which the security relied for their exoneration, was disclosed by special pleas, on which issues were taken. If the defence set' up had not been available at law, a demurrer^would probably have been interposed. But the parties went to trial upon the facts. And the court say, in their judgment, upon the motion for a new trial, that none of the pleas appear to have been proved. It is true, Lord Ellenborough says, the question is, whether the laches of the obligees, in not calling upon the principal as soon as they might have done, if the accounts had been properly examined from time to time, be an estoppel at law against the sureties. And he adds, I know of no such estoppel at law, whatever remedy there may be in equity. If the position here intended to be laid down is, that mere delay in calling on the principal, will not discharge the surety, it is, I think, a sound and salutary rule, both at law and in equity. In the case of Peel v. Tatlock, in the C. B. (1 Bos. ξ Pull. 419.) where the laches of the plaintiff was relied upon by the guarantee, in discharge of his responsibility, it was never suggested that this was not a defence at law ; arid it was submitted to the jury as a question of fact, whether, under the circumstances appearing in evidence, the plaintiff had not waived the guaranty, and exonerated the defendant. That the defence set up in the case before us ought to be admitted in a court of law, appears to be fortified by the consideration, that this is a bond of indemnity under a penalty; and which, under the statute, requires an assignment of breaches. The occasion of this statute was, to moderate, the rigour of the common law, which drove parties into equity for relief against the penalty; and since the statute, courts *339court of chancery had before. The defence, therefore, in my opinion, is admissible at law, and the effect and validity of it, forms the next subject of our inquiry.
The verdict has been taken by consent of parties, subject to the opinion of the court, upon the facts stated. So that, if any part of the defence was a subject proper for the consideration of a jury, that is waived by the form in which the case is presented. This case differs essentially from the ordinary case of a security in a bond to a private individual. In such case the obligee is under no positive injunction, or legal obligation, to watch over the conduct of his principal debtor, and at stated periods to examine into his accounts, and in case of failure in punctual payment, to adopt measures calculated to relieve the security. The risk of the insolvency of the principal is assumed by the surety, and the liability of the latter continues, unless he should, at least, require of the creditor to enforce payment. But the situation of the security in this case is widely different. The statute under which the bond was taken, makes it the duty of the supervisors in each county, together with one or more of the judges of the common pleas, annually to meet, and carefully to inspect and examine the minutes and accounts of the loan-officers, and if it be found that any loan-officer has refused or neglected to perform the duty enjoined upon him, they are directed to elect another in his stead. The security had a right to look to the provisions of this statute, and to calculate his liability, on the presumption that the duties enjoined on these public officers would be faithfully and- punctually discharged ; and if so, that he could in no event be responsible for more than,one year’s deficiency. There can be no doubt that the plaintiffs are chargeable with the consequences of the neglect, or breach of duty of their agents or public officers, intrusted with this business.
I should have no doubt but the defendants would be *340responsible for the first year’s deficiency of the loan-offi- , , , . , , . , cer, had the judges and supervisors complied with the duty enjoined upon them by the statute, and removed him from office. This, however, they did not do, until twelve or thirteen years after, when the loan-officer had become insolvent. The defendants are not chargeable with notice of these deficiencies. There is no evidence that they knew their ancestor was surety for the loan-officer. The minutes of the judges and supervisors, which are public records, might have charged the ancestor with this knowledge, had those minutes shown the deficiency during his life-time. But that was not the case. The ancestor died in the year 1794, and although the first deficiency was in the year 1791, there is no entry of any default on the minutes until the year 1795. This is another circumstance calculated to mislead and lull the security to sleep. Again, in the year 1798, a suit was commenced against the loan-officer, at which time he was solvent, and able to have paid all arrears. Indulgence, however, was from time • to time given, and the suit not prosecuted to effect, or the arrears paid up. This was a violation of the spirit' and intention of that clause in the statute which directs that suits on bonds given by the loan-officers should be staid on the defendant’s paying or tendering the damages which had arisen by the breach of the condition of the bond, together with the costs due. These circumstances are sufficient to show beyond a doubt, that the neglect and indulgence of the judges and supervisors, in direct violation of the duty imposed upon them by the statute, have occasioned the loss. And it would be extremely hard and unjust to permit a recovery against the surety, in the face of such repeated laches. In the case of Peel v. Tatlock, (1 Bos. ξ Pull. 422.) Buller, J. says, if any uew debt be incurred, or the demand enlarged, it might be a fraud on the guarantee. And he seems to admit, gs a general rule, that if any thing be done between the *341creditor and principal debtor, which creates the injury to the surety, it will go in discharge of his responsibility. This is a just and equitable principle, and one which ought to be applied to the case before us.
We are, accordingly, of opinion, that the defendants are entitled to judgment.
Judgment for the defendants.