Hendry v. Cartwright.

• Decision Date: 27 February 1907
• Citation: 89 P. 309,14 N.M. 72
• Parties: HENDRYv.CARTWRIGHT.
• Court: New Mexico Supreme Court

14 N.M. 72

89 P. 309

HENDRY

v.CARTWRIGHT.

Supreme Court of the Territory of New Mexico.

Feb. 27, 1907.

Syllabus by the Court.

A bond required by an order of court to avoid an injunction which is perfect and complete upon its face, and is executed and duly acknowledged by the sureties whose names appear in the body thereof, and is thereupon delivered by one of such sureties to the clerk of the court, and is duly approved and filed by the latter is binding upon all of such sureties, notwithstanding the fact that one of such sureties may, without the knowledge of the obligee or the clerk, have executed and delivered said bond to such co-surety, upon the express condition that such bond was not to be used until an indemnity bond had been furnished him.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 40, Principal and Surety, § 56.]

Where such bond is not perfect upon its face, because not signed by all the sureties whose names appear therein, or because of material noticeable alterations or erasures therein, or because of a lack of some requirement which the law fixes as a prerequisite to its receipt or filing by the clerk, a surety may defeat recovery thereon by showing the existence of a condition, imposed at the time of delivery by him to a co-surety, that he was to have an indemnity bond against his suretyship before the bond was used.

Rule 6 adopted by this court for the regulation of practice in the district courts, which provides that all bonds approved by the clerks of such courts shall be duly acknowledged in like manner as deeds or real estate before the same shall be received or filed, being within the powers conferred upon this court by Comp. Laws, § 874, has the force and effect of statute.

The absence of such acknowledgment upon a bond so tendered so detracts from its facial regularity as to call for inquiry by the obligee as to whether it was signed upon condition, and entitles a surety if sued thereon to prove an unfulfilled condition imposed by him that the bond was not to be used until he had been furnished a satisfactory indemnity bond

Error to District Court, Santa Fé County; before Justice John R. McFie.

Action by Alexander M. Hendry against H. B. Cartwright. From a judgment in favor of defendant, plaintiff brings error. Affirmed.

This is a civil action, brought by Hendry originally against the Lincoln, Lucky & Lee Mining Company, a corporation, and against H. B. Cartwright and Bernard Seligman. The trial in which this appeal originated, however, concerned only the defendant, Cartwright. The issues as made by the pleadings are given below.

On November 7, 1892, plaintiff, Hendry, and one Daniel Jones had litigation with the Lincoln, Lucky & Lee Mining Company in the district court of Santa Fé county. By an order of court, made in the cause on November 3, 1892, that company, in order to prevent an injunction against it, was required to give a bond to plaintiff and his associates in interest for $25,000. On November 7, 1892, the company executed the bond with H. B. Cartwright and Bernard Seligman and one Al Townsend and one E. T. Webber as sureties. The plaintiff alleges a breach of the bond by the company, and prays judgment. The defendant, Cartwright, answered, setting up as a defense that while he signed the alleged bond, he handed it unsealed, unacknowledged, and unjustified to by him to his co-surety Webber, but upon the express agreement and condition that Webber should not use or deliver the paper to any person unless the company should first give Cartwright a satisfactory indemnity bond, upon the giving of which Cartwright was to seal, acknowledge, and justify to the bond and deliver it. It is further alleged that Webber, in violation of this agreement, fraudulently delivered the paper to some person or persons unknown to the defendant. The answer accordingly pleads as a defense that the document is not his writing obligatory because not sealed by him or delivered by him, and because not acknowledged so as to admit it for filing by the clerk of the court, and pleads the further defense that it contains other and material conditions and obligations not required by the order of court for its filing. A demurrer to the answer being overruled, the plaintiff replied, denying the allegations of the answer, and alleging that if there was any such understanding between Cartwright and Webber it was a secret understanding, and not known either to plaintiff or the clerk of the court who approved the bond. The cause was tried to a jury, at which time there was tendered by plaintiff in addition to the bond, the proceedings in the cause out of which it grew, and also a judgment in a suit against the Lincoln, Lucky & Lee Mining Company fixing the damages. The defendant, Cartwright, was the only witness for the plaintiff. He testified that he signed the bond, but stated that he never attached his seal to the paper, or adopted the seal of any one else. The original of the paper certified to this court by consent shows a signature by the principal obligee, the Lincoln, Lucky & Lee Mining Company, with an impression seal attached. The signatures of the sureties, Al Townsend, E. T. Webber, H. B. Cartwright, and B. Seligman, follow in the order named, each with the word “seal” in parentheses following, except that in the case of Seligman a pen and ink scroll surrounds the word “seal.” The bond was indorsed, approved, and filed by the clerk on November 9, 1892. There is no justification or acknowledgment by any of the sureties except Townsend. Cartwright testified that the bond was brought to him by Webber, and that at the time of signing it he told Webber that he would have to have a satisfactory indemnifying bond which Webber promised to furnish, but that he signed it without such a bond because Webber wanted to use his name with Seligman. After signing it and on the same or the next day Webber came with an acknowledging officer, and wanted him to acknowledge his signature and trust him (Webber) to get the indemnifying bond, but witness refused to do so because he had no indemnifying bond. He also testified that it was understood between Webber and himself that the bond in suit was not to be used until Webber had given the indemnifying bond. This latter was never given, and witness did not know that the bond now in controversy had been used until four years later, after Hendry had gotten judgment against the company. At the close of the testimony the court instructed the jury to return a verdict for the defendant. A motion for a new trial was stricken out by the court as having been filed out of season, but it was held by this court at the last term that the motion was filed within time, and stood overruled by operation of law by the arrival of the next regular term. (85 Pac. 1043).

