State v. Allen

• Decision Date: 11 January 1892
• Citation: 10 So. 473,69 Miss. 508
• Court: Mississippi Supreme Court
• Parties: THE STATE v. JOHN M. ALLEN ET AL

10 So. 473

69 Miss. 508

THE STATE v. JOHN M. ALLEN ET AL

Supreme Court of Mississippi

January 11, 1892

FROM the circuit court of the first district of Hinds county JUDGE J. B. CHRISMAN being disqualified, HON. C. H. CAMPBELL judge of the fifth district, presided by consent.

This is an action by the state upon the bond of Hamilton, Allen &amp Hoskins, lessees of the state penitentiary. This cause has been twice before this court. See Hamilton v. The State, 67 Miss. 217; Hamilton v. The State, not reported. The opinion of the court, read in connection with the previous report of the case, will sufficiently disclose the facts.

Affirmed.

T. M. Miller, attorney-general, for the state.

It is true that the alteration of an executed instrument, whether in a manner prejudicial to sureties or not, releases them. In this case there was no executed instrument until delivery to, and approval by, the board of public works. If counsel for appellee be correct in his position that the bond, when signed by the sureties, was complete, the addition of a single name afterwards would be a material change, and would avoid the bond. The doctrine which underlies all the cases relied on by appellee, is, that when the surety intrusts the bond to his principal to fulfill the conditions before delivery, the principal becomes his agent, and, if fraud be committed, or any departure from secret instructions be made, the loss must fall upon the surety and not upon the beneficiary of the bond. Such would be the rule, even though names were forged by the principal. Murfree on Off. Bonds, § 761; 63 Mo. 212; 53 Me. 284; 21 Wall., 274; Graves v. Tucker, 10 Smed. & M., 9.

I admit, for argument, that if these defendants had signed upon condition that Hart should become bound, and then, after he signed, his name was erased, that would discharge them, because the face of the bond would give notice. But the fact here is that the bond was merely intrusted to the principals for further signatures, to the end that enough might be procured to make up the penalty. Hart's withdrawal, so far as the sureties are concerned, was no more and no less than if he had promised to become a surety and had failed to keep his promise. The appellants were not defrauded, as they had never heard of Hart. If the principals had delivered the bond with only the names appearing thereon ahead of Hart's, these sureties would have been bound. How, therefore, can it be said that they would not be bound, when the bond was delivered that way, in effect? Graves v. Tucker, supra.

The reason for releasing subsequent signers in such cases, is, that they act upon the faith of previous signatures. They contract to become jointly liable with certain persons as co-sureties. And, even if they intrust the bond to the principal, they presume that it will not be altered. Murfree, § 760. That is the doctrine as it stood prior to State v. Craig, 58 Iowa. It is the real doctrine stated in Smith v. U.S. 2 Wall., 219; and in 21 Iowa 244; and 43 Ib., 508.

It is believed that Craig v. The State was the first case to hold that not only subsequent but prior signers of a bond intended for circulation were discharged by erasures before delivery. The case is not consistent in reason. The board of public works cannot be charged in this case with notice of any implied conditions. If it had made inquiry, and had learned that Hart's name was erased without the consent of the subsequent signers, and that the latter signed before the erasure, and that the erasures were made by the principal having the bond, the only conclusion would have been, that the instrument was not the deed of the subsequent signers, and the bond might, notwithstanding this, have been accepted. It could have learned nothing more, for the allegation in the plea that the sureties, as among themselves, signed only for the amount stated opposite their names is fanciful. No such understanding was or could be proved. There was nothing on the face of the bond to show that these defendants relied on others to become bound. State v. Churchill, 48 Ark. 426, relied on by appellees, is so extraordinary in its holding as to destroy its value as an authority; but, even in that case, it does not appear that the bond was drawn in blank, to be circulated for signatures. The erasure of Hart's name in this case occurred before delivery. The real plea, however, is that it occurred after delivery. The defense, therefore, is not sustained.

The essential principle contended for by the state here was applied in Railroad Co. v. Kitchin, 91 N.C. 39. Upon the general principle claimed, see, also, 89 N.C. 6; 71 Ill. 20; 5 Ohio 256; Robert v. Halsey, 11 Smed. & M., 140; 50 Me. 36; 10 Ohio 445; 21 Iowa 244.

John M. Allen, for appellees.

