Lieberman v. First National Bank

8 Del. Ch. 229

• Court: Court of Chancery of Delaware
• Decided: September 15, 1898
• Status: Published

Opinion

The Chancellor—

This is a bill in equity by one of the sureties on the official bond of Peter T. E. Smith, late paying teller of the First National Bank of the City of Wilmington, to restrain the bank from proceeding at law to collect from the complainant any of certain defalcations of the said Smith committed while paying teller of the said bank.'

The bonds bore date respectively November 1, 1879, and July 6, 1885. The complainant was one of the sureties in each bond, his co-sureties on the first bond being John Sparks, Christian Messick and Joshua Maris, and on the second bond John Sparks and Hannah L. Sparks. The two bonds were precisely alike in their terms, being each in the penal sum of Fifteen Thousand Dollars, and upon condition that:

“If the above bounden Peter T. E. Smith shall behave himself well and truly and diligently execute and discharge his trust as teller of the said ‘The First National Bank of Wilmington,’ and faithfully perform all the duties thereof and shall and do make and give or cause to be made and given unto the said ‘The First National Bank of Wilmington,’ and its successors and assigns for and during the entire time the said Peter T. E. Smith shall or may be employed in the said office of teller as aforesaid, full satisfaction, recompense and account of and for all such moneys, bills, notes, goods, wares, books, papers, accounts and effects, or other things whatsoever of and belonging to the said ‘The First National Bank of Wilmington,’ or its successors and assigns, as he may have the care, charge, supervision or possession of in performing the duties devolving upon him as teller as aforesaid; and shall deliver to the said ‘The First National Bank of Wilmington,’ its successors or assigns, all such property, books, papers and effects, or other things whatsoever belonging to the said ‘The First National Bank of Wilmington,’ its successors or assigns, upon the conclusion of his said office as teller as aforesaid, as he may have been entrusted with at any time in performing his duties as teller as aforesaid, or had in his possession in any way whatsoever, then the above obligation to be void, otherwise to be and remain in full force and virtue.”

Each bond contained a warrant of attorney for confessing judgment, which had been executed by the entry of judgments, February 24, 1893, in the Superior Court of the State of Delaware in and for New Castle County, being No. 299 on the bond of November 1, 1879, and 301 on the bond of July 6, 1885, both of the FebruaryTerm, 1893.

On the 19th day of October, 1893, the bank caused a writ of execution for $15,000 to be issued upon said judgment No. 301 directed to Pierce Gould, Sheriff, as aforesaid, who levied upon and took into execution all the goods and chattels of the complainant and was about to advertise and sell the same when the complainant filed his bill - in equity and the late Chancellor Wolcott granted the following preliminary injunction:

“And now to wit, this sixth day of November, A. D., 1893, the foregoing bill of complaint having been read and considered, it is ordered by the Court that a preliminary injunction be issued to restrain the First National Bank of Wilmington, its officers, agents and attorneys from taking any action or proceedings upon said judgment, and against Pierce Gould, Sheriff of New Castle County, his agents and attorneys, from disturbing, removing, advertising or selling any of the goods and chattels, property or effects of the said complainant,' under said writ of execution, until the further order of this Court upon the complainant executing an injunction bond in the penalty of $30,000, with John T. Dickey as surety.”

Subsequently proofs were taken in the cause, the testimony which was very voluminous being closed June 4th, 1896, and it was finally brought to a hearing before me.

It appears from the evidence on the part of the respondent, and it is not denied by the complainant, that defalcations were committed by Smith as paying teller during a series of many years. They began several years prior to November 1st, 1879, the time when the first bond on which the complainant became a surety was given, and continued until Smith’s detection and resignation in February, 1893, when he made a full confession, and was indicted, tried and sentenced to a term of imprisonment. During the whole period money was constantly abstracted by Smith at the rate of several thous-sand dollars a year. The complainant would only be liable under the first bond for such defalcation as might be committed between its date, the 1st day of November, 1879, and the 5th day of July, 1885, and under the second bond for such as might be committed between its date, the 6th day of July, 1885, and the 5th day of July, 1891, when a new bond was given by Smith with the American Surety Company as surety. Smith’s defalcations between the first day of November, 1879, and the 5th day of July, 1885, appear from the evidence to amount to the sum of $11,650, and between the 6th day of July, 1885, and the 5th day of July, 1891, to have been $27,750.

Much, in fact most of the testimony both documentary and oral, relates to the method by which Smith succeeded in abstracting such large sums of money and in concealing so successfully their embezzlement, or it discloses in detail the workings of the bank during the period covered by the bonds in controversy and prior thereto, the system of bookkeeping employed and of the checks upon the employes used and the diligence displayed by the president and directors in preventing or disclosing fraud or dishonesty on the part of such employees.

