Clinton County to Use of Township 54, Range 30 v. Smith

• Decision Date: 29 November 1911
• Citation: 141 S.W. 1091,238 Mo. 118
• Parties: CLINTON COUNTY to use of TOWNSHIP 54, RANGE 30, v. E. T. SMITH and E. C. HALL, Appellants
• Court: Missouri Supreme Court

141 S.W. 1091

238 Mo. 118

CLINTON COUNTY to use of TOWNSHIP 54, RANGE 30, v. E. T. SMITH and E. C. HALL, Appellants

Supreme Court of Missouri, First Division

November 29, 1911

Appeal from Clinton Circuit Court. -- Hon. John G. Park, Special Judge.

Affirmed.

W. S Herndon and E. C. Hall for appellants.

(1) The payments, if made, were on the loan account and not on the bond, which was given as personal security required by the statute. (2) Any payments made were properly credited on the loan account and not on the bond, as the bond, like the mortgage on the real estate, was given as a security for the loan. It was no more evidence of the loan than the mortgage. (3) The loan account, if competent evidence, showed that on January 1, 1895, there was default in the payment of interest which was never paid, and for more than twelve years the plaintiff had a cause of action on the bond (except for the Statute of Limitations) against defendant for such default. And it was not optional. (4) One of the express conditions of the bond was: "And it is further agreed and understood as a condition of this bond, that should default be made in the payment of the interest when due, or should the principal of this bond fail to give additional security hereunto when lawfully required, in either case both the principal and interest shall become due and payable forthwith." So that the surety could rest assured that the real estate, as long as it was worth $ 500, made him safe. (5) Where the obligee has done anything to injure the surety the court is glad to lay hold of it in favor of the surety. 1 Brand on Surety & Guaranty, sec. 93. And the claim against the surety must be strictissimi juris. As to the first proposition "A bond is a specialty, being under seal." 4 Am. & Eng. Ency. Law, p. 620, and note 2. A bond by a third party, that is, one other than the debtor, or promisor, is, however, regarded as a guaranty. 4 Am. & Eng. Ency. Law, p. 620. If the payments on this loan can be considered as payments on the bond we contend that such payments would not raise a new promise as to defendant E. C. Hall, the surety. 19 Am. & Eng. Ency. Law, p. 309; R. S. 1909, secs. 1909, 1910 and 1911; Leach v. Asher, 20 Mo.App. 659; Zervis v. Unnerstall, 29 Mo.App. 474; Maddox v. Duncan, 62 Mo.App. 476. It is held by many of the states that the payment of interest by a joint obligor will bind only the one making the payment. And the ground seems to be that such payment is equivalent to a new promise and acknowledgment of the debt. McBride v. Hunter, 64 Ga. 655; Davis v. Mann, 43 Ill.App. 301; Dougherty v. Hoffstetter, 12 Ind.App. 699; Steel v. Souder, 20 Kan. 39; Walters v. Knapp, 23 S.C. 578; Succession of Voorhees, 21 La. Ann. 659; Ettinge v. Hull, 2 Dem. Sur. (N. Y.) 562; Probate Judge v. Stevenson, 55 Mich. 320; Exeter Bank v. Sullivan, 6 N.H. 124; Meitzler v. Todd, 12 Ind.App. 381; Gould v. Cayuga Co. Nat'l Bank, 86 N.Y. 75; Decatur v. Lainer, 7 Ala. 595; Hunter v. Robertson, 30 Ga. 479; Littlefield v. Littlefield, 91 N.Y. 203; 25 Cyc., pp. 1355-1356. (6) The loan of the school fund in this case was made to Elias T. Smith, and an account of the same was kept by the county clerk upon the books of the county, and when Smith made payments of interest or principal the same were credited on said account and not on the bond, which was given as personal security for the loan, as required by section 10816, Revised Statutes 1909, which is the same as the section under which the loan here was made. In this case the bond did not bear interest, but the debt, which the bond guaranteed, did bear interest, and consequently became a part of the loan debt, and the payment of interest in no way released or reduced the liability of the surety on the bond or changed his status in any way (except to make the debt become due), as he was bound for the penalty of the bond only. Then how could any payment made by the principal on the loan be regarded as a new promise on the part of the surety to pay the bond, or penalty? It is said, the reason why the payment of interest is considered a new promise by the one who makes it is because interest is considered a part of the debt. Brown v. Latham, 58 N.H. 30; Am. and Eng. Anno. Cas., p. 980; 19 Am. & Eng. Ency. Law, 309. The payments made by Smith did not toll the Statute of Limitations as to defendant Hall, because his liability was not a joint liability. The plaintiff must allege and prove a default on the part of Elias T. Smith that is a breach of the conditions of the bond, and damages to be satisfied out of the penalty. Regan v. Williams, 185 Mo. 628, 88 Mo.App. 577; Maddox v. Duncan, 62 Mo.App. 474; Munroe v. Herndon, 110 Mo.App. 509; Thompson v. Thompson, 121 Mo.App. 524.

