Stone v. Pittsburg, Binghamton & Eastern Railroad

Opinion by Henderson, J., The plaintiff’s action is on a bond given by the Pittsburg, Binghamton and Eastern Railroad Company to the appellant in a proceeding for the condemnation of land to be used by the company in the construction of a railroad. The Title, Guaranty & Surety Company was the surety on the bond, and the question for our determination relates to the extent of the liability of the surety. In the declaration filed the plaintiff charged the defendants with the responsibility apparent on the face of the bond and also with the legal consequences of a representation that the bond was security for the whole amount of damages which might be awarded to the obligee irrespective of the amount of the penal sum in the bond, but the record does not disclose any evidence from which a jury could find that the surety company made any promise or representation other than is expressed in the bond, and the amount of its liability is to be ascertained from that instrument. No — 619 — allegation of fraud or misrepresentation was asserted against the sdrety company and that part of the case set forth in the declaration which was intended to permit the introduction of evidence to show that the agent of the railroad company stated to the plaintiff that the bond would secure him against all the damage sustained by him was not supported by proofs. Moreover, .the bond was not accepted by the plaintiff and he was therefore not misled into a waiver of any right which he had to its sufficiency in form. The obligatory part of the bond is in the usual form of such instruments and binds the surety for the payment of $500 on default of the principal to perform the conditions stipulated. The general principle is that the liability of a surety in a bond given to secure the performance of collateral acts is limited by the penal sum therein expressed. He does not undertake to perform the act to be done by the principal but pledges himself to compensate the obligee to the extent of the penalty for the failure of the principal to make' good his promise. It follows that by payment of the amount named in the bond the surety may be discharged: Com. v. Forney, 3 W. & S. 353; Bensinger v. Wren, 100 Pa. 500; Foster v. Passerieux, 37 Pa. Superior Ct. 307; Wyman v. Robinson, 73 Me. 384; Sedgwick on Damages, sec. 680; Meadows v. The State, 114 Ind. 537; N. Y. Life Ins. Co. v. Seckel, 3 Phila. 92; Leggitt v. Humphreys, 62 U. S. 66; Ives v. Bank, 53 U. S. 159; Gloucester City v. Eschbach, 54 N. J. L. 150. The conditions of the bond, generally speaking, set forth the undertaking of the principal and the circumstances under which the obligation of the surety to pay arises, but the surety’s obligation is to pay to the extent of the sum stipulated if the principal fail to comply with the conditions. The distinction is to be noted between an action on a covenant for- which a bond is security and an action for the penal amount of a bond. This distinction is referred to in New Holland Turnpike Co. v. Lancaster County, 71 Pa. 442; Foster v. — 620 — Passerieux, 37 Pa. Superior Ct. 307, and other cases. Where the covenant creates an obligation for the payment of an amount thereafter to be determined an action may be maintained on that covenant and the bond introduced as evidence of the covenant. In such case the action is brought directly on the contract to pay and not for the penalty. The bond offered by the plaintiff does not contain a promise of the surety to perform any of the conditions therein set forth. They were to be met by the principal, and the surety covenanted that if failure occurred on the principal’s part it would make good the plaintiff’s loss to the extent of $500 with costs and interest for the detention. To adopt the construction contended for by .the appellant would make necessary the reformation of the instrument which he seeks to enforce. It requires a construction which binds the surety to perform the conditions of the bond; not to pay the penal amount. This would require us to ignore the penal provision and to make the surety a joint obligor with the principal as to the condition. There is nothing on the face of the instrument which will furnish a support for such action, and as we have seen- no contemporaneous parol agreement on its part was proved. The appellant relies on that provision of the condition of the bond in which the principal agrees to pay the damages to which the plaintiff shall be entitled "whether the same exceed the amount of the penalty in this bond mentioned or not,” but this is not the surety’s covenant. It is a récital of the obligation of the principal, a breach of which is to make the promise of the surety for the payment of the penalty effective. It may have been supposed by the railroad company that this would bind the surety, but this was a legal construction of the instrument for which the surety was in.no way chargeable. Stress is laid on the fact that the form of the bond was furnished by the surety company, but that does not cast light on the meaning of it. Conceding that it should be construed most strongly against the obligors because — 621 — they fixed its terms it is still to be construed according to its language in the absence of competent parol evidence qualifying it. It is an obligation provided for by statute, was not the result of negotiations between the parties and is therefore not .affected by qualifying circumstances. No exception was filed to the sufficiency of the bond, the plaintiff apparently resting on his own knowledge or the assurance of counsel that it would protect his interest. His confidence may have arisen out of the fact that the railroad company was not then insolvent and that a claim against it would be collectible. The learned counsel for the appellant earnestly contend that the case is controlled by Wadhams v. Lackawanna & B. R. R. Co., 42 Pa. 303. That was an action of ejectment brought to recover land appropriated by the railroad company under its right of eminent domain, the plaintiff’s contention being that the bond filed by the company did not conform to the requirements of the statute and that title therefore did not vest in the company. The objection to the bond was that it, was not conditioned as required under the act of assembly because it provided only for the damages sustained in consequence of the location of the road whereas it should have covered the damages arising from the construction also and that was the question determined by the Supreme Court, the complaint in that court being that the court below had construed the bond as comprehensive enough to include both of the sources of damage referred to. With respect to the right of the land owner the court said: “Where the railroad has been located, the land has been taken and appropriated for the public use, the right of the landowner to sue for his damages is complete, and he may recover .all which may be caused by the location and by the subsequent construction. . . . The damages cannot be severed, and security for one is therefore security for all.” It was in this connection that the court said: “The court below held with obvious correctness that the bond covered all — 622 — the damages which the plaintiff under any circumstances could recover.” The context shows that the subject there considered was the character of the damages to which the landowner was entitled and the comprehensiveness of the bond with reference thereto. The case did not involve the relation of the surety to the principal and the extent of the surety’s obligation with, reference to the penalty of the-bond. We do not regard the case therefore as a decision on the question now presented. The great weight of authority, including the cases in this state, is adverse to the appellant’s contention and however unfortunate it may be that the insolvency of the railroad company has prevented him from recovering the whole amount of the damage which he sustained the way is not clear to give such construction to the bond in suit as would make the surety company a guarantor of all of the obligation of the railroad company to him. In Twelfth-Street Market Co. v. R. R. Co., 142 Pa. 580, objection was made that the condemnation bonds filed designated a fixed sum as a penalty which bonds had been approved by the court below as sufficient in amount to cover the damages. This was held by the court to have been the universal practice under the Act of April 9, 1856, P. L. 288, and it was further held that the affidavits submitted to the court below show that the' bonds were amply sufficient to cover the damages. The remedy of the plaintiff for a bond insufficient in amount to secure his damage was by exception in the court and proof of the probable extent of the injury. As this remedy was not resorted to he is left, so far as the surety is concerned, to the smaller compensation to which the bond entitles him. The judgment is affirmed. Rice, P. J., dissents.