Sauer v. Detroit Fid. & Sur. Co.

• Decision Date: 01 April 1927
• Docket Number: No. 99.,99.
• Citation: 213 N.W. 98,237 Mich. 697
• Court: Michigan Supreme Court
• Parties: SAUER et al. v. DETROIT FIDELITY & SURETY CO.

237 Mich. 697

213 N.W. 98

SAUER et al.

v.DETROIT FIDELITY & SURETY CO.

No. 99. ^*

Supreme Court of Michigan.

April 1, 1927.

Error to Curcuit Court, St. Clair County; Harvey Tappan, Judge.

Action by Joseph Sauer and another against the Detroit Fidelity & Surety Company. Judgment for plaintiffs, and defendant brings error. Affirmed.

Argued before the Entire Bench. shirley Stewart, of Port Huron, (Eugene F. Black, of Port Huron, of counsel), for appellant.

John B. McIlwain, of Port Huron, for appellees.

SNOW, J.

There was considerable delay in bringing to a hearing a chancery suit for an accounting between Joseph Sauer, Cornelius Stomler, and Sydney C. McLouth, copartners engaged in dredging sand from the bays and channels of the St. Clair river. Sauer and Stomler each claimed McLouth owed him several thousand dollars for sand he had removed, and, after the case had been pending for more than a year, McLouth was required by order of the court to give them a bond in the sum of $5,000, conditioned to pay ‘any and all sums of money to be found by the said court to be due them for sand removed from the said 4th day of October, A. D. 1922, until the trial of said cause and the decree of said court.’ Seven months later, upon order of the court, he gave a second $5,000 bond with the same obligation except that it covered sand removed ‘heretofore and hereafter until the trial of said cause and the decree of said court.’

The present action is one to recover on these bonds, and was tried before the court without a jury. From a judgment in plaintiffs favor, the defendant brings error.

It claims it is not liable on either of the bonds, because the condition in each was to pay a sum ‘to be found by the said court to be due,’ and that, as a matter of fact, the court never found any sum whatever to be due, as the decree was entered by consent of its principal and plaintiffs, without contest, and pursuant to a written agreement fixing the amount due, and that the making of such settlement without the surety's consent constituted such a material alteration of its undertakings that it was thereby discharged.

It is true that the accounting case was not tried in the sense that evidence was received and passed upon. There was no necessity for it. Before the case could be heard McLouth died, and his administrator, negotiating with his partners, determined and agreed upon the quantity of sand he had removed and the sum in which he was indebted. This sum considerably exceeded the amount of the bonds. It was allowed by the probate court as a claim against the estate, and a 5 per cent. dividend paid thereon, which was all that the assets of the estate would permit. By consent this was likewise the amount named as due them in the accounting degree, to recover which from the surety this action is prosecuted. No one has ever claimed the amount thus determined was not correct, nor that there was any mistake, fraud, conspiracy, or collusion between any of the parties in arriving at it. In fact, upon the trial of the instant case, the parties stipulated in open court in part as follows:

‘The attorneys for the respective parties in this case, for the purpose of expediting the trial and avoiding loss of time to the court and counsel attendant upon the proof herein stipulated to, agree and stipulate as a fact, to be considered by the court, as follows: That Sydney C. McLouth, the principal named in the bonds declared upon, and defendant in the chancery case in which said bonds were given, removed an amount of sand from the waters adjacent to Dickinson Island during his lifetime and covered by said bonds, worth in excess of $10,000, the total penalty of said bonds over and above the quarter interest therein of the said Sydney C. McLouth as tenant in common with the plaintiffs herein.’

It will be remembered that the obligation of the surety on the bonds was to pay ‘any and all sums of money to be found by the said court to be due them for sand removed.’ The amount due was first agreed upon by the parties, and reduced to writing. On this writing the court based the decree. Defendant contends this is not a finding by the court as is contemplated by the bond; in effect, that to arrive at such a finding the court would have to hear the proofs and try the case, and that, because this was not done, the surety is released. In other words, it seeks to avoid its obligation contracted by saying:

‘I have no fault to find with the amount my principal has been decreed to pay, but, because that amount was determined by the court from conceded facts, rather than disputed ones, it does not amount to a determination at all, and I am thus released.’

While, as contended, there may exist some conflict of authority upon the proposition, we have no hesitancy in holding that, in the absence of fraud, mistake, collusion, or conspiracy between the principal and other persons, a surety is not released from his obligation to pay the amount found due in a decree or upon judgment, because his principal did not contest the same, or because he consented thereto; that such a decree or judgment is in fact and effect a finding by the court. And in this holding we find support in the great weight of authority.

Defendant's counsel urge as contrary authority the case of Wright v. Hake, 38 Mich. 525, in which the surety was released. But counsel...