Complainant alleges in his bill that the bank “wholly failed and omitted to use proper care and reasonable diligence in the management of the affairs of said bank, and but for such negilgence and omission the alleged embezzlement would not have occurred,” and also that Smith “was required and suffered to perform the duties of a bookkeeper in said bank, and that the duties imposed upon him as bookkeeper were not appropriate to his employment as paying teller, nor within the terms of said bond, and that his embezzlement, if any, of the money and funds of said bank were connected with and in use by reason of his employment in said bank as bookkeeper.”

With regard to the last allegation it may be stated here that it appears from the evidence that the bookkeeping referred to, consisted in the fact that it was made a part of Smith’s duty to keep the Individual Deposit Ledger, and it also appears that it was the custom at that time of the great majority of the banks in this State to impose this duty upon the paying teller, and that it was considered by those banks to be a legitimate part of the duties of the paying teller.

As to the whole question, however, of negligence on the part of the officers of the bank,—although it may be proper for me to state that a careful examination of the evidence adduced has satisfied me that the degree of care and diligence displayed by them was such as is to be found in similar moneyed institutions, neither more nor less,—yet I shall omit the discussion of the evidence on that point as being unnecessary to the decision of this cause, in view of the well settled principle that such negligence does not discharge the sureties in such official bonds as those which are the subject matter of this suit.

The grounds upon which this principle rests were long ago stated with force and precision by Chief Justice Shaw in the case of Amherst Bank vs. Root and others, 2 Metc. 540, and I will quote from his language at length. He says:.

“Another ground of argument for the defendant was that the sureties were not liable by reason of the culpable negliligence of the directors and their agents, inasmuch as the bylaws of the bank made it the duty of the directors to make frequent examinations of the affairs of the bank, to count the money, to inspect the books, and generally to watch over its concerns; and it is contended'that it does not appear from an inspection of the minutes of the directors that this was done. Whether their duties were as diligently done as they ought to have been, we do not inquire because it appears to us that the by-laws were directory, intended to prescribe the duties of the directors; and though the performance of them might tend to detect and disclose negligence, or lead to an early disclosure or detection of default on the part of officer, and so operate indirectly to the safety of the sureties; yet they were not intended for that purpose, nor can a compliance with them be deemed a condition precedent to the liability of the sureties. But further, the adoption of such a principle would lead to this result, that the negligence and fault of one agent, or set of agents, for a corporation, would deprive them of a remedy against another for their default. As well might the directors excuse themselves for the neglect of their duty, by showing that the cashier had failed to lay before them the books or accounts, the weekly or other statements of the affairs of the bank, by reason of which they were unable to perform their duty.

“The idea that the cashier is excused by the act’or negligence of the directors, arises from considering the board of directors as the corporation, and then applying a very equitable principle, that one ought not to recover of a surety damages caused by himself. We think the principle does not apply. The only case which seems to countenance it is the People vs. Jansen, 7 Johns. 332; a case which has been often questioned and which we think is fully answered by the cases of United States vs. Kirkpatrick, 9 Wheat. 720, and Minor vs. Mechanics’ Bank of Alexandria, 1 Peters, 46.”

Again in Tapley vs. Martin, 116 Mass. 275, in the same court, where a defaulting bookkeeper had been elected cashier and the suit arose in consequence of his defalcations as cashier, it was alleged that the directors had been guilty of negligence in not having discovered his defalcation as bookkeeper committed before the bond- as cashier was given, Morton, J., said: “Upon examining the evidence reported in the bill of exceptions, it is clear that there is no evidence which would justify the jury in finding that the officers of the bank had actual knowledge of Martin’s frauds while he was bookkeeper. We are not, therefore, called upon to decide whether if they had such knowledge and failed to communicate it to the sureties on Martin’s bond as cashier, the bond would be thereby avoided as to the sureties. The only question is whether their negligence in failing to examine the books discharges the obligations of the sureties. We can see no principle upon which it could be held to have this effect. The object of the bond is to guarantee to the bank the faithful performance by the cashier of his duties. His duties and obligations are not affected by the negligence of the other officers or agents of the bank and such negligence does not discharge his sureties.” Then after quoting from the opinion of Chief Justice Shaw in Amherst Bank vs. Root, which I have quoted above, he proceeds as follows:

“In the case at bar the plaintiff was not induced to sign the bond by any fraud of the directors and the Court correctly ruled that he would not be released from his obligations as surety by their alleged negligence in failing to examine the books and affairs of the bank. Minor vs. Mechanics’ Bank of Alexandria, 1 Pet. 46; United States vs. Kirkpatrick, 9 Wheat. 72; Franklin Bank vs. Stevens, 39 Me. 532; Farmington vs. Stanley, 60 Me. 472.”

