Weed S. M. Co. v. Winchell

• Decision Date: 15 June 1886
• Citation: 107 Ind. 260,7 N.E. 881
• Parties: Weed S. M. Co. v. Winchell and another.
• Court: Indiana Supreme Court

107 Ind. 260

7 N.E. 881

Weed S. M. Co.

v.Winchell and another.¹

Supreme Court of Indiana.

June 15, 1886.

Appeal from Grant circuit court.

W. W. Woollen and J. F. McDowell, for appellant.

Steele & St. John, for appellees.

Mitchell, J.

This suit was brought by the Weed Sewing Machine Company, against Winchell and Murphy, to recover on a bond executed by them, with and as the sureties of one Sale. The plaintiff sought to recover the amount of a judgment it had previously recovered against Sale, and also the amount of three promissory notes, executed by him, payable to the Sewing Machine Company, all of which, with interest, it was averred remained due and unpaid. Sale was alleged to be insolvent. The case having been put at issue, a jury was required to return the facts to the court in the form of a special verdict. The merits of the controversy may be fully determined by a consideration of the facts thus returned, without regard to some questions which have been discussed relating to the pleadings.

Shortly stated, the facts found within the issues are as follows: On the twenty-second day of November, 1872, the Weed Sewing Machine Company appointed one Dennis S. Sale, of Marion, Indiana, its local agent. The appointment was by a writing which embraces minute and detailed stipulations, covering the terms of the agency. The company agreed to consign sewing machines to Sale. These were to be sold or leased by him as its property, on certain prescribed terms. Sales or leases were to be made for cash, or to responsible parties, whose notes were to be taken, payable to the company, and indorsed by the agent. An account of all sales and leases, together with all cash and notes received, was to be forwarded weekly; the agent having the right to retain, either in cash or notes, a stipulated commission on all sales or leases. Concurrently with the contract of agency the bond sued on was executed. It was in the penal sum of $3,000, and recited that it was executed by Sale as principal, and Winchell and Murphy as sureties. The condition of the bond was that Sale would well and truly pay “every indebtedness or liability now existing, or which may hereafter in any manner exist or be incurred, on the part of said Dennis S. Sale, to the said Weed Sewing Machine Company, whether such indebtedness shall exist in the form of book-accounts, notes, renewals or extensions of notes or accounts, acceptances, indorsements, or otherwise, hereby waiving presentment for payment, notice of non-payment, protest, and notice of protest, and diligence upon all notes now or hereafter executed, indorsed, transferred, guarantied, or assigned by the said Dennis S. Sale to the Weed Sewing Machine Company.” It was also stipulated in the bond that it was to “remain in full force and effect, and a continuing guaranty, until after notice in writing shall have been given and received by said Weed Sewing Machine Company.” On the fifteenth day of November, 1875, Sale, having ceased to transact business for the company as agent, purchased two machines of it, and gave his note for $80. After paying $40 on the note so given, a judgment was recovered against him by the company for the unpaid balance and interest. In April, 1876, the agency having terminated in September, 1874, upon an accounting and compromise of the matter involved in the business, $600 was agreed to be due from Sale to the company. This indebtedness grew out of the failure of Sale to pay over money which had been received by him from time to time, and which belonged to the company, as appeared by his reports made from week to week, as his contract required. These defalcations, beginning about 30 days after the agency commenced, and increasing gradually until the agency terminated, were exhibited on the weekly reports. They were known to the company, and unknown to the bondsmen. When the accounting and compromise were had, Sale was solvent, and the company took his three notes, due in 12, 24, and 30 months, for $200 each, with 8 per cent. interest, and 10 per cent. attorney's fees. This settlement did not include the note for the machines sold to him in 1875.

The jury returned that Sale executed the notes in settlement of his account with the company. The notes were payable at a bank in this state. The sureties had no knowledge of the indebtedness, and gave no consent to the settlement. If they had known of the indebtedness, Sale being then solvent, they could have secured themselves. Before they were informed of their liability, Sale went into bankruptcy, and was, at the time of the trial, a non-resident of the state. The sureties had given no notice of a desire to be released from the bond. Reckoning the judgment and notes, the principal, interest, and attorney's fees amount to about $1,300.

Upon the facts returned a judgment for the defendants was entered. To reverse the judgment this appeal is prosecuted.

The question is suggested incidentally whether the obligation of the bondsmen is that of guarantors or of sureties. The bond is essentially a collateral engagement, into which the sureties have entered with their principal, the performance of whose...