Court Opinion

ID: 6898152
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:52:06.727284+00
Date Added: 2024-06-11T16:06:04.601250
License: Public Domain

Mr. Justice Bean
delivered the opinion of the court.
In 1892 the plaintiff and defendant became sureties on the official bond of V. L. Arrington, Treasurer of Douglas County. Arrington made default in the sum of $22,990, which they were compelled to pay in equal parts. Thereafter the plaintiff brought this action to recover $4,003.55, alleging that at the time of the execution of the bond it was agreed and stipulated between him and the defendant that their liability, as between themselves, should not be joint or equal, but that the plaintiff should be liable for one-third, and defendant for two-thirds, of any loss thereon. This alleged contract was denied by the defendant, and, upon issue joined, the cause was tried before a jury, resulting in a verdict in favor of plaintiff for the amount prayed for; and from the judgment which followed the defendant appeals, assigning as error the following instruction to the jury : “The complaint in this case alleges, in substance, that an agreement was entered into between the plaintiff and the defendant, at the time of the execution of the bond of V. L. Arrington as Treasurer of Douglas County, that there was an agreement between plaintiff and defendant, as sureties to said bond, that the plaintiff should be liable for one-third part of any default Arrington might make as county treasurer, and that defendant should be liable for two-thirds of any such default. I charge you that such agreement may be established by proof of circumstances from which shch agreement may be inferred, and that it is not necessary, to entitle plaintiff to recover, to prove that such agreement was made in express words, or by the use of any formal expression or statement of the parties. Therefore, if you find from the evidence before you that at the time this bond was executed the plaintiff and defendant each understood that they were assuming liabilities on it in the ratio of one-*156third by the plaintiff and two-thirds by the defendant, and that they executed the same with that understanding, and each knew that such was the understanding of the other, such facts, if you find them to be facts, would be evidence from which an agreement could be inferred, and would be sufficient to prove the allegations of an agreement set out in the complaint.”
There was no evidence of an express contract by defendant to indemnify plaintiff against liability as a surety on Arrington’s bond. It must be implied from the conduct of the parties and the circumstances of the case, if it existed at all. The instruction complained of is the only one given as to what would be sufficient proof of an implied contract. To understand its importance and the particular objection made to it, a brief reference is necessary to some of the facts, a statement of which will be found in the former opinion in this case : 31 Or. 269 (44 Pac. 382). Arrington was required to give a bond for $30,000, and the evidence tended to show that he represented to the plaintiff that it was to be signed by three sureties, and, with that understanding, plaintiff consented to become one of them. When the time came for executing the bond, the plaintiff, discovering that defendant and himself were tire only sureties present, objected to becoming a surety for more than one-third of the amount of the bond, whereupon Arrington offered to get the third surety, when the defendant said that it was not necessary, for he would “take the rest of the bond.” It was thereupon executed, with the figures “$10,000” written immediately in front of plaintiff’s signature; and he justified in that sum, and the defendant in the sum of $20,000. The point of the objection is that in view of this testimony the jury could very properly have found that the plaintiff and defendant each understood or supposed at the time they executed the bond that they were assuming liability thereon *157to the county in the proportions of one-third and two-thirds, and that by the instruction such an understanding alone was made sufficient proof of a contract between the plaintiff and defendant to modify or change the ordinary rule of contribution between sureties. And in this position we concur. By the execution of the bond, the sureties assumed a dual liability : First, to the county, and, second, as between themselves. The liability of each of them to the county must be measured by the face of the bond, and not by the mode or manner of its execution. Their liability as between themselves results from equitable principles, and, unless changed by a contract, they would each be liable for one-half the loss. The court charged the jury very properly, therefore, that beforedhe plaintiff could recover he must prove the contract alleged in the complaint by a preponderance of evidence, and mere proof of the manner in which the bond was executed would not be sufficient for that purpose, and also that it was not necessary to prove an express contract, but that it might be inferred from the acts and conduct of the parties. So far there was no error. But, when it came to charge the jury specifically as to what would be sufficient proof of an implied contract, it left the question to be determined upon the understanding of the parties as to the liability they were assuming by the execution of the bond, and this was not the question in issue. The thing to be established was a contract by the defendant that in case of a default he would indemnify the pi aintiff for any sum above one-third of the loss which he might have to pay; and this agreement cannot be inferred merely from the understanding the parties may have had as to the liability they assumed in executing the bond, but, like any other contract, must be founded upon the mutual agreement and intention of the parties.
