Brown v. National Sur.Corp. of N.Y.

• Decision Date: 21 January 1946
• Docket Number: 15793.
• Citation: 36 S.E.2d 588,207 S.C. 462
• Parties: BROWN v. NATIONAL SURETY CORPORATION OF NEW YORK.
• Court: South Carolina Supreme Court

36 S.E.2d 588

207 S.C. 462

BROWN v. NATIONAL SURETY CORPORATION OF NEW YORK.

No. 15793.

Supreme Court of South Carolina

January 21, 1946

Appeal from Common Pleas Circuit Court of Bamberg County; E. H Henderson, Judge.

Action by Mrs. Evelyn Brown against the National Surety Corporation of New York on a highway patrolman's bond. From an order overruling a demurrer of the plaintiff to the second defense of the answer, the plaintiff appeals.

The order of Judge Henderson requested to be reported follows:

This action is brought by the plaintiff against the National Surety Corporation of New York, on a highway patrolman's bond which was furnished pursuant to section 6004 of the Code. The plaintiff alleges that she was damaged in the sum of $2,000 by the acts of the patrolman, L. O. Wiggins, and that the conditions of the bond have been broken.

The defendant, in the second defense of the answer, sets forth that the bond was given in the penal sum of $2,000, and that two other like actions have been instituted in this Court against the defendant, based on the same bond, in each of which damages are claimed in the sum of $2,000; and that there were six occupants of one of the automobiles referred to in the complaint who may or may not institute like actions against the defendant, based on this bond. The defendant claims that if it is liable under the bond in any amount to any person or persons, its liability is limited to the sum of $2,000, and that if the plaintiffs in any or all of such actions now pending or hereinafter instituted should recover judgments against it amounting in the aggregate to more than $2,000, then in such event all of the said plaintiffs should be restrained from attempting to collect their judgments in full, and that payment to each of them of his or her proportionate share of the $2,000 as apportioned by the Court among the several judgments according to their respective amounts, should be adjudged full satisfaction of each of the judgments; and that payment of any one or more of the judgments should be held in abeyance by the Court until the total liability of the defendant on the bond shall have been determined.

The plaintiff demurs to this defense, on the ground that it does not state facts sufficient to constitute a defense, because it appears on the face thereof that it is contrary to section 6004 of the Code.

The question presented by the demurrer, therefore, is simply this: Is the amount of liability of the defendant under its bond limited to the sum of $2,000, or is every person who is injured and recovers a judgment for $2,000 or less entitled to collect it, although the aggregate of such several judgments may exceed the sum of $2,000?

Section 6004 reads in part as follows:

'Every officer authorized by this chapter to enforce the provisions of this chapter shall file with the highway department a bond, subscribed by some duly licensed surety company conditioned for the faithful performance of his duties; for the full, prompt and proper accounting for all funds coming into his hands and conditioned to pay any judgment recovered against him in any court of competent jurisdiction upon a cause of action arising out of breach or abuse of official duty or power, and damages sustained by any member of the public from any unlawful act of such officer.'

Act No. 518 of the General Assembly, Acts of 1944 43 St. at Large, pages 1431, 1496, in section 53(d) provides:

'Every officer authorized by Chapter 128, Volume III, Code of 1942 to enforce the provisions of said Chapter shall file with the Highway Department a bond in the sum of Two Thousand ($2,000.00) Dollars for the purpose set forth and provided in Section 6004 of said Chapter.'

Paragraph two of the second defense of the amended answer states that the defendant, National Surety Corporation, for the year 1944 filed with the Highway Department a bond 'conditioned as required in said section 6004,' and that the penal sum of the bond is the sum of $2,000.

This interesting question was raised in the case of AEtna Casualty & Surety Company v. Yonce, 181 S.C. 369, 187 S.E. 536, 539, but it was not necessary in that equity action, on a motion for a temporary injuction, to decide it. However, the Court stated that 'we agree with the ruling of the lower court that the plaintiff has an adequate remedy at law, and may set up any defenses which it may have in the cases brought by Yonce and Smith in Edgefield county, and to this end the plaintiff is given a period of twenty days from the filing of the remittitur within which to answer the complaint in these actions.'

The case of Small v. National Surety Corporation, 199 S.C. 392, 19 S.E.2d 658, deals with this section of the Code, but the point here at issue was not involved in that case.

The general rule is well settled that the liability of surety is limited to the amount, or the penal sum, stated in the bond.

