Summers, State ex rel., v. Lake Tavern, Inc.

• Decision Date: 23 December 1954
• Docket Number: No. 8135,8135
• Citation: 76 Idaho 111,278 P.2d 192
• Parties: STATE of Idaho ex rel. Wayne SUMMERS, Commissioner of Law Enforcement, and N. P. Nielson, Auditor, Plaintiff-Appellant, v. LAKE TAVERN, Inc., a corporation, and Standard Accident Insurance Company, a corporation, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 192

278 P.2d 192

76 Idaho 111

STATE of Idaho ex rel. Wayne SUMMERS, Commissioner of Law Enforcement, and N. P. Nielson, Auditor, Plaintiff-Appellant, v. LAKE TAVERN, Inc., a corporation, and Standard Accident Insurance Company, a corporation, Defendants-Respondents.

No. 8135.

Supreme Court of Idaho.

Dec. 23, 1954.

Robert E. Smylie, Atty. Gen., Ray Durtschi, Asst. Atty. Gen., for appellant.

Elam & Burke, Boise, and Donart & Donart, Weiser, for respondents.

PORTER, Chief Justice.

This action has been heretofore before this court on a phase not involved in this appeal. See State ex rel. Summers v. Lake Tavern, Inc., 73 Idaho 377, 252 P.2d 831.

On May 10, 1951, the Commissioner of Law Enforcement issued to respondent, Lake Tavern, Inc., a state retail liquor license for the sale of liquor by the drink at McCall, Idaho. The respondents, on May 7, 1951, duly filed with the Commissioner the surety bond in the penal sum of $5,000 required by statute for the issuance of such a license.

On or about October 23, 1951, the Commissioner instituted proceedings under the statutes for the cancellation of such liquor license. Thereafter, on November 9, 1951, the Commissioner of Law Enforcement revoked such liquor license and forfeited the surety bond. The actions of the Commissioner of Law Enforcement were based on the charge that on or about the 16th day of September, 1951, the defendant, Lake Tavern, Inc., sold liquor on Sunday at or about the hour of 12:50 p.m. contrary to the provisions of Section 23-927, I.C.

On January 17, 1952, appellant commenced this action. By its complaint appellant alleged the facts hereinbefore set forth and further alleged that on December 13, 1951, the Commissioner of Law Enforcement had demanded of defendants the payment of the $5,000 principal of the surety bond, and that defendants had refused to pay the same; and appellant prayed judgment for said sum of $5,000 and costs of suit. The answer of respondents in effect denied the breach of the bond and that there was any sum due and owing by reason of such alleged breach.

Upon the trial, at the close of the testimony respondents moved for a nonsuit upon the ground of certain alleged defects in the proceedings to revoke the liquor license and cancel the bond, and upon the further ground 'that the plaintiffs have not proven that the State of Idaho has been damaged by any action or omission on the part of Lake Tavern, Inc., and that under the bond, as written, the penalty of the bond is a limitation upon the amount of the recovery rather than a determination for fixing of the amount of recovery as liquidated damages.' The motion for nonsuit was by the court granted and judgment of dismissal entered. From such judgment appeal has been taken by appellant to this court.

Appellant, in its proof, did not rely solely upon a presumption of a violation of the liquor laws arising from a revocation of the liquor license. Appellant offered direct proof sufficient to sustain a finding that respondent, Lake Tavern, Inc., sold liquor on Sunday in violation of Section 23-927, I.C. Respondents admit the direct evidence shows a violation of the liquor laws. Accordingly, any claim of defects in the notices given for revocation of the liquor license or forfeiture of the bond is immaterial.

There was no pleading or proof of actual damages made or submitted on behalf of appellant. The controlling question herein is whether the penal sum of $5,000 named in the surety bond is a measure of liability or is a limitation upon liability. Upon a violation of the conditions of the surety bond, was the full penal sum thereof forfeited to the state as liquidated damages or is the recovery by the state limited to the amount of actual damages pleaded and proved?

