Franklin v. Hammond

The opinion of the court was delivered, by THOMPSON, J. The learned judge of the Common Pleas very .justly conceded that the bond in suit was good as a voluntary stipulation; but we think he erred in coming to the conclusion that it did not bind the parties to it for default in not paying over moneys by the principal. This conclusion could not have been deduced from the bond itself, for the condition is express “that if the above bounden, J. W. Hammond, shall faithfully 'perform the duties and services so committed to him, and shall truly account for and pay over all moneys which may he received by him,” by virtue of his appointment, then the obligation was to be void; otherwise to be and remain in full force and virtue. Thus the terms of the obligation are clear. Money was to be [511] collected by Dr. Hammond, and he was to pay it over. If he did not, his sureties pledged themselves, to the extent of $5000, to do it for him. This being their agreement and undertaking, it lies upon them now, either to comply or make out a clear case, entitling them to relief against their own contract. It was not doubted by the learned judge below, nor could it reasonably have been, that the instrument was valid as a voluntary bond, and that at law the parties to it are bound. It was given for a lawful purpose, and was not against any statutory prohibition, or in excess of any required statutory obligation; it was therefore binding, unless some equitable reason exists to the contrary. The general heads of equitable relief are fraud, accident, mistake, failure of consideration. There are other grounds, it is true, but these are the general heads. Under which is the defence here ? Fraud is not alleged. Accident or failure of consideration are not in the case. Was there mistake ? The learned judge seemed to be of opinion that there may have been misapprehension as to the power of the agent under the terms of the appointment; that the sureties may have supposed that he was not to collect money under it. But this does not prove mistake in inserting the clause in the bond that he was to account for, and pay over any money he might receive. Their own misapprehension is no ground of relief, unless they were led into it by some act of the obligee. This is not suggested. Indeed-the ground assumed is, that they had the appointment before them, read it for themselves, and put their own construction on it. It certainly did not positively mislead them, and if their opinion of it was a mistake, they must bear the consequences. Where mistake in an instrument is relieved against, it is generally on the ground of a supposed reform of the instrument, and the reform is predicated of the idea that the instrument was not the intentional act of the parties. But that must be shown. Here notwithstanding the appointment might not bear the construction that Hammond was to collect money, yet there was nothing unlawful in stipulating for payment over of money to cover a contingency of his receiving any, and hence the existence of it is no evidence by itself of any error in the obligation. In support of the acts of the parties, we must presume, in the absence of plain mistake or misapprehension, superinduced by the obligee, that the condition was inserted abundante cautela. If there was, therefore, neither fraud, mistake such as might be reformed in equity, nor misapprehension, so superinduced as to raise a belief that there had been surprise or fraud in executing the bond, I am at a loss to see any defence in equity in the case, more than at law. Neither of these grounds' of relief appear, and no other valid ground for equitable interference has been suggested. [512] It is true that something was said in regard to the law regulating the mode of settling claims against debtors and defaulters under the Act of 1811. But the learned judge predicated nothing of that. That statute looked towards adversary proceedings. But nobody ever dreamed that it took away the right of amicable adjustment and settlement between the state and her debtors. And so far as the state is concerned, this must always be done, if at all, by agents; and hence the appointment of an agent or attorney in this case violated no law. Although not necessary to a determination of this case, we will look for a moment at the controverted point of authority. The authority to Franklin was “ to discover and bring to settlement corporations” in default to the Commonwealth, “ on account of non-payment of their dues, and to adopt such measures in the premises as to him may seem best calculated to carry out the authority hereby conferred.” If assistance were necessary in the performance of the duty assigned and accepted, surely here was authority to employ it. He was only limited in the measures to be employed by his own discretion, and the legal requirement that they should be lawful. If personal intercourse with the corporations was deemed better than a correspondence, he might employ the former in preference to'the latter; he might attend in person or employ an agent. The proceedings were not restricted to process, so as to come within the prohibitions of the Act of 1806. It was an agency outside of that, effectuating what doubtless it was thought could not be as successfully accomplished by a resort to formal proceedings. . Viewed in this light, we see the reason of the appointment of an agent, and at the same time the general authority conferred. If in the process of settlement, payment of money due as a balance, or the entire sum originally to be paid was agreed upon, and acquittances to be given, would this be less a settlement than it would be if only the sum to be paid were ascertained? Was it intended, and do the words employed by the state treasurer necessarily resti’ict the agent from receiving money if offered by the debtors with whom he was to settle ? If it should be offered by the debtor corporation, and made a term of settlement by it, must the agent at this point desist from settling the claim, fold up his papers, and retire? If the object to be attained as expressed be considered, we are in no danger of coming to such a lame conclusion. The reason of the appointment appears on the face of the authority. It was on account of the non-payment of dues and taxes by certain corporations. The object was to produce an opposite condition of things, to secure payment of these back dues to the treasury. If settled and paid to the agent, and he did his duty, this would save all recourse to adversary proceedings, and effectually secure the debt. That he was expected so [513] to receive money when it could be had from the defaulters, the power further shows. It expressly provides for commissions as a compensation by declaring that “ the agent or attorney shall be entitled to receive out of the funds thus secured by the Commonwealth, such fer centage or commissions as is now allowed by law, in such cases made and provided.” Was he to receive money out of funds collected, or out of funds uncollected? Or was this intended to express the idea that he was only to be paid in promises, the realization of which was to be dependent on the future collection by some other hand, of what he was forbidden now to touch ? This cannot be so. It was certainly intended that the agent should receive money from defaulters when he could get it, and hence this provision. I do not say that he might not be entitled to compensation when he should only adjust the accounts between the state and corporation, but I know of no fee bill allowing a per centage for such services. That it was well understood by the state treasurer that collections were to be made, this claim proves. That they could be made, the result proves, for the agent employed collected nearly $36,000. That Mr. Franklin understood this to be included in the duty assigned, is proved by the requirement of the bond conditioned to pay over, and that this was the understanding of Hammond'and his sureties, is proved by their giving it on these terms. The authority conferred on Franklin was conferred by him on Hammond. He was to act for him “ fully and effectually in the premisesthat is to say, in adjusting and settling all accounts and claims contemplated in the authority of the state treasurer to him (Franklin). If the latter could receive money, he could. This equality of power is clearly expressed in the deputation to-Hammond. The idea that because Franklin was but an agent himself, he could not delegate his power to Hammond, is of no force here: First, because his deputation, as we have already seen, was broad enough to allow him to substitute, if he deemed it best; and, secondly, even if the position were as suggested, it would be neither a legal nor equitable defence by the agent and his sureties, to their bond. It might, affect the validity of his acts with third parties, but it would not enable him to keep the money collected, nor would it render invalid the voluntary bond given by himself and sureties, conditioned that he would pay over. We are not able to see any valid defence to a recovery in this case, and we are constrained to reverse this judgment, and direct judgment on the case stated for the plaintiff. And now, to wit, July 1st 1863, this case being argued by counsel, it is now considered and adjudged that judgment be entered in the case stated for the plaintiff for the sum of $6212.33 against the defendants, with costs of suit.