Harris v. Clap

| Mass. | Mar 15, 1805

Thacher, J.,

said he had no doubt that the Court might go beyond the sum of the penalty of a bond, by allowing as damages for the detention of the debt, the interest upon the penalty; that in the present case he was of opinion the award had its force from the acceptance of it in the Court of Common Pleas, and judgment th re upon it; that as that judgment would draw interest, so also * ought the bond after 120 days had expired from the rendition of the judgment.

Sewall, J.

The question for the consideration of the Court is whether judgment may be entered for an amount exceeding the penalty of the bond.

The condition of this bond is, to pay such sum as should be awarded by referees appointed by the plaintiff and Clap, the principal in the bond, for the adjustment of certain demands between them, within one hundred and twenty days after the award should be made. A certain sum was awarded to Harris to be paid by Clap ; which award, being returned into the Court of Common Pleas, was there accepted and confirmed by a judgment of that Court rendered thereon. The plaintiff has been delayed until this time, from having the effect of that judgment, by an attempt to review the action ; which attempt, by a decision at this term, has entirely failed, and he now prays for judgment on this collateral bond. In ordinary cases, where the amount would be short of the penalty, the judgment would be entered for the sum awarded with legal interest thereon from the time of payment, according to the intent of the condition; and affording to the obligor the benefit of the chancery powers of this Court pursuant to the statute in such case provided. In the present case, the sum awarded, and interest upon it from the time of payment, exceeds the penalty; and hence the present question of the extent of the sum for which judgment may be entered. This Court, especially in a case where a surety may be affected, cannot exceed the express contract of the parties, and the legal effect of it. At the common law, the penalty of a bond is recoverable, with damages, for the detention of it from the demand or other time of payment. The penalty is recoverable by the express contract of the parties; and the damages, estimated at the lawful interest of the * penalty, are the legal effects of their contract. To this amount then the obligors in a bond are liable at law; and this Court are not authorized by the statute to mitigate or abate this sum, unless it exceed the sum due and the damages actually sustained by the plaintiff. In this case, the amount awarded by the referees, and interest thereon, from the time of payment, is due from Clap, one of the obligors, according to equity and good conscience ; but in this suit the plaintiff cannot recover beyond the penalty of this bond, and the damages for the detention of it; which may be considered as legally demanded at the service of the writ. The penalty and interest from the demand must be the measure of the judgment; not exceeding, however, the sum awarded, and interest upon it from the time of payment, according to the condition of the bond. And the judgment must be entered for that amount, viz., $5000, as recovered for the debt, and the residue as damages, for the detention of the debt.

Sedgwick, J.,

after stating the case, and observing that the •amount of the award in favor of Harris, with interest thereon, computed from the end of 120 days, from the time it was accepted by the Court of Common Pleas, greatly exceeded the penalty of the bond. The question is, whether the excess beyond the penalty, can be recovered in the name of damages. And I am of opinion that it cannot. Were the action solely against Clap, the principal, the question in equity, and, as I conceive, in law, would be wholly different. At the time the submission was made to referees, by Harris and Clap, the surety had no means of knowing — it was impossible he should know — what amount would probably be awarded against his principal. To the amount of $5000 he was willing to be responsible, but no further. And yet, if the sum awarded against him by our judgment be more than the penalty, he will, without any fault of his, * without any practice of delay, on his part, and merely in character of surety, be made responsible to a greater amount than he ever consented to assume. Barely stating the facts presents, to my judgment, so strong a case that it is incapable of being fortified by arguments.

I have said that the surety was in no fault; that he had practised no delay. He never undertook to pay but on the contingency of an award against his principal; and it is agreed on all hands, and was admitted by the counsel for the plaintiff, in the argument, that the award would not create any obligation upon him until it was established by the Court. Till this term of this Court it never was established ; for although it was accepted by the Court of Common Pleas, yet it was so removed to this Court that no execution could issue on the judgment. Can it, in any sense, be said that, while the judgment was so suspended, and its validity a question depending and undecided before the Supreme Court of Judicature of the commonwealth, the surety was in fault for not deciding what has remained here for years undecided ? Let it be again remembered that this suit depended altogether on that upon the award, and that unless that was decided against the principal, there never could be a recov ery against the surety. But it may be said that this defendant might have brought the money into court to the amount of the award, and that he ought to have done it if he would excuse himself from the payment of damages. To this there are two answers. In the first place, that there was nothing due until the award was accepted, and that acceptance rendered valid and effectual by the decision of this Court; and in the second, that by bringing the money into court, this defendant would have admitted the plaintiff’s action to the amount of the sum so brought in; and of course, had the award been set aside, the payment would have been in his own wrong.

