Albany Dutch Church v. Vedder

By the Court, Savage, Ch. J. The demurrers in this case raise two questions: 1. Upon the sufficiency of the second assignment of the breach in the declaration; and 2. Upon the sufficiency of the defendant’s last'pledf both in matter of substance and in form. As to the second breach assigned in the plaintiff’s declaration, the general rule no doubt is, that a breach is sufficient if assigned in the words of the covenant. 2 Chit. Pl. 325. 1 Bos. & Pul. 643. The words of the condition of the' bond are, that Gerrit Gates shall “ keep a separate account in the Bank of Albany, as such treasurer, of all monies received by him on account of said church.” The assignment is “ that the said Gerrit Gates did not keep a separate account in the Bank of Albany, as such treasurer, of all monies received by him on account of said church,” but lafge sums of money, amounting to the sum of SI0,000, received by him as treasurer, were never deposited, &c. This seems to be within the rule defining a good breach. There is no difficulty in assenting to the correctness of this-rule when such general assignment necessarily amounts to a ’breach, as was said by Kent, chief justice, - in' Smith v. Jansen, 8 Johns. R. 114, where the breach was that a prisoner did not remain a true and faithful prisoner, according to the condition of a limit bond. There the fact of escaping, alone was a breach of the condition, and the extent [169] of liability was fixed by statute. Here the plaintiffs do not show that they have been damnified, nor do they furnish any data by which their damages may be assessed. Upon the assessment, it may appear that although Gerrit Gates did not keep a separate account in the Bank of Albany, that he had made his deposits in some other equally safe bank $ in which case only nominal damages could be assessed upon the assignment. I am inclined, however, to think upon authority that the assignment is sufficient, although the plaintiffs would be entitled to recover only nominal damages. It seems to be well settled that it was not necessary to set forth the several sums of money received by Gerrit Gates, as such particularity would lead to too great prolixity. 2 Saund, 411, n. 4. 1 Bos. & Pul. 644. 5 Johns. R. 174. The next point of inquiry is, whether the last plea of the defendants is good in substance and form. The substance is this: that the plaintiffs neglected to call their treasurer to account for seven years after his default from year to year, until he became insolvent, when by their own by-law he was bound to render his account every six months. The question is, does the negligence of the creditor to call his debtor to account discharge the sureties ? As a general proposition, I know of no case which answers this question in the affirmative, but there are numerous cases which decide it in the negative. The case The Trent Navigation Company v. Harley, 10 East, 35, was much like the present. The condition of the bond upon which that suit was brought, was, that one Ella, who had been appointed collector of tolls for the company, should, so long as he should continue collector, render true accounts of all monies which he should receive or pay; and from time to time pay to their treasurer when required, all money which should come to his hands, and in all things faithfully execute the office of collector. On the trial, it appeared that from 1799 to 1807, Ella was a defaulter to £1000. He had attended the meeting of the committee who audited the books once a year ; neither the treasurer nor the committee complained of any deficiency in the books till 1807, when it was communicated to the sureties. The treasurer might [170] have every year ascertained the balance, and there was no difficulty in detecting the errors when the accounts were settled. It was contended that the sureties were discharged, by suffering the collector to run so much in arrear, and by neglect to give the sureties notice; but that was ruled to be no defence at law. On a motion for a new trial, it was contended that the neglect of the officers of the company to detect errors in Ella’s accounts, or their neglect to require him to account according to the condition of the bond, discharged the sureties; and it was argued that the sureties relied on the obligees using due diligence; and their omitting to do so for eight or nine years lulled the sureties into false security, and prevented them from using diligence for their own protection. The counsel for the plaintiffs were stopped by the court. Lord Ellenborough said the only question was whether the laches of the obligees, in not calling upon the principal so soon as they might have done, if the accounts had been properly examined from time to time, be an estoppel at law against the sureties ? I know, said he, of no such estoppel at law, whatever remedy there may be in equity. Thompson, J. in giving the opinion of the court in The People v. Jansen, 7 Johns. R. 338, quotes this expression of Lord Ellenborough, and adds, that if the position intended to be laid down is, that mere delay in calling on the principal will not discharge the surety, it is, I think, a sound and salutary rule both at law and in equity. The case of The People v. Jansen was of course not supposed to trench upon that principle. The court expressly stated, that in ordinary cases the obligee is under no legal obligation to watch over the conduct of the principal debtor, and at stated periods to examine into his accounts, and in case of failure to adopt measures calculated to relieve the surety. But that case was put upon the statutes and the duties arising out of them, and also upon the peculiar circumstances of the case itself. The supervisors were bound, by the law under which the bond was taken, to examine the accounts of the loan officers annually, and if any one was found in default, it was the duty of the supervisors and judges to remove him and elect another in his stead. The court said the surety had a right to rely upon the fidelity of those officers in the performance of [171] their duty, and that the public should be chargeable with the consequences of their neglect. There is no such feature in this case. This is a transaction between individuals, for so a corporation is considered. The sureties had no reason to place any reliance upon the by-law requiring the treasurer to account every six months; that was a mere private regulation, which did not form any part of the contract with the sureties. The plaintiffs were not officers of the public, whose conduct was regulated in the transaction of their concerns by a public statute. The two cases are not parrellel. But even in the case of public officers, it has since been determined that the provisions of law which regulate the conduct of public officers, are created for the security and protection of government—are merely directory, and constitute no part of the contract with the surety. 9 Wheat. 736. 11 id. 184. 12 id. 509. 1 Peters, 325. 4 Wend. 574, 5. The utmost extent to which courts have gone in cases like the present, is to hold that when the creditor refuses to prosecute the principal debtor, upon the request of the surety, if the debtor subsequently becomes insolvent, and the surety is prejudiced by such refusal, he is discharged. 13 Johns. R. 174. 17 id. 386. 8 Wend. 199. In the last case, Chancellor Walworth says, to bring a case within that decision, King v. Baldwin, 17 Johns. R. 386, the surety must show that the principal was solvent and within the jurisdiction of the state when the request to prosecute was made, and that the creditor, without any reasonable excuse, refused or neglected until the debtor became insolvent. It is not alleged that this case comes within the principle just mentioned. Nor has it any connection with the doctrine of guaranty. The defendants are sureties in the strict and proper sense of that term, and as such their rights are to be determined. If it was the moral duty of the plaintiffs to have called their officer to account, according to the regulations which they had prescribed for the conducting of their own affairs, it was the legal duty of the defendants, the sureties, to have examined into the state of the accounts of the person for whose correctness they had become responsible. There is, therefore, no ground to complain on account of the hardship of the case. The law knposed upon them entire responsibility for the conduct of [172] their principal. Had they inquired into his accounts and foun(j the extent of his defaults, they might have required the plaintiffs to prosecute, or they might have had a remedy in equity but the facts set forth in their last plea constitute no defence at law. The plaintiffs are entitled to judgment on both demurrers, with leave to defendants to amend their plea on payment of costs.