The cause is here upon writ of error.

The absence of an acknowledgment of a bond so detracts from its facial regularity as to call for inquiry by the obligee as to whether it was signed on condition, and entitles a surety, if sued thereon, to prove an unfulfilled condition imposed by him that the bond was not to be used until he had been furnished a satisfactory indemnity bond.

N. B. Laughlin and W. B. Childers, for plaintiff in error.

Eugene A. Fiske, for defendant in error.

POPE, J.

The ultimate question in this case is, was the court below justified upon plaintiff's testimony in giving a peremptory instruction for the defendant? It is urged by the defendant on the one hand that this action was right, for the reason that the bond in question was deposited as an escrow with Webber, conditioned upon his furnishing an indemnity bond and that his delivery to the clerk was in violation of the terms of what the defendant says was a special agency, and was thus no delivery at all; that independent of this the instrument had at least four defects in form-lack of a seal, of acknowledgment and of justification, and because not conditioned as required by the order of court-and that these were sufficient to put the plaintiff and the clerk upon inquiry as to any understanding between Cartwright and Webber; that the instrument sued on was defective as a bond, and could not be recovered on as such and that the facts and pleadings did not justify recovery upon it as a common-law obligation; and that irrespective of these there could be no recovery because the attempted delivery by the clerk's filing it in court was in distinct violation of law, and void as a delivery. The plaintiff takes issue upon these positions, and urges that the case is controlled by the equitable principle that, where one of two innocent persons must suffer by the acts of a third, the loss should fall upon that one who placed it in the power of such third person to occasion the loss, rather than upon the other.

Disposing first of the facts, we find it not entirely clear whether the condition that an indemnity bond should be furnished before the bond was used was imposed by Cartwright at the time the bond was signed, or when it was presented for acknowledgment a few hours later. In either event, however, it was imposed as a condition to the use of the bond by Webber before the latter delivered it to the clerk of the court. The case-made, therefore, is that of a surety who defends against a bond upon the ground that his signing and handing it to the co-surety for delivery was upon the unfulfilled condition that it should not be used until a satisfactory indemnity bond had been furnished him. We consider this question greatly illumined by two decisions of the Supreme Court of the United States, which, of course, are controlling authorities with this court:

In the first of these (Pawling v. United States, 4 Cranch, 219, 2 L. Ed. 601), the opinion was written by Chief Justice Marshall. This was a case where Ballinger, as collector of the revenue, gave a bond with Pawling and four others as sureties. These latter defended upon the ground...