Court Opinion

ID: 7047906
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:57:00.772124+00
Date Added: 2024-06-11T16:11:01.909962
License: Public Domain

Dissenting! Opinion.
Elliott, J.
I fully concur in the conclusion reached in the prevailing opinion, but upon one point am compelled to-dissent. It is my judgment that the bond upon which the action is founded is a contract of suretyship and not of guaranty. While I have not been able to find any decision expressly affirming that an ordinary cashier’s bond is a contract of suretyship, yet I find them generally spoken of as constituting such contracts, and I have not seen an intimation anywhere that notice of default is in any event required, nor have I seen it intimated that there is any doubt at all as to the right to sue all the obligors, the principal as well as the sureties, in one action, although many cases deny that a principal and his guarantor can be jointly sued. ' Our decisions upon bonds of a like character have uniformly treated those who unite with the principal as sureties, though it is true-that, with one exception, the point here discussed does not seem to have been definitely presented. It was, however, presented in one case where it was said: “ The bond was joint and several. E. R. Forsyth was not a guarantor but a surety, and- by the terms of his obligation he was liable for every indebtedness now existing, or which hereafter may in any manner exist or be incurred on the part of said W. H. Forsyth to said company.” Burns v. Singer Mnfg. Co., 87 Ind. 541, opin. 544.
The contract sued on, an ordinary cashier’s bond, undertakes, upon one and the same consideration, that all of the obligors shall be responsible for the conduct of one o,f their number. It does not guaranty the payment of an existing indebtedness, nor does it guaranty jiayment- for goods to be sold the principal, but it undertakes that one of the obligors shall faithfully perform the duties of a trust confided to him. It is an agreement that one of the obligors shall do a desig*349nated thing or things; it is not a guaranty that he will do these things, but a positive, direct, and express undertaking that he will do them. The principal joins in the undertaking, and he, surely, can not be justly deemed a guarantor for himself. All the obligors are liable on the contract, and all may be sued. There is no precedent liability, one and all ■of the obligors become liable on the default of one of the obligors to do what all have agreed and promised he shall do. There is no distinct and different liability. The default that makes one liable makes all liable. Their liability is on the same instrument, accrues at the same instant, and flows from one-and the same breach of one and the same contract. A text-writer says: “ The words surety and guarantor are often used indiscriminately as synonymous terms; but while a surety and a guarantor have this in common, that they are both bound for another person, yet there are points of difference between them which should be carefully noted. A surety is usually bound with his principal by the same instrument, executed at the same time and on the same consideration. He is an original promisor and debtor from the beginning, and is held ordinarily to know every default of his principal. Usually he will not be protected, either by the mere indulgence of the creditor to the principal or by want of notice of the default of the principal, no matter how much he may be injured thereby. On the other hand, the contract of the guarantor is his own separate undertaking, in which the principal does not join.” Brandt Suretyship and Guar., section 1. Markland M. & M. Co. v. Kimmel, 87 Ind. 560.
In a carefully written article in the Albany Law Journal it is said: “ It may be stated as a general rule that the bond of a cashier or other officer js an undertaking, not only for honesty but for capacity, for reasonable skill and diligence in the discharge of his duties.” 17 Alb. L. J. 340. In this article very many cases are collected, and they speak of the bond as a contract of suretyship, as does Judge Thompson in his work on the “ Liability of Officers and Agents of Cor*350porations.” See pp. 494 — 544 inclusive. They are so treated: by other writers. Morse Banking, 211, 247; Law of Building Ass’ns, sections 217, 219.
It is true of every contract of suretyship, that the liability of the sureties is accessary to that of the principal. Pothier says: “As the obligation of sureties is, according to our definition, an obligation accessary to that of a principal debtor,, it follows that it is of the essence of his obligation, that there should be a valid obligation of a principal debtor.” 1 Pothier Obi. 366; De Colyar Guar. & Sur. 37; Burge Suretyship, 3.
In every case of suretyship there is a contract of the principal which the surety undertakes that he shall perform. Of the many familiar instances, it is only necessary to name a few: A receiver’s bond, an appeal bond, a bond to secure the performance of a building contract, to secure the faithful performance of duties by the agent of a corporation, to refrain from engaging in a designated business within the limits of a certain specified territory. High Receivers, sections 127 to-133, and' cases cited; Gavisk v. McKeever, 37 Ind. 484; Davis v. Sturgis, 1 Ind. 213; Potts v. Hartman, 101 Ind. 359; City of Lafayette v. James, 92 Ind. 240 (47 Am. R. 140). In all of these cases, and very many more like them, it has always been considered that the contract of the principal was the main one,, and that of the other promisors the accessary; but, nevertheless, that the latter were sureties. If it can be said of the bond of a cashier that those who unite with him are guarantors, and not sureties, then the same thing must be said of bonds of agents, of trustees, of receivers, and, in fact, of all bonds in which all the obligors are not all principals. "With all deference and respect, I submit that such a holding would destroy settled rules and narrow the limits and range of contracts of surety-ship much within the limits long and uniformly assigned to them. It seems to me that it must be said of the cashier’s, bond before us, as was said of the bond before the court in City of Lafayette v. James, supra, that “ The bond is simply an undertaking that he should perform the duties of his em*351ployment as already fixed at the time of, and prior to, the execution of the bond.”
So far as the statement of facts in Singer Mnfg. Co. v. Littler, 56 Iowa, 601, enables me to judge of its effect and scope, I think it not in point. The question there arose on the answer. The cbmplaint averred that Littler became bound to pay money to the plantiff upon the sale of sewing-machines, or upon the endorsement of paper taken upon such sales, and the sureties answered that they had no notice of his default. In that case, therefore, there were debts guaranteed, while here, there is an undertaking that duties shall be performed, just as there is in a receiver’s bond, an agent’s, bond, a trustee’s bond, and many other bonds of like character. The court in the Littler case recognized the effect and importance of this distinction, for it said: “They became first and only bound upon the bond, whereby they guaranteed that Littler would pay his indebtedness to plaintiff in whatever form it assumed. A guarantor becomes bound for thepei'formance of a prior or collateral contract upon which, the principal is alone indebted; a sxxrety is bound with the px’incipal upon the contract under which the principal’s indebtedness arises. This is a familiar doctrine of the law.” This statement of the law proves that the bond before us. makes the appellants sureties and not guarantors, for it is the breach of that bond that creates the indebtedness against all the obligors. The parties are all bound upon the same instrument, the one default makes them all liable, and until that default occurs not one of them is liable, but, wdxen it-does occur, all are liable. In the case cited the obligors, other than the principal, were not bound by the instrument, which created the indebtedness of the latter; while here the one instrument binds all of the obligors, and the one breach makes them all liable. In speaking of a bond in many respects similar to the present, the Supreme Court of Vermont said: “ But there is no distinction, in this respect, between the-principal and the sureties. Alanson Seaver .had engaged to-*352do certain things; and for not doing them he was liable. The sureties engaged that he should do them, and for his not doing them they became liable. So that the same act, or neglect, that charges the principal, must charge the sureties.” Seaver v. Young, 16 Vt. 658.
In this instance the question whether the contract was one of guaranty or suretyship does not exert an important influence, but the question is intrinsically one of very great importance, and I have thought it proper to outline the reasons which constrain me to dissent from the proposition that a cashier’s bond constitutes a contract of guaranty.
Zollars, J., concurs in the foregoing opinion.
Filed June 25, 1885.