When an agreement consists of words,written or spoken, *158stating in' terms the understanding and obligations of the parties, it is called an “express contractbut when it is inferred from the acts or conduct of the parties, instead of their words, it is an ‘ ‘implied contract. ’ ’ But in either instance it exists as an obligation solely because the contracting party has willed, under circumstances to which the law attaches the sanction of an obligation, that he shall be bound. And the distinction between an express and implied contract lies, not in the nature of the undertaking, but solely in the mode of proof. In either case there must be an offer of terms, or its equivalent, on the one side, and the acceptance of such terms, or its equivalent, on the other. “All true contracts,” says Mr. Justice Lowrie, “grow out of the intentions of the parties to transactions, and are dictated only by their mutual and accordant wills. When this intention is expressed, we call the contract an express one. When it is not expressed, it may be inferred, implied, or presumed, from circumstances as really existing, and then the contract, thus ascertained, is called an implied one :” Hertzog v. Hertzog, 29 Pa. St. 465-467. And in Marzetti v. Williams, 1 Barn. & Adol. 415, Lord Tenterden says : “The only difference between an express and implied contract is in the mode of substantiating it. An express contract is proved by an actual agreement; an implied contract, by circumstances and the general course of dealing between the parties.” Mr. Keener, in his work on Quasi Contracts (p. 4), says : “In the case of a contract implied in fact, as much as in the case of an express contract, the plaintiff must prove that the defendant either made or accepted an offer which resulted in a promise on the defendant’s part, and that the promise was not only in fact made, but that a sufficient consideration was given therefor. * * * The difference between the cases is a difference simply in the kind of evidence used to establish the contract. In the one case *159the language of contract is in terms used, and, because of the expressions used, the contract is called an ‘express contract; ’ whereas in the other case the contract is established by the conduct of the parties, viewed in the light of surrounding circumstances, and is called a ‘contract implied in fact.’ The terms ‘express contracts’ and ‘contracts implied in fact’ are used, then, to indicate, not a distinction in the principles of contract, but a difference in the character of the evidence by which a simple contract is proved. The source of the obligation in each case is the intention of the parties.” It is clear, then, from these elementary principles, that, before the plaintiff can recover in this case, he must make it appear by a preponderance of testimony that there was an agreement on' the part of the defendant to indemnify him against liability on the bond in excess of one-third thereof; and, while this contract may be implied from the conduct of the parties, nevertheless it cannot exist as an obligation unless the defendant willed, either expressly or by implication, to be so bound.
The fact, if it is a fact, that at the time of the execution of the bond the parties both mistakenly understood that they were liable in the proportion of their respective justifications, would not be proof, of itself, of the contract alleged in the complaint. But by the instruction complained of the court told the jury that it would be sufficient proof of an implied contract of agreement on the part of the defendant to indemnify the plaintiff if the parties “each understood that they were assuming liabilities on it in the ratio of one-third by the plaintiff and two-thirds by the defendant, and that they executed the same with that understanding, and each knew that such was the understanding of the other,” without indicating whether such understanding was confined to their liability to the county, or as between themselves. The court *160seems to have confused the question of the sureties’ supposed liability on the bond with the real issue in the case, and to have made the existence or nonexistence of a contract modifying or changing the ordinary rule of contribution between sureties to depend upon their understanding as to the liability incurred by the execution of the instrument; and, as we have seen, this is not enough. As held on the former appeal, there was sufficient evidence in the case from which the jury could have found the contract as alleged in the complaint, but they could not do so simply on account of any understanding the parties may have had as to their liability to the county. We think, therefore, the instruction complained of was error.
It is also claimed on behalf of the defendant that the court below erred in overruling his motion for judgment notwithstanding the general verdict. This motion was based upon the answers given by the jury to two special interrogatories, but there is such a want of clearness in their language that the case ought not to be finally disposed of on the jury’s answers thereto, and therefore it is reversed and remanded for a new trial. Reversed.