75 N.Y.S. 140 | N.Y. App. Div. | 1902
Lead Opinion
At the Monroe Trial Term on the 27th day of November, 1901, and before any evidence was given, the defendant moved to dismiss the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The motion was granted and the plaintiff excepted. The exception so taken was ordered to be heard by
The only question to be considered upon this motion is, does the complaint state a cause of action.
The complaint alleges, in substance, that on or about the 11th day of November, 1897, a liquor tax certificate was duly issued to one John M. Kurtz, authorizing him to engage in the traffic of liquor at No. 158 Main street, East, in the city of Rochester, N. Y.; that in order to obtain said license a bond was given to the People of the State of New York in the penal sum of $1,000, which was signed by John M. Kurtz, as principal, and the City' Trust, Safe Deposit and Surety Company of Philadelphia, the plaintiff herein, as surety.; that the conditions of this bond were, that the said Kurtz would not. suffer • or permit any gambling upon the said licensed premises; that he would not permit or suffer said premises to become disorderly, and that he'would not violate any of the provisions of the Liquor Tax Law (Laws of 1896,- chap. 112, as amd.). It further alleges that on or about the 12th day of July. 1898, the Commissioner of Excise of the State of New York commenced an action against said Kurtz and this plaintiff to recover the penal sum mentioned in said bond, on the ground that there had been a breach of its conditions by said Kurtz in maintaining and suffering to be maintained upon said licensed premises a nickle-in-the-slot machine, which w;as a gambling device upon which people did play for money by chance; that a judgment was obtained in that action against said Kurtz ;as principal and the plaintiff as surety, and an appeal was taken from that judgment to the Appellate Division and to the Court of Appeals, and the judgment was affirmed in both courts, which judgment was subsequently paid by said plaintiff as surety upon the bond.
The complaint also alleges that the defendant was the undisclosed principal on said bond, and was the owner of the liquor tax certificate; that the business in said saloon was conducted for the benefit of the defendant, and that defendant owned the lease of the store furnished the stock of goods therein, including fixtures; that it paid all expenses of running said place; that said Kurtz was.employed by the defendant as manager ánd paid twelve dollars a week for his services, and that he had no interest whatever in the said business.
This action is brought, not upon the bond, but against the defendant, an undisclosed principal, to recover the money wlrich the plaintiff, as surety, was compelled to pay for the defendant’s benefit. Although the principal was concealed, the contract, however, was made by its agent, upon its authority and for its benefit and advantage. It is a rule of law that an undisclosed principal, when subsequently discovered, may, at the election of the other party, if exercised within a reasonable time, be held liable upon all contracts made in his behalf by his duly authorized agent, although the credit was.originally given to the agent under a misapprehension as to his true character.
In this action the complaint alleges that when the plaintiff executed the bond at the request of Kurtz, it was not aware of the fact that Kurtz was acting as agent for the defendant. The fact that Kurtz executed the bond as principal does not preclude the plaintiff from maintaining this action, upon parol proof that the contract, in fact, was the contract of the defendant; that the act of Kurtz was the act of the defendant, and that, therefore, the defendant was liable for the breach of the contract.
In Briggs v. Partridge (64 N. Y. 362), in discussing the question under consideration, Judge Andrews said: “ The doctrine that must now be deemed to be the settled law of this court, and which is supported by high authority elsewhere, that a principal may be charged upon a written parol executory contract, entered into by an agent in his own name, within his authority, although the name of the principal does not appear in the instrument, and was not disclosed, and the party dealing with the agent supposed that he was acting for himself, and this doctrine obtains as well in respect to contracts which are required to be in writing as to those where a writing is not
In Coleman v. First National Bank of Elmira (supra) it was held that the rule does not preclude a party who has- entered into a written contract with an agent from maintaining an action against 'the principal, upon parol proof that the contract was made, in fact, for the principal, although the agency was not disclosed by the. contract and was not known to such party at the time of making it. (Briggs v. Partridge, supra ; Pierson v. Atlantic National Bank, 77 N. Y. 310.)
' The rule of evidence which makes a written contract conclusive proof of what the parties have agreed to, and which rejects parol proof to vary or contradict the writing or its legal import, applies only in controversies between the parties to the instrument. (Folinsbee v. Sawyer, 157 N. Y. 196.)