At 11 C.J.S., Bonds, § 57, p. 432, it is said:

'The object of a penalty in a bond is to limit the obligation of the signers, and in the absence of a condition extending his liability a surety cannot be held liable for more than the penal sum named. Also, the liability of a surety on a statutory bond cannot be enlarged by implication beyond its terms and its statutory office.'

In American Jurisprudence, Vol. 43, Section 415, under the title of Public Officers, it is stated:

'Unless otherwise provided, and subject to an exception as respects interest, the liability of sureties on an official bond is limited by the penalty of the bond, and if the penalty is larger than required by statute, the liability, it has been held, should be limited to the amount required by law.'

In 57 C.J., at page 1020, which treats of Sheriffs and Constables, it is declared:

'In general, the liability of the sureties on the official bond of a sheriff or constable is limited to the penal sum named therein; and a recovery for the full amount of the bond prevents a recovery from the sureties for any other defaults, even though actions therefor are then pending.'

In the title Officers, 46 C.J., 1084, it is said:

'If the damages exceed the penalty, the common law governs, and the penalty is all that can be recovered, except, in some jurisdictions, where the excess is in the form of interest.'

Treating of 'Principal and Surety,' it is stated at 50 C. J., page 74:

'A surety on a bond is not liable beyond the penalty named therein. The application of this doctrine to the matter of interest, costs, and attorney's fees, is elsewhere discussed. If the amount of the penalty is insufficient to satisfy all claims, it should be apportioned.'

The case of Mitchell v. Laurens, 41 S.C.L. 109, 7 Rich. 109, involved an action on the official bond of a master in chancery. It was held that the several creditors could recover the amount of the penalty of the bond, and that if the damages and judgments in their suits exceeded the penalty, they must take ratably.

In the case of Bonsall v. Taylor, 12 S.C.L. 503, 1 McCord 503, the Court concurred 'in the opinion that the plaintiff is not entitled to recover more than the penalty of the bond.'

In the case of Treasurers v. Bates, 18 S.C.L. 362, 2 Bailey 362, it was held that several creditors could recover the penalty of a sheriff's bond, to be prorated among them. The statute in that case, pursuant to which the bond was given, provided 'that the bonds may at all times be sued for by the public or any private person, who shall or may think themselves aggrieved by any misconduct of any sheriff.' 18 S.C.L. at page 379, 2 Bailey at page 379.

The Supreme Court stated in the case of Ellis v. Sanders, 34 S.C. 236, 13 S.E. 417, that judgment may be recovered on a bond according to its terms in an amount not exceeding the penalty.

The great weight of authority from the other states of the Union sustains the proposition that where several persons have causes of action on a public or official bond, they may not together recover more than the penalty of the bond, although the aggregate of the judgments may exceed the penalty. Humphreys v. Leggett, 21 How. 66, 16 L.Ed. 50; Bradford v. National Surety Co., 207 Ala. 549, 93 So. 473; Witter v. Massachusetts Bonding & Insurance Co., 215 Iowa 1322, 247 N.W. 831, 89 A.L.R. 1065; Albie v. Jones, 82 Ark. 414, 102 S.W. 222, 12 Ann.Cas. 433; Taylor v. Blyth, 9 Colo.App. 81, 47 P. 662; Bailey v. McAlpin, 122 Ga. 616, 50 S.E. 388; State ex rel. Walker v. Ford, 5 Blackf., Ind., 392; Waddle v. Wilson, 164 Ky. 228, 175 S.W. 382; Marcy v. Praeger, 34 La.Ann. 54; Squires v. Michigan Bonding & Surety Co., 173 Mich. 304, 138 N.W. 1062, 43 L.R.A.,N.S., 76; Guffanti v. National Surety Co., 196 N.Y. 452, 90 N.E. 174, 134 Am.St.Rep. 848; Southern Surety Co. v. Bender, 41 Ohio App. 541, 180 N.E. 198; American Surety Co. v. Lawrenceville Cement Co., C.C., 96 F. 25; Darrah v. Lion Bonding & Surety Co., Tex.Civ.App., 200 S.W. 1101; Jitney Bus Ass'n v. City of Wilkes Barre, 256 Pa. 462, 100 A. 954; Maryland Casualty Company v. Alford, 10 Cir., 111 F.2d 388.

It appears that the only exception to this rule is made in the State of Washington, where the contrary view is held, as is shown by the following cases: Salo v. Pacific Coast Casualty Co., 95 Wash. 109, 163 P. 384, L.R.A.1917D 613; ...