Frank J. Howard was the treasurer of Clark county, S. D., for two terms; the first term beginning January i, 1923; the second term ending December 31, 1926. The Federal Surety Company, appellant herein, was surety on his official bond in each term in the penal sum of $75,000. Howard embezzled on various dates in his first term sums amounting to $393.65 and on various dates in his second term sums amounting to $16,780.13. Neither Clark county, respondent herein, nor Federal Surety Company, appellant herein, knew of Howard’s defalcations until shortly prior to August 2, 1928, at which time Clark county made formal demand on the surety company for payment, claiming, however, that the amount of the defalcations -was $19,099.57. After a trial, in which the total amount of the defalcations was found to be $17,173.78, the court concluded that Clark county was entitled to judgment against Howard and the surety company for that sum, but reserved decision as to the date or dates from which interest should be computed until after argument of counsel. Thereafter in a supplemental judgment it was adjudged that Clark county should recover from the principal and surety the sum of $3,445 as interest on the sums embezzled, the interest being computed at the rate of 7 per cent per annum from the date of each act of embezzlement. The surety company promptly paid the total of the sums found to be embezzled and appealed from the supplemental judgment for interest. It claims that it is liable for interest, not from the several dates of each act of embezzlement, but from the date when it was first advised by -Clark county of those embezzlements, namely, August 2, 1928.
The bond! sued upon, omitting portions thereof, is as follows:
“Know all men by these presents: That we, Frank J. Howard * * * as Principal, and the Federal Surety Company * * * as Surety, are held and firmly bound unto Clark County, South Dakota, in penal sum of Seventy-five Thousand (75,000) Dollars * * * to be paid to the said Clark County * * * for which payment well and truly to be made, we bind ourselves * * * jointly and severally, firmly by these presents. * * *
“The condition of the above obligation is such That whereas, the said Frank J. Howard has -been elected to the office of County-Treasurer. * * *
*459 “Now, therefore, if the said Frank J. Howard shall well, truly and faithfully perform all official duties * * * and if he shall account for and pay over * * * all moneys or other property that may come into his hands as such county treasurer * * * then this obligation would be null and void; otherwise to remain in full force and effect.”
The sole question raised by this appeal is the date from which interest should be computed as against the surety on the foregoing bond. A casual reading of sections 1474 and 1485, R. C. 1919, would seem to answer this question. These sections are as follows:
“§ 1474. A guaranty is a promise to- answer for the debt, default or miscarriage of another person.”
“§ 1485. A guarantor of payment or performance is liable to the guarantee immediately upon the default of the principal and without 'demand or notice.”
The definition of “guaranty” given by section 1474 is almost identical with the definition of the “contract of suretyship” as given by many courts and certain text writers. See 50 C. J. 12, 13. But in our Code while sections 1474 to 1479, 'inclusive, deal with the law of guaranty, sections 1498 to 1512, inclusive, deal with the law of suretyship. A “surety” is defined by section 1498 as one “who, at the request of another, and for the purpose of securing to- him a benefit, becomes responsible for the performance by the latter of some acts in favor of a third person, or hypothecates property as security therefor.” It is unnecessary to- state herein the exact distinction between a guarantor and a surety under our law. However, they are defined, not by the two sections 1474 and 1498 alone, but by the entire chapters of which these sections are parts and by the decisions of this and other courts. It is enough, for the purpose of this opinion, to state that there is a difference, under our Code, between the liabilities of guarantors and sureties, and that section 1485 in the chapter on guaranty applies to guarantors and not to sureties. Appellant herein contracted as a surety.
Considering the many instances in which surety companies have settled with obligees in official bonds, it is strange that there is so little positive law as to when interest should commence to
Were we willing- to accept the positive statement of courts and text-writers without investigation of the authorities on which the positive statements are made, the question might be less difficult. Thus in Dickinson v. White et al,
But an examination of the authorities cited by the court and in the texts discloses that in many of them the main question therein discussed is whether the surety should pay interest when the effect thereof is to exceed the penalty of the bond. Thus the opinion in Dickinson v. White, supra, seemingly so decisive of the question at bar, cited twelve decisions or texts. The great majority of them deal with the question of whether the surety is liable for interest on the penalty where the damages exceed the penalty of the bond, in point in the North Dakota case. The same is true of the authorities cited in support of the above-quoted statement from 16 Am. and Eng. Encyc. of Law' (2d Ed.)' p. 1043, apparently so decisive of the question.
But if the authorities cited to support the contention that the surety is liable for interest only from the date'of demand prove not entirely satisfactory on careful examination, the same may also be said of the authorities supporting the view that the surety is liable for interest from the time of the defalcation of his principal. See 23 Calif. Juris. 1069, § 55, Suretyship; Montpelier v. National Surety Co.,
In this case we are not attempting to determine when sureties on all manner of bonds should becom(e liable for interest. We are dealing only with the case of a surety on an official bond where the principal has embezzled money, of which many acts of embezzlement neither the surety nor the obligee were aware until several years thereafter. The surety does not contend that it
In Gearhart v. Hyde, 39 S. D. 273,
No one would contend that a bond could not be so drawn as to make the surety liable for interest on the various sums embezzled by its principal from the date of the various acts of embezzlement, nor that the bond sued on herein might not be SO' construed if the statutes of South Dakota furnished — as they do not — a basis therefor. Section 1962, R. C. 1919, provides: “Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested 'in him upon, a particular day, is entitled also' to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor, from paying the debt.” “Damages,” as the term is used in section 1962, is defined in section 1959, R. C. 1919, as follows: “Every person who suffers detriment from the unlawful act of omission of another may recover from the person in fav.lt a compensation therefor in money, which is called damages.”
It seems particularly inept to say of a surety on an official
Although the case of Bunkers v. Guernsey, 41 S. D. 381,
While the question of the date from which interest should be computed was not discussed in the opinion by this court in Farmers’ Elevator Co. v. Swanson, 33 S. D. 377,
We therefore conclude that appellant herein ,is right in its contention that it was liable for interest only from August 2, 1928. We deem it advisable to state, however, that this conclusion is based on the facts of this case and the -law as we find it applicable to such facts. We are not attempting in this opinion to determine when interest should begin to run against sureties generally.