There is another well-settled principle of law applicable to this case, and that is that where a surety pays the debt of h}s principal, the surety has a right to be put in the place of the creditor, and to avail himself of every means the creditor had to enforce payment against the principal debtor. This principle of law comes under the rule of subrogation, which is not founded upon contract, but upon principles of equity and justice, and may be enforced where no contract or privity of any kind exists between the parties.
' In Arnold v. Green (116 N. Y. 571) Judge "Vahn says : ■“ The remedy of subrogation is no longer limited to sureties and quasi. sureties, but includes so wide a range of subjects that it has been called the ‘ mode which equity adopts" to compel the ultimate payment of a debt by one who in justice, equity and good conscience ought to pay it.’ ” (Cole v. Malcolm, 66 N. Y. 363; Townsend v. Whitney, 75 id. 425 ; Jessup v. Steurer, supra ; Pease v. Egan, 131 N. Y. 262.)
In Lewis v. Palmer (28 N. Y. 271). the court held that a surety who pays a debt for his principal is entitled to be put in the place of the creditor, and to all the means which the creditor possessed to enforce payment against the principal debtor.
Assuming that in the action upon the bond the execution had
If the State Excise Commissioner could maintain such an action, then the plaintiff can maintain this action, for the reason that, when plaintiff paid the judgment, it became subrogated to all the rights of the State, and could avail itself of every means that the State had to enforce payment of the judgment.
In the case of Kane v. State ex rel. Woods (78 Ind. 103), where a party applied to the board of excise commissioners for a license to sell intoxicating liquors, and in order to obtain his license was required to give a bond to the State with sureties in the penal sum of $2,000, conditioned, among other things, that he would pay all judgments that might be recovered against him for any violation of the provisions of the act regulating the sale of liquors, the principal was four times convicted for violating the provisions of said act; judgments were obtained against him, and, having failed to pay them, they were paid by the surety ; and it was held that the surety was entitled to be subrogated to all the rights of the State, the judgment creditor. (Boltz’s Estate, 133 Penn. St. 77; Matter of Churchill, 39 Ch. Div. 174; Richeson. v. Crawford, 94 Ill. 165; Dias v. Bouchaud, 10 Paige, 461.) It will be seen from these cases that no distinction is made between an official bond given to the State and an ordinary bond given to an individual; the surety in either case, upon paying the debt of the principal, has a right to be subrogated to all the rights of the creditor, and may invoke every remedy for its enforcement.
Benham v. Emery (46 Hun, 160) was a contract under seal made by the husband in his own name for a building on his wife’s land. It appeared that the contractor was ignorant that the husband was acting as the agent of his wife, the undisclosed principal. The court said: “ The plaintiff may pass by the written agreement and
It would be against public policy to permit the defendant to give a bond in the name of an irresponsible servant, to enable it to carry on the liquor business and to violate the conditions of the bond through its servant in order that it might derive a pecuniary benefit therefrom and then be screened trom any liability, on the ground that it did not sign the bond. Fair and honest dealings should be upheld, but courts of justice should not help parties to consummate fraud and deception.
Upon the facts, as alleged in the complaint, we think the action can be maintained, and that the court erred in dismissing the complaint. Plaintiff’s exceptions, therefore, should be sustained and the motion for a new trial granted, with costs to the plaintiff to abide the event.
Spring and Williams, JJ., concurred; McLennan and His-cook, JJ., dissented. •
Dissenting Opinion
It seems to me that the law of principal and agent has no application to this case. The conditions of the bond related solely to the personal acts and conduct of Kurtz. By its terms he was not liable for the acts of any one else, unless permitted or authorized by him upon the premises covered by the liquor tax certificate. Neither was any one else liable for his acts. It was purely a personal obligation on the part of Kurtz. Whether the bond should be violated or not, and thus the surety become liable, was wholly with Kurtz and for him to determine. The act of the brewing company, or of any one else, could not create an obligation under the bond. It seems to me that it might as well be said that if an agent gave a bond to keep the peace, and violated it while acting as agent, the principal would be liable on such peace bond, or for the amount the surety had to pay.
It seems to me clear that upon principle as well as upon authority the case was rightly disposed of by the court below. I, therefore, think the motion for a new trial should be denied, and judgment ordered for the defendant.
Hiscock, J., concurred.
Plaintiff’s exceptions sustained and motion for new trial granted, with costs to the plaintiff to abide the event.