Clinton County ex rel. Township 54, Range 30 v. Smith

141 S.W. 1091, 238 Mo. 118, 1911 Mo. LEXIS 302

• Court: Supreme Court of Missouri
• Decided: November 29, 1911
• Status: Published

Opinion

WOODSON, J.

This was a suit brought by tbe relators against the appellants on a school bond, executed by E..T- Smith as principal and E. C. Hall and Daniel Smith sureties, to recover tbe amount due thereon. Tbe bond was for five hundred dollars, bearing eight per cent interest and was secured by a mortgage or deed of trust upon certain real estate described in the pleadings.

The suit was brought after various payments of the principal and interest had been paid; also after the real estate had been sold under the deed of trust, and the- proceeds thereof had been credited thereon. There was still due thereon, at that time, approximately the sum of $714.55-.

The trial was had before the court without the intervention of a jury, which resulted in a judgment' for the respondent and against the sureties, for the penalty of the bond, and eight per cent interest thereon until paid.

E. T. Smith the principal was never served and Daniel Smith suffered a judgment by default against him. After unsuccessfully moving for a new trial and in arrest of judgment, Hall appealed to this court.

The bond sued on was in the following words and figures:

“State of Missouri, County of Clinton.

“Know all men by these presents, that we, Elias T. Smith, as principal, and............ as sureties, jointly and severally firmly bind ourselves and our respective heirs, executors and administrators to the county of Clinton, State of Missouri, in the sum of $500, to be paid to said county for the use and benefit of the school fund of township- 54, range 30, of said county, to the payment whereof we jointly and severally bind ourselves, our heirs, executors and administrators firmly by these presents. Sealed with our seals and dated the 1st day of September, A. D. 1890'. íhe conditious of this bond are: That whereas, the said Elias T. Smith, principal, has this day borrowed from said county the sum of $500, belonging to the capital school fund of township 54,' range 301, of said county, which said sum of money the said principal and sureties agree to pay to said county for the use and benefit of the said township school fund on or before the .... day of........, A. D. 18.., with interest thereon from the date hereof until paid at the rate of eight per cent per annum, said interest to be paid annually on the .... day of........ of each and every year until the whole debt shall be páid off and discharged. Now, therefore, if the principal and sureties shall well and truly pay or cause to be paid the said sum of money borrowed and the interest thereon according to the tenor and effect of this bond, then this obligation shall be void; otherwise, it shall remain in full force. But it is expressly agreed and understood that all interest not punctually paid when due, shall, when due, be added to the principal and shall bear interest at the‘same rate as the principal until paid. And it is further agreed and understood as a condition of this bond that should default be made in the payment of the interest when due, or should the principal of this bond fail to give additional security hereunto when lawfully required, in either case both the principal and interest shall become due and payable.” Then followed the signatures of the parties.

While the bond is not dated, yet the petition stated and the evidence showed that the bond was executed on September 1, 1800.

Counsel for appellant Hall asked the following-declarations of law, which were by the court refused.

“1. The court, sitting as a jury, declares the law to be: That under the pleadings and evidence in this case, the finding must be for the defendant, E. C. Hall.

£ £ 2. The court, sitting as a jury, declares the law to be: That under the evidence, the liability of the defendant, E. C. Hall, on the instrument sued on was a collateral liability, and that the payment of part of the interest thereon by the principal, E. T. Smith, did not prevent the running of the Statute of Limitations as to the said defendant, E. C. Hall.

“3. The court, sitting as a jury, declares the law to he: That if the court finds that the defendant E. C, Hall was surety on the bond sued on, and further finds that by the laches of the plaintiff or its agent, the county court, the said E. C. Hall was injured, then such surety should be relieved from liability to the extent of such injury, if any.”

The court made a special finding of facts and gave certain conclusions of law, which were as follows:

“I have carefully considered the defense based upon the Statute of Limitations. The bond is dated September 1, 1890, and the penalty is $500, Mr. Smith, the principal, on January 7, 1891, paid $13.30; February 3, 1892, $40-; October- 5, 1897, $70; October 7, 1903, $20’; December 9, 1904, $20 ; April 3, 1906-, $200, and the sale of the mortgaged premises produced a net credit on the bond of $192.20', December 5’, 1906. Mr. Hall has paid nothing on the bond and has never acknowledged the debt.

