O'Gorman v. Sabin

• Decision Date: 10 July 1895
• Docket Number: 9320-(153)
• Citation: O'Gorman v. Sabin, 62 Minn. 46, 64 N. W. 84 (Minn. 1895)
• Parties: J. C. O'GORMAN, Receiver, v. D. M. SABIN and Others
• Court: Minnesota Supreme Court

64 N.W. 84

62 Minn. 46

J. C. O'GORMAN, Receiver, v. D. M. SABIN and Others

Nos. 9320-(153)

Supreme Court of Minnesota

July 10, 1895

Action in the district court for Washington county against D. M Sabin, J. S. O'Brien, David Tozer, Samuel Matthews, E. W Durant, and Jacob Bean, upon an undertaking alleged to have been executed by them. After trial and verdict in favor of plaintiff for $ 76,343.07, plaintiff by leave of court amended his complaint as stated in the opinion, and defendants interposed a demurrer to the amended complaint which the court overruled. Defendants thereafter moved the court (1) to direct judgment for defendants for dismissal of the action, and for their costs and for such other relief as might be just; (2) to make its order and direct judgment sustaining the demurrer to the amended complaint; and (3) to vacate the general verdict and the special findings of the jury, and grant a new trial. The court, Williston, J., made an order granting a new trial unless plaintiff should consent to a reduction of the verdict to $ 75,280.61, but in case of such consent denying a new trial, and in other respects denying defendants' motions. Plaintiff consented to the reduction of the verdict. From the order denying their several motions defendants appealed. Affirmed.

Order affirmed.

J. N Castle, for appellants.

The variance between the amended and the original complaint is fatal. O'Brien v. City of St. Paul, 18 Minn. 163 (176); Cowles v. Warner, 22 Minn. 449. The rule in regard to sureties is that the amount in gross mentioned in the bond is considered merely as a penalty, to cover any actual damages sustained by the party in whose favor the bond is given. Taylor v. Sandiford, 7 Wheat. 13; Jackson v. Baker, 2 Edw. Ch. 471; Hoag v McGinnis, 22 Wend. 163; Dennis v. Cummins, 3 Johns. Cas. 297; Colwell v. Lawrence, 38 N.Y. 71; Wallis v. Carpenter, 13 Allen, 19, 25; 2 Am. & Eng. Enc. Law, 462, note 7; Shreve v. Brereton, 51 Pa. 175; Carter v. Strom, 41 Minn. 522, 43 N.W. 394; Fasler v. Beard, 39 Minn. 32, 38 N.W. 755. The contract of suretyship is construed strictly in favor of the surety. 24 Am. & Eng. Enc. Law, 749, § 9; Ryan v. Williams, 29 Kan. 487; Tomlinson v. Simpson, 33 Minn. 443, 446, 447, 23 N.W. 864; City of Lafayette v. James, 92 Ind. 240, 243, 244. Misrepresentation of material facts releases a surety from liability. Fishburn v. Jones, 37 Ind. 119; Drabek v. Grand Lodge, 24 Ill.App. 82, 84; Mendelson v. Stout, 37 N.Y.S. 408; Frisch v. Miller, 5 Pa. 310; Ham v. Greve, 34 Ind. 18; Franklin Bank v. Cooper, 36 Me. 179; 24 Am. & Eng. Enc. Law, 847. Sureties are entitled to subrogation. 24 Am. & Eng. Enc. Law, 847, 216, note 3; 217, 218; 223, note 2; Cullum v. Emanuel, 1 Ala. 23, 34 Am. Dec. 757; Hayes v. Ward, 4 Johns. Ch. 123; National Ex. Bank v. Silliman, 65 N.Y. 475, 479. A surety is released when the creditor parts with a lien for the payment of the principal debt without his consent. Baker v. Briggs, 8 Pick. 122, 126; New Hampshire Bank v. Colcord, 15 N.H. 119; Nelson v. Munch, 28 Minn. 314, 9 N.W. 863.