* Thus far have I gone on principle; but I had thought that this case was decided on authority. I had supposed it had been long settled that a surety was never to be bound beyond the express terms of his contract. Many decisions to that purpose might be produced, but I will cite only one ; which I conceive to be a very strong one. In Stratton vs. Rastal, 2 Term Rep. 366, it was determined that, “ where an annuity bond granted by two becomes void, by the neglect of the grantee in not registering a memorial under the statute, he cannot recover back any part of the consideration money from the one who was known to be only a surety for the other, and had not in truth received any part of it, notwithstanding they both signed a receipt for it.” In that case it appeared from the whole of the transaction that the plaintiff had no confidence in the principal, but relied wholly on the surety. Yet it was determined that the action could not be supported. And that great judge, Buller, laid it down as undoubted law that against a surety a contract cannot be carried beyond the strict letter of it. Now in this case the surety never undertook beyond the penalty of the bond ; he has practised no delay. Till within a very few days he did not know, nor could he know, unless he was wiser than those who are to pronounce the law, that the contingency had happened, or ever would happen, whereby he had, or ever should, become in debted to the plaintiff.

From every view which I have been able to take of the subject, I should have concluded with confidence (but for my respect for those from whom I have the misfortune to differ in opinion) that the plaintiff’s demand would have been bounded by the amount of the penalty of the bond. Whether I am right or wrong, I cannot resist the impression that the case of the surety is indeed a hard one, * inasmuch as he is to be mulcted in damages for not knowing a fact resulting from principles of Jaw; that the contingency had happened by which a duty had devolved on him, while it was a question which had induced an interference of the legislature, and while the decision of the question was suspended in this Court.

Strong, J.

In this case one question is, At what time did the sum awarded by the referees become due ? Was the award binding from its acceptance in the Court of Common Pleas, or does its validity depend upon the decision of this Court a few days since upon the application of Clap to review the judgment of that court? I am of opinion that the award is to be considered as having its force and validity from its acceptance in the court below. It is true that the principal has ever since been resisting the payment of the sum awarded, and endeavoring to get the judgment of the Court of Common Pleas annulled or reversed. He has made his application to this Court for that purpose; he has been fully heard, and we have, at this term, unanimously determined that the application was groundless; that he had no reason to contend. It appears, therefore, that the principal has been all this time acting in his own wrong. The next and principal question then is, What damages shall the plaintiff recover ? Shall he recover the sum awarded with interest, after 120 days, from the time of the acceptance of the award in the Court of Common Pleas, or are the Court limited to the sum of the penalty of the bond ? It has been said that although the Court may in some cases give interest by way of damages beyond the penalty of a bond, yet that it cannot legally be done against a surety. I admit that there are cases in which a dif ference has been made between the obligations of the principal and the surety in certain contracts; but I do not think ihit to be one of those cases ; nor can I *see the distinction which my learned brother (Sedgwick, J.) has taken in the case. Here both the defendants have bound themselvesjotniZy, as well as severally, in the same words in a penalty. If the words are sufficient, in case the action had been brought against the principal alone, to have authorized the Court to go beyond the penalty of the bond in a judgment against him, then surely the same words must be sufficient for a like purpose in the present action ; and to say that they are not, seems to be absurd. What, then, is the law as to going beyond the penalty ? The law, as I understand it, says that every man who binds himself in a penalty is liable to pay not only the whole penalty — the debt — but also the legal interest of it as damages for the detention. This rule of law extends to all cases where the condition of the bond is for the payment of money — or where the value of the condition, if I may so express it, is equally capable of being ascertained as though the sum had been expressed in the condition — which is the present case. When the surety entered into the bond, he knew, or ought to have known, that he was bound to that extent. Every man is presumed to know the law. He undertook that the principal should perform the award ; this was the contract made by the surety ; the award has not been perform ed; and, therefore, the defendants must answer in damages fot the non-performance; these damages are the amount of the sum awarded, with the interest thereof, after the expiration of 120 days from its acceptance in the Common Pleas; and the plaintiff" is entitled to judgment for that amount in the manner already mentioned.