“In this case, Daniel Smith’s and E. C. Hall’s signatures appear at the foot of the instrument after Elias T. Smith’s, and although the recitals do not show in what capacity Daniel Smith and Mr. Hall acted, they are, beyond question, not principals, but sureties. But being sureties, signing the bond with their principal, and at the same time, they made the identical contract which he made, and, under the issues here, are bound to the precise extent to which he is bound. They are all payors and comakers.

“There is, therefore, no escape from the conclusion that this case is governed by Vernon County v. Stewart, 64 Mo. 408. The ten-year limitation (R. S. 1899, sec. 4272) is not available to defendants, and the finding and judgment must be for plaintiff.

“Plaintiff has alleged that the amount due on the bond was, on September 21, 1906, $714.55. A computation of principal, interest and credits shows that on June 10, 1904, when action was brought, $68-5.92 was the amount of the debt. The best authorities are to the effect that the liability of the surety, at the time recourse is had on the bond, is limited to the penalty of the bond. If, after that, the surety fails or refuses to pay, he is liable for interest and damages for detention of the fund. [27 Am. & Eng. Ency. Law (2 Ed.), 453; Brighton Bank v. Smith, 12 Allen, 243, 90 Am. Dec. 144; Insurance Co. v. Swain, 189 Pa. St. 626, 42 Atl. 297; Folz v. Trust Co., 201 Pa. St. 583, 51 Atl. 379; Thomas Laughlin Co. v. Surety Co., 114 Fed. 627.]

“Judgment, therefor, will go for the plaintiff for the amount of the penalty of the bond with interest after service of summons, June 12, 1907, at eight per cent per annum, the contract rate, $538.55.”

I. Counsel for appellant make and discuss many legal propositions in their briefs, but in the view we take of the case it is only necessary to notice two of them, namely: the Statute of Limitations and the alleged laches of the plaintiff in not bringing its suit at an earlier date. We will consider those questions in the order stated.

The record shows that E. T. Smith, the’ principal in the bond, made the following payments at the dates stated, namely: January 7, 1891, $13.30; February 3, 1802, $40; February 6, 1893, $40; January 15, 1894, $40'; October 5, 1897, $70; October 7, 1903, $20; December 0,1904, $20; April 3, 1906, $192.20, the proceeds of the sale of the land under the deed of trust.

This record shows that instead of those payments being indorsed upon the bond, the clerk of the county court, whenever a payment was made, would give Smith, the principal in the bond, credit therefor" on the records of the court.

From that course of dealing, counsel for appellant Hall seems to have reached the conclusion that Smith, the principal in the bond, was indebted to the county for the use of the school district on an open account, and that the bond sued on and executed by E. T. Smith and the sureties was only a collateral agreement to pay that account. Manifestly that is the> view'of respondent’s counsel, as clearly appears from the second declaration of law asked by them.

"With all due respect for their ability and legal learning, we are constrained to take a different view of the transaction. The record no where shows that E. T. Smith was indebted to the county on account, for any sum,- for any purpose, but it does show that he borrowed from the county on September 1, 1890', $500 of the school district mentioned, and that he executed the bond in suit therefor with Daniel Smith and E-. C. Hall as sureties.