Lester B. Hooper for respondent.

All the questions raised by appellant in this cause pertinent to the issues, are answered and fully settled. Vernon County v. Stewart, 64 Mo. 408. The case of Maddox v. Duncan, 143 Mo. 621, and Regan v. Williams, 185 Mo. 628, strongly uphold the early case of Vernon County v. Stewart, and utterly annihilate appellant's contention that the Statute of Limitations avails him in this case.

OPINION

WOODSON, J.

This was a suit brought by the relators against the appellants on a school bond, executed by E. T. Smith as principal and E. C. Hall and Daniel Smith sureties, to recover the amount due thereon. The bond was for five hundred dollars, bearing eight per cent interest and was secured by a mortgage or deed of trust upon certain real estate described in the pleadings.

The suit was brought after various payments of the principal and interest had been paid; also after the real estate had been sold under the deed of trust, and the proceeds thereof had been credited thereon. There was still due thereon, at that time, approximately the sum of $ 714.55.

The trial was had before the court without the intervention of a jury, which resulted in a judgment for the respondent and against the sureties, for the penalty of the bond, and eight per cent interest thereon until paid.

E. T. Smith the principal was never served and Daniel Smith suffered a judgment by default against him. After unsuccessfully moving for a new trial and in arrest of judgment, Hall appealed to this court.

The bond sued on was in the following words and figures:

"State of Missouri, County of Clinton.

"Know all men by these presents, that we, Elias T. Smith, as principal, and . . . . as sureties, jointly and severally firmly bind ourselves and our respective heirs, executors and administrators to the county of Clinton, State of Missouri, in the sum of $ 500, to be paid to said county for the use and benefit of the school fund of township 54, range 30, of said county, to the payment whereof we jointly and severally bind ourselves, our heirs, executors and administrators firmly by these presents. Sealed with our seals and dated the 1st day of September, A. D. 1890. The conditions of this bond are: That whereas, the said Elias T. Smith, principal, has this day borrowed from said county the sum of $ 500, belonging to the capital school fund of township 54, range 30, of said county, which said sum of money the said principal and sureties agree to pay to said county for the use and benefit of the said township school fund on or before the . . . . day of . . . ., A. D. 18 . ., with interest thereon from the date hereof until paid at the rate of eight per cent per annum, said interest to be paid annually on the . . . . day of . . . . of each and every year until the whole debt shall be paid off and discharged. Now, therefore, if the principal and sureties shall well and truly pay or cause to be paid the said sum of money borrowed and the interest thereon according to the tenor and effect of this bond, then this obligation shall be void; otherwise, it shall remain in full force. But it is expressly agreed and understood that all interest not punctually paid when due, shall, when due, be added to the principal and shall bear interest at the same rate as the principal until paid. And it is further agreed and understood as a condition of this bond that should default be made in the payment of the interest when due, or should the principal of this bond fail to give additional security hereunto when lawfully required, in either case both the principal and interest shall become due and payable." Then followed the signatures of the parties.

While the bond is not dated, yet the petition stated and the evidence showed that the bond was executed on September 1, 1890.

Counsel for appellant Hall asked the following declarations of law, which were by the court refused.

"1. The court, sitting as a jury, declares the law to be: That under the pleadings and evidence in this case, the finding must be for the defendant, E. C. Hall.

"2. The court, sitting as a jury, declares the law to be: That under the evidence, the liability of the defendant, E. C. Hall, on the instrument sued on was a collateral liability, and that the payment of part of the interest thereon by the principal, E. T. Smith, did not prevent the running of the Statute of Limitations as to the said defendant, E. C. Hall.

"3. The court, sitting as a jury, declares the law to be: That if the court finds that the defendant E. C. Hall was surety on the bond sued on, and further finds that by the laches of the plaintiff or its agent, the county court, the said E. C. Hall was injured, then such surety should be relieved from liability to the extent of such injury, if any."

The court made a special finding of facts and gave certain conclusions of law, which were as follows:

"I have carefully considered the defense based upon the Statute of Limitations. The bond is dated September 1, 1890, and the penalty is $ 500,...