If a receiver exceeds his powers, his acts are void. High, Receivers, c. 1, § 1; Kerr, Receivers, 196; Edwards, Receivers, 4; Verplanck v. Mercantile Ins. Co., 2 Paige, 452, 453; Chautauqua County Bank v. White, 6 Barb. 589; Runyon v. Farmers' & Mechanics' Bank, 4 N.J.Eq. 480; Devendorf v. Dickinson, 21 How. Pr. 275; Hooper v. Winston, 24 Ill. 353; Yeager v. Wallace, 44 Pa. 294; Davis v. Gray, 16 Wall. 203, 217, 218; Booth v. Clark, 17 How. 322; Corey v. Long, 43 How. Pr. 492. Conveyance should not be made by the receiver till payment of the price. Barnes v. Morris, 4 Ired. Eq. 22; Ruckle v. Barbour, 48 Ind. 274. A sale without such payment is void. Chapman v. Harwood, 8 Blackf. 82; State of Wisconsin v. Torinus, 24 Minn. 332; Delafield v. State of Illinois, 26 Wend. 192, 221; Story, Agency, § 78; Cushing v. Longfellow, 26 Me. 306; Donovan v. Mayor of New York, 33 N.Y. 291; McSpedon v. Mayor of New York, 20 How. Pr. 395; Nash v. City of St. Paul, 11 Minn. 110 (174); State v. Hastings, 12 Wis. 664. Bonds taken by receivers contrary to authority are void. State of Wisconsin v. Torinus, supra; Ayer v. Hutchins, 4 Mass. 370; Reynolds v. Wilson, 60 Am. Dec. 753; Fisher v. Bridges, 77 E. C. L. 642; Hamilton v. Pleasants, 98 Am. Dec. 551; Paxton v. Popham, 9 East, 408, and note 414; Benedict v. Bray, 2 Cal. 251; Marshall v. State, 8 Blackf. 162; Daniels v. Barney, 22 Ind. 207; Bartee v. Tompkins, 4 Sneed, 623; Slocomb v. Robert, 16 La. 173; King v. Baker, 7 La. Ann. 570; Perry v. Hensley, 14 B. Mon. 381; Buckingham v. Bailey, 12 Miss. 538; Aucoin v. Guillot, 10 La. Ann. 124; Caffrey v. Dudgeon, 38 Ind. 512, 516; Alexander v. Silbernagel, 27 La. Ann. 557; Pacific Nat. Bank v. Mixter, 124 U.S. 721, 8 S.Ct. 718; State of Wisconsin v. Torinus, supra; Cressy v. Gierman, 7 Minn. 316 (398); Breen v. Kelly, 45 Minn. 352, 47 N.W. 1067.

Warner, Richardson & Lawrence, for appellants Durant, Tozer, and Matthews.

By his amendment of the complaint plaintiff substituted a new cause of action and waived the verdict. The obligation alleged in the amended complaint has one more condition annexed than was annexed to the obligation set out in the original complaint. State of Wisconsin v. Torinus, 28 Minn. 175, 9 N.W. 725; Benson v. Miller, 56 Minn. 410, 57 N.W. 943; Harrington v. Samples, 36 Minn. 200, 30 N.W. 671. The amended complaint and the verdict did not warrant judgment in favor of plaintiff, because it was not alleged and found that Searles was ever in default; and until such default the obligation of the sureties did not arise. The amended complaint did not allege that Searles was ever requested to pay his bid. Parr v. Johnson, 37 Minn. 457, 35 N.W. 176.

