Court Opinion

ID: 9808614
Source: CourtListenerOpinion
Date Created: 2023-08-31 20:43:45.871368+00
Date Added: 2024-06-11T12:16:02.537956
License: Public Domain

Clark, J.,
dissenting.
The defendant, II. E. Seago, gave bond in the penal sum of $500 with the two other defendants as his sureties for the faithful discharge of his duties as agent for the sale of sewing machines, and accounting for all sums received by him as such. This action is to recover of him and the sureties on said bond the sum of $442.21 alleged to have been illegally retained by him in breach of said bond, with interest thereon from the date of such breach.
A witness testified that he was general agent of the plaintiff in this State and produced his written authority as such. Defendants’ exception to- this evidence is a misconception. It is true that an agency can not be proved by declarations of the agent, Taylor v. Hunt, 118 N. C., 173; but that is where the declarations of one holding himself out as agent are sought to be given in evidence by another person to prove the agency against the principal. But here the agent goes on the stand himself to prove the fact, and the evidence is competent. It was also competent to corroborate his statements on the stand by showing the same statement had been made by him previously in a letter offered in evidence. State v. Whitfield, 92 N. C., 831. The Court also held correctly that there was no evidence to go to the jury to justify the release of Marks as a surety.
It was not contested on the trial that the principal of the *163defalcation is $442.27, which, with interest, amounted to $546.Y1 at the date of the judgment. Judgment was thereupon rendered against all the defendants for $546.71, with interest on $442.27 from the date of the judgment till paid, and for- costs. It is not contested that this is correct as to the principal, but exception is made that judgment can not be rendered against the sureties for more than $500, the penalty named in the bond.
No consideration is attached to the addition after the $500, of the words “with ten per cent attorney’s fees for collection,” that stipulation is held invalid. Martin v. Boger, 126 N. C., 300.
Where the damages recovered upon a bond of this nature do not exceed the amount of the bond, no difficulty of this nature can arise. But where, as in this case, the recovery is for a greater sum, the question arises as to -whether interest upon the default (the principal of course not to exceed the penalty of the bond) can be recovered against the sureties. Upon this subject there has been some diversity in the Courts. On such state of facts, New York, Maine, Vermont, Kentucky and Kansas, and indeed the great weight of authority is that judgment goes against the sureties for the principal of said default (not to exceed the amount of the penalty of said bond) with interest thereon from the date of the breach. Brainard v. Jones, 18 N. Y., 35; Wyman v. Robinson, 73 Me., 384; 2 Sutherland on Damages, sec. 478 (19); Carter v. Thorne, 57 Ky. (18 B. Monroe), 613; Williams v. Wilson, 1 Vt., 266; Perit v. Wallis, 2 Dallas, 252; Carter v. Carter, 4 Day, 30; U. S. v. Arnold, (Story, J.), 1 Gall, 348; Burchfield v. Haffey, 34 Kan., 42, overruling prior case; Lyon v. Clark, 8 N. Y., 148; Ringle v. O’Matthiessen, 39 N. Y., Supp., 92.
Massachusetts allows judgment against sureties for the principal sum of default or damages (not to exceed penalty) *164with interest thereon from the beginning of the action. Warner v. Thurlow, 15 Mass., 154; Bank v. McGill, 1 Paine (C. C. R.), 661.
' In a very few old. cases judgment 'was given against the sureties for the principal of the bond with interest only from the date of the judgment. Tyson v. Sanderson, 45 Ala., 364; Bonsall v. Taylor, 1 McCord (S. C.), 503. This seems to have been the English rule, 2 Sedgwick Damages, sec. 618, with some contrariety, however. Gainsforth v. Griffith, 1 Sanders, 51, note 1, but even in England the later cases all tend toward the American rule.
Owing to this diversity and the very great importance of the ruling as affecting all bonds of this nature, including official bonds, bonds of guardians and administrators, bonds in injunction, attachment and claim and delivery proceedings, and penal bonds generally, a great number of decisions have been examined, only a part of which have been cited above, and by the great weight of authority, especially in the more recent cases, the rule first cited above is now quite well settled, which was also the view taken by the Court below.
In 2 Sutherland on Damages, sec. 478, after thoroughly discussing the question, it is said, citing a column of cases in note 2: “The weight of American authority, however, is in favor of allowing interest on damages beyond the penalty. The penalty is the limit of the liability at the time of the hr each; interest is given afterwards, not on the ground of contract, but as damages for its violation; for delay of payment after the duty to pay damages for breach of the condition to the amount of the penalty had attached.” Ibid, it is said: “Interest may properly be charged against sureties for delay after it became their duty to pay, as well as against the principal.”
In 2 Sedgwick on Damages, sec. 678, after a similar discussion, the same conclusion is reached: “The better opinion *165is that interest may be recovered in addition to the penalty in an action, whether against principal or surety,” and a large number of authorities to that effect is cited in the notes. To the same purport is the weight of the authorities, all of which are to be found collected in 8 American Digest (Century Ed.), sec. 243. To same purport, 4 Am. & Eng. Enc. (2d Ed.), note 2, and Field on Damages, sec. 546, and cases there cited.
The reasoning of this rule, which seems now the prevailing one, and the better one, is thus given (1882) in Wyman v. Robinson, supra, S. C., 40 Am. Rep., 361: “It is commonly said that the damages can not exceed the penalty of the bond. Rightly understood, the statement is true. But what is the penalty in a bond for the payment of damages? It is the amount which the obligors agree to pay, if the whole penalty be needed for the purpose, for the damages sustained by the obligee by a breach of the bond, the amount to be paid as soon as the breach occurs. The obligee is to have the penalty at a particular and definite time. Immediately upon a breach of the bond the penalty is due to him. If he gets it tben, he gets what the contract provides; if he gets it later, he gets less than what the contract provides. If then the penalty be paid after the breach, interest should be added for the detention of the penalty, to make it equivalent to a payment at the date of the breach. After the penalty is forfeited, it becomes a debt due. The sureties then stand in the relation of principals to the obligee, owing him so much money. The penalty of the bond is payable because the principal did not fulfill his obligation; the interest is the penalty upon the sureties for not fulfilling theirs.”
This reasoning is sound, and accounts for the concensus of the more recent cases upon that line.
In our own State, we have two decisions, Stafford v. Jones, 91 N. C., 189, which is to above result, but on a somewhat *166different line of reasoning; and Anthony v. Estes, 101 N. C., 541, in which it is said that no more than the penalty named in a guardian bond can be recovered against either the guardian or his sureties; the question of interest, however, is not raised, and this ruling is expressly stated to be “not material in disposing of the appeal.” The form there cited from Mr. Eaton evidently is intended for cases where the recovery is for a sum less than the penalty of the bond. The question will rarely arise as to guardian, administration and similar bonds, as to which it is customary to require a bond in double the sum at risk.
Our only direct authority, Stafford v. Jones, supra, being in conformity with the better reasoning and the rule as settled by the great weight of authority elsewhere and eminent text-writers, we should adhere to it.
The Code, sec. 530, has no application. Of course the penalty of the bond bears no interest. Here, the sureties bound themselves to make good any breach of the principal, not to exceed $500. But they bound themselves to make that good when it occurred. Their failure to do so is their own default and they are liable for the $442.27, which is the amount of their principal’s default, and by virtue of their contract to pay such default the sureties are liable for interest on said $442.27 for every day they delayed to make it good. There is nothing in the bond or in the contract which delays the running of interest on this breach by the sureties of their own contract till after judgment. “It is not so nominated in the bond.”