Hopkirk v. McConico

12 F. Cas. 501, 1 Brock. 220

• Court: U.S. Circuit Court for the District of Virginia
• Decided: May 15, 1812
• Status: Published

Opinion

MARSHALL, Circuit Justice.

This suit is instituted to obtain a settlement of the accounts of Christopher McConico, as collector for the plaintiffs, and to obtain payment from the other defendants, who were his sureties, in a bond given for the faithful performance Of his duty as collector. The securities oppose this claim, because, in 1800, McConico gave to the agent of the plaintiffs a deed of trust on all his property, to secure the balance then stated to be due, upon receiving which, the plaintiffs, by their agent, gave him further time for payment. The deed, too, was executed on the faith of a letter promising to relinquish-the bond, if the deed should be executed according to the requisition of the letter. This prolonged credit, it is urged, has entirely discharged the securities.

The two cases cited, the one from 2 Brown, Ch. 579 (Nisbet v. Smith), and the other from 2 Ves. Jr. 540 (Rees v. Berrington), do certainly establish the principle for which the defendants contend. A stipulation, without the knowledge of the surety, giving further time of payment to the principal debtor, is held to discharge the surety. But the plaintiff contends, that this case differs from those which have been cited, because the bond, from its terms, not being for the payment of a particular sum, at a specified time, but of money as it should be collected, the obligation is a continuing obligation, and, therefore, not released by suspending proceedings upon it. The counsel for the plaintiff did not appear to rely much upon this argument, as applicable to the debt, then known to be due, and the court cannot perceive its force. An action for any sum of money actually collected, accrues as soon as it is collected; and if that action be suspended, such suspension appears to the court, to release the sureties with respect to the sum so suspended, as completely as they would be released from the whole bond, if the whole money had been collected. The court feels no hesitation in declaring the sureties discharged, for so much as was known to be due, when the deed of trust was executed. ²

But a question of much more difficulty remains to be decided. A much greater sum had been actually collected, than was reported by the defendant HcConico, or known by the agent for the plaintiff to be in his hands. Are the sureties discharged for this sum also? On this question, I have felt great doubts, nor are those doubts entirely removed. I must suppose the settlement establishing the balance for which the deed of trust was taken, to have been made on an account rendered by McConico. If that account did not contain a true statement of the sums in his hands, it was a false, account, and a fraud committed on the plaintiff. The agreement exhibited by the deed would not, in the opinion of the court, have restrained the plaintiff from suing, immediately, to compel a fair account, and payment of so much as had been collected and fraudulently concealed. Much less could it have restrained the sureties from instituting a suit in chancery, to compel a full settlement and payment of what was really. due. But it ib urged, and urged with great force, that, by this settlement, the sureties were lulled into perfect security, and prevented from taking any measures for their own safety; that this supineness was produced by the act of the plaintiff, hnd ought to disable him from proceeding to fix any loss, afterwards discovered, on the sureties. The court has felt the weight of this argument, but it is opposed by others which possess still greater influence.

It has been already stated, .that this settlement must be considered as having been founded on the account rendered by McCon-ico. This account is false and fraudulent. It is a breach of the condition of the bond. That condition requires, that he should account fairly for his transactions as often as he should be required so to do; and at least, once in every year, namely, on the first day of September. This condition is broken by the rendition of a false account The securities are liable for this breach. The case is a hard one, but I cannot say, that they are discharged from this liability by an agreement produced by the fraud. The defendants rely also on the letter of Strange, of the 13th of February, 1800. I concur with them in opinion, that the promise to deliver up the bond, if the deed be recorded in the spring of 1800, does not lose its obligation by the postponement of recording the deed until the fall of that year, because the postponement was made by the plaintiff’s own agent He has himself released the condition of his promise, and the promise remains absolute. On this letter, the sureties contend that they are discharged at law, and as they are not bound in equity further than at law, this suit cannot be sustained against them. They are said to be discharged at law, because if suit was instituted at law against them on the bond, accord and satisfaction might be pleaded, and would' bar the action. If the sureties are correct in their law, there is an end of the case. But the court is not of opinion that accord and satisfaction would bar this action. To this plea it might be replied, that the accord was obtained by the fraud of Mc-Conico, and, as at present advised,! think that a verdict found on such issue for the plaintiff, would authorise a judgment. If the defendants chose to demur to the replication, it is believed that the demurrer would be overruled, and the replication sustained. If this be correct, the sureties are not discharged at law. The question is, whether a court of equity will relieve against the bond, or decree against the defendants, or leave the parties to their action at law? I should incline to the latter course, were it not for the obvious advantage which the settlement of such an account as this, before a commissioner, has over a settlement before a jury. With respect to the sum for which McConico took credit as the guardian of his son, I rather incline to the opinion, that the securities must be discharged from it, because the agent for the plaintiff admitted it knowingly. This, however, would seem to be a question between the two securities, because one of them is security to the guardian’s bond.³