Dana, C. J.,

(after stating the case,) said — At the time of executing the bond it was uncertain what sum, if any, would be awarded against Clap: * this was made certain by the award, that is, by the acceptance of it in the Court of Common Pleas, for till then it was uncertain whether it was a binding and valid award or not; by that acceptance it became binding upon the parties, and the duty of the defendants in this action was created. What is that duty ? That Clap should perform the contract entered into by the bond — which was to pay to the plaintiff whatever sum should be awarded to him within 120 days after the making the award — which, as I have already observed, is 1*20 days after the acceptance; the act of the court in accepting the award being necessary in this case to make it a binding award. It was the duty of the principal to have paid the actual sum awarded at the expiration of the 120 days; the money has not been paid ; and the surety comes into this Court as a court of equity for relief What is the equity of the case ? Clearly that the plaintiff should recover the sum awarded and interest. But it is said that we cannot, against a surety, go beyond the penalty of the bond ; and the case of Stratton vs. Rastal has been cited to prove it. That .was a case where the equitable action for money had and received was brought to recover back money paid upon a consideration which failed, and it appeared in evidence that the surety had not, in fact, received a farthing of the money. The action was grounded wholly on an implied promise; and the court decided, and, undoubtedly, very justly decided, that the surety was not liable ; and I agree that a surety is not, in any case, to be bound beyond the fair import and intention of his contract. ■ In the case now under consideration, the surety has expressly, by an instrument under seal, bound himself to the plaintiff; there is no ambiguity in the words ; but the expressions are positive, clear, and unequivocal. He knew that he had undertaken for * the performance of the award if one should be made against his principal; he knew the award was made, and what it was; these he certainly knew when the action on this bond was commenced, which was but a short time after the expiration of 120 days from its acceptance in the Court of Common Pleas ; it then became his duty to see that it was performed ; nor was that obligation suspended by the subsequent transactions in endeavoring to obtain a new trial; this Court has decided that delaying payment on application for a new trial is at the peril of the party delaying. But in going beyond the penalty of the bond, the Court do not go out of the contract; it is no more than the common case of a bond conditioned for the payment of money lying until the sum mentioned in the condition, with the interest of it, exceeds the penalty — in which cases the Court will givxe the excess as damages for the detention of the debt; in no case, however, going so far beyond the penalty as to exceed the legal interest on the penalty. At law the penalty is the debt; and for the detention of the debt, damages, either real or nominal, are always recoverable. The contract at law is to pay the penalty ; if the defendants ask equity, they must do equity. Of the real equity of the case I have not a doubt; and that the plaintiff ought to recover the sum awarded with interest, after 120 days from the acceptance of the award in the Court of Common Pleas.

The judgment was accordingly entered up against both the defendants for 5000 dollars debt, and 1480 dollars 55 cents, damages, for the detention of the debt.

After the Chief Justice had delivered his opinion, Sedgwick, J., read (16) Ch. Notes to B. Com. vol. 2, p. 341, edit. 1800. Interest beyond the penalty of a bond may be recovered in a court of law, *in the shape of damages — 2 Term Rep. 388 — but it cannot be allowed beyond the penalty in a court of equity. 3 Bro. C. C. 489, 496. — 2 Vesey Jun. 718.

Parsons for the plaintiff. The Attorney-General (Sullivan) for the defendants.

Note. — See 2 Com. Dig. Chancery, 4 D. 6; 1 Vern. 196; Lofft, 555; Doug. 49, White vs. Sealy & Al. — 6 Term Rep. 303, Wilde vs. Clarkson. — See, also, to prove that bail are not liable beyond the penalty, 7 Term Rep. 370, Hoppel vs. King. — 8 Term Rep. 28, Stevens vs. Cameron. — 1 H. Bl. 76, Mitchell vs. Gibbons. — See, also, l East, Rep. 436, M'Clure vs. Dunkin. — [Smedes vs. Houghtaling, 3 Caines, 48. — Clark vs. Bush, 3 Cowen, 158. — Payne vs. Elbzey, 2 Wash. 143. — United States vs. Arnold, 1 Gal. 348. — Trimson vs. Plumer, S. C. Rep. 498. — Fairlee vs. Lawson, 5 Cow. 424.— Sed vide Bensall vs. Taylor, 1 M’Cord. 503. — Smith, Administrator, vs. Vanderhorst, 1 M’Cord. 348. — Carter vs. Carter, 4 Day, 30. — State of Maryland vs. Wayman, 2 Gill, and Johns. 279. — Ed.]