If the bond was obtained to protect plaintiff against loss from disobedience of the orders of the court, his action was fraud upon the court. Adams v. Adams, 25 Minn. 72; Belden v. Munger, 5 Minn. 169 (211). The scheme as testified to by plaintiff was not a mere private fraud, but a design to mislead the court. Livingston v. Ives, 35 Minn. 55, 27 N.W. 74; Tozer v. O'Gorman, 60 Minn. 42, 61 N.W. 895; G. S. 1878, c. 87, § 1, subds. 4, 5, 9; G. S. 1894, § 6155. Defendants are sought to be charged simply as guarantors and as being under obligation to pay on conditions that are not alleged to have been satisfied. Burke v. Baldwin, 54 Minn. 514, 56 N.W. 173; Guerin v. St. Paul F. & M. Ins. Co., 44 Minn. 20, 46 N.W. 138; Loomis v. Youle, 1 Minn. 150 (175); Cochrane v. Halsey, 25 Minn. 52, 61, 64. If the bond was to guarantee payment by Searles or his appointee of the balance of his bid at the time of the transfer, that is, as the orders required, defendants were sureties. By making the transfer without insisting on cash, plaintiff exonerated the sureties pro tanto. Franzen v. Mabon, 2 Minn. Law J. 216; Cummings v. Little, 45 Me. 183; Pollock, Contracts (251) 270; Otis v. Von Storch, 15 R. I. 41, 23 A. 39; 2 Sutherland, Damages, 562; Guild v. Butler, 127 Mass. 386; Ives v. Bank of Lansingburg, 12 Mich. 361; cf. Benson v. Miller, supra. If the bond was to guarantee payment by Searles of his bid at some time subsequent to the transfer, it was made to induce the receiver to disobey the orders of the court, and was illegal and void. If Searles and plaintiff concocted this contrivance, and defendants executed the bond without knowledge of its real purpose, as shown by the evidence, defendants are not estopped. State of Wisconsin v. Torinus, 28 Minn. 175, 9 N.W. 725; Castle v. Thomas, 16 Minn. 443 (490); Hicks v. Mendenhall, 17 Minn. 453 (475); Farmers' & Mechanics' Bank v. Baldwin, 23 Minn. 198; First Nat. Bank v. Pierson, 24 Minn. 140; Kennett v. Chambers, 14 How. 38; Brown v. Tarkington, 3 Wall. 377; Davidson v. Lanier, 4 Wall. 447; Thomas v. Railroad Co., 101 U.S. 71; Pacific Nat. Bank v. Mixter, 124 U.S. 721, 8 S.Ct. 718; Central Transp. Co. v. Pullman's Palace-Car Co., 139 U.S. 24, 59, 60, 11 S.Ct. 478; Trist v. Child, 21 Wall. 441; Meguire v. Corwine, 101 U.S. 108; Chippewa Valley & S. R. Co. v. Chicago, St. P., M. & O. R. Co., 75 Wis. 224, 44 N.W. 17; Thomson v. Thomson, 7 Ves. Jr. 470; Cousins v. Smith, 13 Ves. Jr. 542; Pennsylvania Navigation Co. v. Dandridge, 8 Gill & Johns. 248; Converse v. Norwich Transp. Co., 33 Conn. 166; Hood v. New York & N. H. R. Co., 22 Conn. 502.

Charles N. Bell and J. N. Searles, for respondent.

As between Searles and defendants there was no relation of principal and surety. Defendants executed the undertaking without request from him. A voluntary payment or contract for payment by one for use of another without request will not create a liability on the part of the latter to the former. Lathrop v. Wilson, 30 Vt. 604; McPherson v. Meek, 30 Mo. 345; Carter v. Black, 4 Dev. & Bat. Law, 425; Hill v. Wright, 23 Ark. 530; Brandt, Suretyship, § 180; Mansfield v. Edwards, 136 Mass. 15; Brown v. Fales, 139 Mass. 21, 29 N.E. 211; Winsor v. Savage, 9 Metc. (Mass.) 346.

A judgment on the verdict before the amendment would bar another action on the obligation in suit. The obligation set out in the original and in the amended complaint was the same. Thompson v. Myrick, 24 Minn. 4; Harris v. Harris, 36 Barb. 88; Cromwell v. County of Sac, 94 U.S. 351. The defenses which defendants seek to avail themselves of by way of new trial are affirmative, and should have been pleaded. Livingston v. Ives, 35 Minn. 55, 27 N.W. 74; Finley v. Quirk, 9 Minn. 179 (194).

It was not necessary to make demand of payment on the bidder to give rise to defendants' liability. State v. Winona & St P. R. Co., 21 Minn. 472; Horn v. Hansen, 56 Minn. 43, 57 N.W. 315; Snow v. Johnson, 1 Minn. 32 (48). The obligation cannot be construed as postponing the time of payment till after conveyance. Horn...