Decree: That the defendants. Conrad Webb, as administrator of Thomas Shore, and James Campbell, are exonerated by the conduct of the plaintiff’s agent from all responsibility, for so much of the money collected by Christopher McConico, as was known to that agent to have been collected, when the deed of trust of the 15th of February, 1800, was executed; but that the said sureties remain bound for so much as had been actually collected, and not accounted for by McConico, and the account is referred to a commissioner, to state the sums which had previously been collected by McConico, and were not contained in any account renderéd by him to the plaintiff or his agent.

2 The principle upon which sureties are discharged, in consequence of any new agreement between the creditor and principal debtor, seems to be, that the remedies of the surely are thereby impaired (Croughton v. Duval, 3 Call, 69), and the surety’s remedy is impaired, and the surety is consequently discharged, if the creditor, after the debt is due, preclude himself from proceeding against the principal for a moment (Hill v. Bull, Gilmer, 149; Bennett v. Maule, Id., 328). But if the agreement to grant indulgence is conditional, as that the principal debt- or should pay a portion of the debt on a specified day, and the condition is never performed, the sureties are not discharged, for they are not thereby deprived, by the act of the credit- or, of.any remedy against the principal. Norris v. Crummey, 2 Rand. (Va.) 323; Hunter’s Adm’rs v. Jett, 4 Rand. (Va.) 104. So, where the agreement to give time, is without consideration, or upon valuable consideration, with a stipulation that the creditor may proceed against the debtor, if required by the surety, or where the agreement to give time is made, with the knowledge and assent of the surety, in none of these eases is the surety discharged. Green, J., in Norris v. Crummey, supra; Hunter’s Adm’rs v. Jett supra; U. S. v. Nicholl, 12 Wheat [25 U. S.] 605; McLemore v. Powell, Id. 654. It is not sufficient that the surety may sustain no injury by a change in the contract, or that it be made for his benefit He has a right to stand upon the very terms of his contract, and if he does not assent to any variation of it, and a variation is made, it is fatal. Therefore, where an official bond was given by a deputy collector of direct taxes, under an appointment for eight townships, designated by name; and the instrument of appointment specially referred to, was afterwards altered by the collector and his deputy, but without the consent of the sureties, so as to embrace another township, the sureties were not responsible for moneys subsequently collected, and not paid over. Miller v. Stewart, 9 Wheat. [22 U. S.] 680. See, also, U. S. v. Tillotson [Case No. 16,524]. The cases decided in the courts of the United States, on the law of principal and surety, are collated by Mr. Peters, in 3 Cond. R. 394 [9 Cranch (13 U. S.) 212], in a note [to TJ. S. v. Giles], to which the reader is referred. See, also, Baird v. Rice, 1 Call, 18; Bullitt’s Ex’rs v. Winstons, 1 Munf. 269; Winston v. Whitlocke, 5 Call, 435.

3 “There was formerly a doubt on the question, whether a legacy due to minors could be safely paid by the executor to the father of the legatees, but the opinion latterly has been that the payment is at the risk of the executor. Dagley v. Tolferry, 1 P. Wms. 285; 1 Eq. Cas. Abr. 300, pl. 2; Cooper v. Thornton, 3 Brown, Ch. 96. In all these cases, the question seems to have been, whether a legacy to a minor could safely be paid to the father, as father or natural guardian merely. It is no where denied that a father duly appointed as guardian by the competent authority, is authorised to receive legacies, and distributive shares belonging to his ward. Kent, Chancellor, in Genet v. Tallmadge, 1 Johns. Ch. 3. See, also, Morrell v. Dickey, Id. 153; Williams v. Storrs, 6 Johns. Ch. 353.” , 2 Rob. Pr. 154, 155.