Illinois Surety Co. v. United States

• Decision Date: 11 January 1916
• Docket Number: 86.
• Citation: 229 F. 527
• Parties: ILLINOIS SURETY CO. v. UNITED STATES.
• Court: U.S. Court of Appeals — Second Circuit

229 F. 527

ILLINOIS SURETY CO. v. UNITED STATES.

No. 86.

United States Court of Appeals, Second Circuit.

January 11, 1916

[Copyrighted Material Omitted]

Nelson L. Keach, of New York City (L. Laflin Kellogg and Alfred C Pette, both of New York City, of counsel), for plaintiff in error.

H Snowden Marshall, U.S. Atty., of New York City (Earl B. Barnes, Asst. U.S. Atty., of New York City, of counsel), for the United States.

Before LACOMBE, COXE, and ROGERS, Circuit Judges.

ROGERS Circuit Judge.

This action involves the right of the government of the United States to recover the full amount of a bond, $1,000, given by the Illinois Surety Company as surety for the purpose of obtaining the admission into this country of four alien children under 16 years of age. The bond upon which the action is brought bound the defendant to pay to the United States the sum of $1,000 in the event that the conditions of the bond were not complied with. There were four of these conditions: (a) That each of the children should attend public school until 16 years of age; (b) that none of them during said period should perform any work that would interfere with their regular attendance at school; (c) that one Biagio Di Goia should send every three months to the commissioner of immigration at the port of New York a written report as to their school attendance and labor (if any) performed; and (d) that none of the children should become a public charge. This action was brought to recover the amount of the bond by reason of breaches of the conditions with regard to the school attendance of Grace and John Pace, two of the children, and the making of the quarterly reports.

A jury was waived orally by both parties at the opening of the trial, and after hearing the testimony the trial court denied motions made by the defendant to dismiss the complaint, and found a verdict in favor of the plaintiff for $1,000, the sum named in the bond. No findings of fact or conclusions of law were submitted to or signed by the trial court.

The statutes require that issues of fact in actions at law be tried by jury (U.S. Comp. St. 1913, Sec. 1584), unless the jury be waived by a stipulation in writing (U.S. Comp. St. 1913, Sec. 1587), when the facts may be tried by the court and its rulings may be reviewed as provided in the statute (U.S. Comp. St. 1913, Sec. 1668). This case having been tried without a jury, and there having been no written stipulation waiving a jury trial, it is well settled that none of the questions decided at the trial can be re-examined in this court on writ of error. Ladd & Tilton Bank v. Lewis A. Hicks Co., 218 F. 310, 134 C.C.A. 106 (1914); Erkel v. United States, 169 F. 623, 95 C.C.A. 151 (1909); City of Defiance v. Schmidt, 123 F. 1, 59 C.C.A. 159 (1903). No questions, therefore, are open to review on error, except they arise upon the process, pleadings, or judgment.

The complaint alleges that on October 9, 1912, Grazia, Giovanni. Francesco, and Angela Pace, subjects of Italy, arrived at the port of New York, and it states that their ages were respectively, 15, 12, 4 and 1 years. It then avers that on October 25, 1912, the Illinois Surety Company, the defendant herein, executed and delivered to the plaintiff a bond in the sum of $1,000, a condition of which bond was, among others, 'that if the said Grazia, Giovanni, Francesco, and Angela Pace should attend day school during the regular terms of the public school until June 30, 1913, June 30, 1916, June 30, 1925, and June 30, 1928, respectively, and if, during said period, the said aliens should not engage in any employment or perform any work or labor which should in any manner interfere with their studies, or with their regular attendance at school, then the said obligation should be void; otherwise, to remain in full force and virtue. ' It then alleges a breach of the condition and demands judgment in the full amount.

The answer does not deny the execution and delivery of the bond, neither does it allege any matter in discharge or avoidance of it. And no rule in pleading is better settled or upon sounder principles than that every plea in discharge or avoidance of a bond should state positively and in direct terms the matter in discharge or avoidance. The matter in discharge or avoidance is not to be inferred arguendo, or upon conjectures. United States v. Bradley, 10 Pet. 343, 9 L.Ed. 448 (1836).

The answer simply denies that the alleged breach of the bond has been committed, and also that the sum of $1,000 is due and owing to the United States by reason of the premises set forth in the complaint. At the close of the case counsel for the defendant moved to dismiss the complaint. In so far as the motion was based on the absence of adequate proof showing any breach of the condition of the bond, this court is not at liberty, for the reason above stated, to consider it. And for the same reason this court cannot look into the record to discover whether there is proof that the plaintiff suffered any damages because of any omission on the part of defendant to perform the obligation imposed by the bond. But if we were at liberty to do so, and should find a total absence of proof that the United States had suffered any damages, it could not defeat the action or afford any reason for the dismissal of the complaint. If this bond had been given to an individual, instead of to the government, it might be important that it contained no less than 16 conditions of varying importance; for courts have held that where an agreement contains several distinct and independent covenants, upon which there may be several breaches, and one sum is stated to be paid upon the breach of performance, that sum is to be regarded as a penalty, and not liquidated damages. Lampman v. Cochran, 16 N.Y. 275; Hoagland v. Segur, 38 N.J.Law, 230; Chase v. Allen, 13 Gray (79 Mass.) 42; Keck v. Bieber, 148 Pa. 645, 24 A. 170, 33 Am.St.Rep. 846. That doctrine was applied by the Supreme Court in Bignall v. Gould, 119 U.S. 495, 7 Sup.Ct. 294, 30 L.Ed. 491 (1886). But in the case at bar, as the bond was given to the government, it would not be in the least material whether the bond contained 16 conditions or only 1.

The general rule is that in case of a penalty the measure of damages is the actual loss which has been sustained as a result of the breach where this can be ascertained. But in the case of liquidated damages there can be a recovery of the whole amount where such a recovery is consistent with the policy of the law. And generally the courts construe the sum mentioned in a bond as a penalty, considering it merely as a security for the damage actually sustained by the breach of the condition and they limit the recovery to an amount compensatory therefor. But while the above doctrine is that which courts usually enforce they do not apply it in all cases. And they do not apply it in the case of bonds running to the government. The rule is correctly stated in Sedgwick on Damages (9th Ed., 1912) Sec. 416a, as...