The substance of the plea is, that the erasure of Hart's name was either while the bond was in the hands of the governor, as president of the board of public works, or in the hands of the principal obligors. This allegation is merely to show that the erasure was made under circumstances that would relieve Hart, and that it was not done by a stranger. The only real controversy is as to whether the name was erased after the bond was completed. The special Verdict clearly settles the issues of fact in favor of the defendants.

No principle is better settled than that, where an instrument is the obligation of a surety, and has been altered without his consent, in a manner to augment his liability, he is released, unless he has consented to or ratified the contract as altered. Murfree, § 760; Greenl., Ev., 564; Smithy. U.S. 2 Wall., 219; State v. Craig, 58 Iowa 238; State v. Churchill, 48 Ark. 426; State v. McGonigle, 101 Mo. 353; 2 Gray, 556; 24 How., 315; 7 Blackf., 61; 2 Penn. St., 54; 7 Mo. 572; 80 Ky. 388; 14 Bush, 604; 21 Iowa 244; 2 Head, 615; 4 Gray, 95; State v. Martin, 56 Miss. 108. Attention is specially called to Smith v. U. S. and State v. Craig, supra.

A surety is everywhere held to be a favored debtor, and the harsh rule contended for by the attorney-general is in sharp contrast with this doctrine. It is not a sufficient answer to say that the sureties constituted the principal their agent. He became agent merely for the purpose of circulating the bond. The sureties never gave the principal authority to discharge any one who had become, or might thereafter become, a party to the obligation. It is found as a fact in this case, that the erasure occurred before the delivery of the bond. The erasure of a name from the body of a bond, or as a signer of the bond, amounts to notice to the approving power of all the conditions. Murfree, § 53; Wade on Notice, §90; 1 Am. & Eng. Eric. L., 506; 53 Me. 284; 63 Mo. 212; 18 Am. Dec., 640; 34 Ib., 780; 29 Ib., 370; 7 Blackf., 27; Parker v. Foy, 43 Miss. 260.

The attorney-general has dismissed as to all signing after Hart, thus admitting that they are released. No cases can be found that hold that the defense is more available to those who signed after Hart than those who signed before. It is admitted that the erasure would suggest to the board an inquiry into the facts. But the attorney-general contends that the inquiry would not have led to a knowledge of the condition and its violation. I submit that, if inquiry had been made, all the facts relied on by appellees, and especially by appellee, Allen, would have been learned. In fact, there is no telling what the board would have ascertained, if it had pursued the inquiry.

The judgment of the lower court cannot be reversed without ignoring the settled rules of law that for ages have been recognized as applicable to cases like this. If public policy demands a reversal of these rules, I do hope that the leading case in this departure will not be the case of the State v. J. M. Allen et al.

Argued orally by T. M. Miller, attorney-general, for appellant, and John M. Allen, for appellees.

OPINION

WOODS, J.

For the last time this cause, which involves public and private interests alike, is before us for conclusive determination, upon the decisive plea of non est factum, interposed by all the defendants yet remaining in court.

This plea, which, under the rulings of the court below, must be understood to embrace all the matter sought to be set up in the further plea of defendants, numbered 10, avers, in its essential parts, that the bond sued on is not their act and deed, because they say, substantially, that under the proviso to §1, chapter 40, laws of 1880, the same being entitled, "An act to require the employment of convicts on works of internal improvement, and provide for the support of the penitentiary, without loss to the state," the board of public works, having first rejected all the bids received for the lease of the penitentiary, penitentiary property and convicts, for the term of six years, entered into a contract with J. S. Hamilton, J. A. Hoskins and Robert H. Allen, constituting the firm of Hamilton, Allen & Co., in July, 1880, whereby, in consideration of the sum of $ 29,420, to be paid annually, the said penitentiary, property and convicts were leased to said Hamilton, Allen & Co., fear the term of six years, upon the terms and conditions provided by law, and that said contract was properly executed by the respective parties thereto; that, thereafter, as required by § 2 of said chapter 40, laws of 1880, the said lessees entered into a bond of the character of the one now sued on, the condition whereof was, that the said lessees should faithfully perform their said contract of lease; that the said § 2 of said chapter 40, requiring that said bond, so executed, should be approved by the board of public works, a form thereof was delivered to said Robert H. Allen, one of the lessees, to be circulated in the northern part of the...