In so far as the county is concerned, all three are to be considered as joint promissors, and the payment of any sum on the bond by the principal before the Statutes of Limitations runs is binding upon all of them alike. This is fully settled by this court in the case of County of Vernon v. Stewart, 64 Mo. 408. There, as here, the suit was on one of these’ school bonds, and the defense was the Statute of Limitations, the same as here. The bond in that case was executed January 15, 1860, and some four or five years thereafter the principal in the bond died, ánd the administrator to his estate was duly appointed and qualified. The bond was duly presented to the probate court for allowance, and was by that court allowed, June 7, 1867, and assigned to the third class of demands; and on December 2, 18691, the administrator of said estate paid on said demand the sum of $44.33. Some time after January 15, 1870, and prior to December, 1874, suit was brought on said bond against the sureties, to recover the balance remaining due thereon. As before stated, the -ten-year Statute of Limitations was interposed as a defense by the sureties. In discussing that question, on page 410, the court in speaking through Sherwood, C. J., said:

“Repeated decisions of this court have settled the matter beyond controversy, that the payment of a portion of a debt evidenced by a promissory note, or similar obligation, by one of the payors before the expiration of the statutory period, would prevent the operation of the statute against the comaker as well as the party paying. [Craig v. Callaway County, 12 Mo. 94; Lawrence County v. Dunkle, 35 Mo. 395; Block v. Dorman, 51 Mo. 31.] And no reason is seen why the same principle is not applicable, where, as. in the present instance, the legal representative of one of the makers makes a similar payment. The statute,after treating of new promises and acknowledgments in writing, and the effect to be given them, explicitly provides: ‘Nothing contained in the two preceding-sections shall alter, take away, or lessen the effect of a payment of principal or interest by any person;’ thus clearly showing that the Legislature intended to make, and did make, a marked distinction between the attendant results of promises or acknowledgments on the one hand, and partial payments on the other. And if that language just quoted will not comprehend the payment by an administrator, it is difficult to see what language, short of a direct designation of the administrator, would be sufficiently comprehensive to accomplish that result. Had Clinton, the principal in the bond, remained alive and made the payment referred to, no doubt could arise, under the foregoing decisions, but that such payments would effectually prevent the operation of the statute as to the defendant. Can it alter the nature óf the case, because the duty of paying the debt is devolved upon the administrator, rather then, and instead óf, the decedent?

“We are clear that-it cannot. If the defendant, instead of the administrator had made the payment, could it be seriously doubted that he would have recourse against the estate of his principal? Upon what theory would such recovery be founded, except that of the continued existence of the mutuality and privity incident to the contract at the time of its formation? In McClurg v. Howard, 45 Mo. 365', it was held that although the partnership was dissolved, yet a partial payment béfore the- statute had run by Howard’s former copartners would take the case out of the statute as to him. And it would seem obvious that the dissolution of a copartnership could accomplish no less towards sundering existing relations, than the death of one of two or more joint obligors. The cases of Smith’s Adm’r v. Irwin, 37 Mo. 169, and that of Cape Girardeau County v. Harbison, Adm’r, 58 Mo. 90, have not the slightest applicability here? because in neither case had any payment been made by the administrator. In the former an allowance was had against the estate-of one of the makers, after the statute had attached; and in the latter case, the administrator had in making a deed of trust, acknowledged, after the claim was barred, the existence of the debt. Any remarks, therefore, in those cases, which are dehors the controlling facts incident to each, cannot be deemed as possessed of any authoritative value.”

In the case at bar we are not required to go to the same length that this court did in that case. Here E. T. Smith, the principal in the bond, made the payments on the bond in person, before the statute had run, and not by his administrator, as was done in the case cited.

By the case of Regan v. Williams, 185 Mo. l. c. 628, the rule in the case last cited is somewhat limited, and rightfully so, in my opinion, yet that limitation does not affect the case at bar, but restates the rule more clearly than any case which I have been able to find. In that case the court said:

“II. In reply to the defense that the Statute of Limitations had run against the note before this action was begun, plaintiff asserts that the payments of interest by the Scott Investment Company and Carey to March 21, 1892, prevented the running of the statute, not only in favor of said parties but of the defendant as well. The ruling that payment by a principal will suspend the statute as to a surety is invoked as applicable, because by operation by law, the subsequent grantees of the land covered by the deed of trust became principals and the defendant a surety. The proposition contended for is sound enough, generally speaking. [Craig v. Calloway Co. Ct., 12 Mo. 94; McClurg v. Howard, 45 Mo. 365; Block v. Dorman, 51 Mo. 31; Vernon County v. Stewart, 64 Mo. 408; Bennett v. McCanse, 65 Mo. 194.] These payments were made while the note was still alive, and the rule is well established that payments made by the principal, or by one of several joint obligators, before the debt is barred, will stop the statute. But the reason why a payment by the principal stops it as to a surety, is not because one is principal and the other surety, but because both are usually joint promisors; that is, the surety is affected by the act of the principal ini his capacity as a joint promisor. The idea is that persons who jointly bind themselves are all liable to the promisee by virtue of their original agreement, so that performance or part performance by one is the act of all. [Sigourney v. Drury, 14 Pick. 387; Brandam v. Wharton, 1 Bar. & Ald. 463; Atkins v. Tredgold, 2 Bar. & Cres. 23.] The principal only applies where the payment was made by one originally liable. [Sigourney v. Drury, supra.] ”

And in Maddox v. Duncan, 143 Mo. l. c. 621, this court said:

“In Craig v. Callaway County, 12. Mo. 94, it was ruled that the payment of interest by one of several joint obligors in a bond before the Statute of Limitations attaches takes it out of the Statutes of Limitations as to the others. So it was held in Vernon County to use, etc. v. Stewart, 64 Mo. 408, that part payment made upon a bond by the administrator of one of the joint makers within the statutory period would prevent the running of the Statute of Limitations in favor of the other makers of the bond. And in Bennett v. McCanse, 65 Mo. 194, it was intimated that part payment of a note by a comaker will arrest the running of the statute as against all the parties-to the note. The same rule was announced in Bender v. Markle, 37 Mo. App. 234. When this case was before the St. Louis Court of Appeals (Maddox v. Duncan, 62 Mo. App. 474), Rombauer, J., in delivering the opinion, of the court, said: ‘In Leach v. Asher, 20 Mo. App. 656, and Zervis v. Unnerstall, 29 Mo. App. 474, we reviewed the decisions in this State on'that subject and were forced to conclude that the rule as stated in Craig v. Callaway County Court, supra, was the rule prevailing in this State, whatever the rule may be in other jurisdictions.’ ”

If we follow the rule announced in the foregoing cases, then we must hold in the case at bar, that the respondent’s cause of action is not barred by the Statute of Limitations, for the reason that the payments were made by E. T. Smith, the principal in the bond, which is binding upon his sureties or joint promisors, and the mere fact that the payments were entered upon the records of the county court, instead of the bond itself, does not change the legal effect of the payments.

We are therefore of the opinion that the trial court properly refused the second declaration of law asked by counsel for appellants.

II. It is finally insisted by counsel for appellants, that respondent should be debarred of a right of recovery for the reason that it has been guilty of laches by the great delay in bringing this suit.

This claim, is clearly devoid of all merit, for the simple reason that the record shows that insofar as the respondent is concerned, the principal in the bond, E. T. Smith, and the sureties, Daniel Smith and E. C. Hall, were joint promisors, and under those facts, it was no more the duty of the respondent to sue E. T. Smith, one of the makers, in the absence of the statutory notice, than it was to sue the other two joint promisors, Hall and Smith, and the mere delay, short of the statutory period of limitation, in suing any one of them will not release the others.

Moreover, insofar as the respondent is concerned, it was just as much the duty of appellant, Hall, to go and pay off and satisfy the bond, at is was the duty of E. T. Smith. This is elementary, and has been so frequently adjudicated by this and other courts of the State that it would be a useless waste of time to cite additional authorities in support thereof.

If appellant objected to the delay of respondent, why did he not pay off and discharge the bond as he agreed to do, and then look to E. T. Smith, since they as between themselves were not joint promisors? By so doing, the school district would have lost nothing, nor would the respondent, for the reason that he could by proper proceedings have subjected the real estate conveyed by the deed of trust to the county to secure the loan, and thereby have reimbursed himself for the-money so paid by him on the bond, which was more than ample for that purpose, if the evidence offered upon that point by appellant is true.

Finding no error in the record, the judgment is affirmed.

All concur.