The statute in pursuance of which the surety bond herein was given is Section 23-909, I.C., and reads as follows:

'Before any license is issued, the applicant shall deliver to the commissioner of law enforcement of the state of Idaho cash in the sum of $5,000.00 or a surety bond executed by a surety company qualified to do business in the state of Idaho in the penal sum of $5,000.00 conditioned upon the faithful observance of this act and all the laws of the state of Idaho, municipal ordinances, and regulations of the commissioner in regard to the sale of liquor, and guaranteeing the payment of lall fines, costs, and damages which may be assessed against the applicant for any violation of this act and such laws, ordinances and regulations.

'In the event of a refusal of any surety company to make payment on account of any liability incurred thereon as in this section provided, an action may be maintained by the state of Idaho for a violation of this act or all fines, costs, and damages which may promulgated hereunder or by any city or village on account of a violation of any of its ordinances.'

The conditions of the surety bond are set out therein as follows:

'Whereas, The said Lake Tavern, Inc., the Principal herein, has made application for a license to sell intoxicating liquor by the drink at retail;

'Now, Therefore, If the said Lake Tavern, Inc., shall faithfully observe all the provisions of Chapter 274, 1947 Idaho Session Laws, regulating the retail sale of liquor by the drink, and all laws of the State of Idaho, Municipal ordinances, and regulations of the Commissioner of Law Enforcement, in regard to the sale of liquor, and shall pay all fines, costs and damages which may be assessed against him for any violation of such Chapter 274, 1947 Idaho Session Laws, and such laws, ordinances and regulations, then this obligation to be void, otherwise to be in full force, virtue and effect.'

Chapter 274, 1947 Idaho Session Laws is the basic liquor by the drink law and the sections of the Idaho Code involved herein are a part thereof.

In support of its contention that upon a showing of a violation of any condition of the surety bond appellant was entitled to recover the whole of the penal sum of the bond as liquidated damages without proof of actual damages, appellant cites in its brief the following authorities: State ex rel. Tollefson v. Novak, 7 Wash.2d 544, 110 P.2d 636; Lyman v. Schenck, 37 App.Div. 234, 55 N.Y.S. 770; Lyman v. Perlmutter, 166 N.Y. 410, 60 N.E. 21; Lyman v. Fidelity & Deposit Co., 39 App.Div. 459, 57 N.Y.S. 372; Accident & Casualty Ins. Co. v. Cook, 72 Ga.App. 241, 33 S.E 571; Quintard v. Corcoran, 50 Conn. 34; Fresh Grown Preserves Corp. v. United States, 4 Cir., 144 F.2d 136; State v. Forch, 26 Idaho 755, 146 P. 110; Eagle Indemnity Co. v. U. S., 4 Cir., 22 F.2d 388; State v. Corron, 73 N.H. 434, 62 A. 1044; City of Albany v. Cassel, 11 Ga.App. 745, 76 S.E. 105; City of Paducah v. Jones, 126 Ky. 809, 104 S.W. 971; Lightner v. Commonwealth, 31 Pa. 341; Commonwealth v. J. & A. Moeschlin, 314 Pa. 34, 170 A. 119; State v. Vending Machine Corp. of America, 174 Okl. 603, 51 P.2d 724, 103 A.L.R. 391; U. S. v. Engelberg, D.C., 2 F.2d 720; Annotation 103 A.L.R. 405; 11 C.J.S., Bonds, § 130, page 510.

An examination of the cited cases discloses they are authority for the proposition that where a surety bond is conditioned solely upon compliance with an existing law and runs in favor of a governmental body, the penal sum specified in the bond is recoverable as liquidated damages upon a breach of the bond without proof of actual damages. Such cases do not appear to be conclusive that the whole penal sum is recoverable without proof of damages where the statute and bond contain a further...