The case of Wayne vs. Commercial National Bank, 52 Pa. St. 343, is a case where the teller of a bank was a defaulter to it at the time the sureties entered into a new bond for the faithful performance of his duties, &c., and on this ground the sureties sought to be relieved, alleging negligence on'the part of the directors. The opinion of the Court is to the same effect as in the Massachusetts case and is full and emphatic.

In a late Federal case, Phillips vs. Brossard, 35 Fed. Rep. 100, Simonton, J., says: “Second. That the wilful negligence and misconduct of the president and board of directors permitted the fraudulent acts of Bartlett, and the sureties consequently are not liable therefor. ■ Assuming that the validity of the bond at its execution is not disputed, no evidence to this effect having been shown, I charge you that this defence, even if it be fully made out cannot avail the defendant. The bond of Bartlett, signed by the defendants, was given to the National Bank of Sumpter, not to the president nor to the board of directors. If he committed the defalcation by the frauds charged, neither he nor his sureties can be excused because of any negligence or omission of duty on the part of the president or board of directors.”

This principle is emphatically laid down in the leading case upon this subject in our own State, Sparks et al. vs. Farmers’ Bank, 3 Del. Ch. 302, and it would be superfluous for me to cite further. Indeed the learned counsel does not dispute this principle, apparently, in its application to subsequent frauds, but in his extremely elaborate and learned argument, rests the claim of1 the complainants to be released from his obligation of suretyship solely upon the two distinct grounds which he states in the following language in his brief: “First. That the bonds signed by Lieberman are void as to him because he became surety thereon by the fraudulent representations of the respondent.

“Second. That the right of the First National Bank to proceed on the said bond is barred by the statute of limitation.”

The facts alleged by the complainant in support of the first proposition are first, that Mr. Lieberman, the complainant, prior to signing each bond, made inquiry of George D. Armstrong, cashier of the bank, with regard to Smith’s accounts and character, and was each time assured by'Armstrong that Smith’s accounts were all straight and that he could go on his bond with safety.

This allegation requires but little consideration as a ground for relief, inasmuch as no statements made by the cashier, a fellow employee of Smith, could in any way affect the responsibility of a surety—the cashier having no more authority to represent the corporation respondent in such a matter than any clerk or bookkeeper in the employ of tho association.

The second fact alleged in support of the first proposition is the one upon -which complainant manifestly relies, so far as his first ground for relief is concerned, and requires careful consideration.

In order to understand clearly this point it is necessary to cite section 5211 of the U. S. Revised Statutes, under the title “National Banks,” which provides as follows: “Every association shall make to the Comptroller of the Currency not less than five reports during each year, according to the form which may be prescribed by him, verified by the oath or affirmation of the president or cashier of such association, and attested by the signature of at least three of the directors. Each such report shall exhibit, in detail" and under appropriate heads, the resources and liabilities of the association at the close of business on any past day by him specified; and shall be transmitted to the Comptroller within five days after the receipt of a request or requisition therefor from him, and in the same form in which it is made to the Comptroller shall be published in a newspaper published in the place where such association is established, or if there is no newspaper published in the place then in the one published nearest thereto in the same county, at the expense of the association; and such proof of publication shall be furnished as may be required by the Comptroller. The Comptroller shall also have power to call for special reports from any particular associatian whenever in his judgment the same are necessary, in order to a full and complete knowledge of its condition.”

The reports required by the statutes were regularly made and published in the Every Evening a newspaper in the City of Wilmington, and it is in evidence, were always read by the complainant, who was a depositor in the said The First National Bank, and the complainant further testifies, page 20 of the testimony, in reply to the following question:

“I will ask you, whether it was from these published statements and from what Mr. Armstrong said to you that you were induced to go on the bond in 1885?”

“It certainly was. If I had seen that the bank’s published account did not show it in good standing I certainly would not have gone on his bond a second time.”

Again on page 21 he answers the same question as to the bond of 1879 in the affirmative; and on page 27 of the testimony, when asked °on cross-examination what he found out in regard to the bank'from that statement he replied: “I found that the bank was in a good, healthy condition.”

This is all the evidence before me tending to show in any way that the representations contained in these reports had any effect in inducing the complainant to become a surety on Smith’s bond.

These reports contained, as we have seen, a statement of the resources and liabilities of the respondent, as shown by the books of the bank, and those books being incorrect to the extent of Smith’s falsification of them, the reports therefore stated incorrectly to that extent, the resources and liabilities of the respondent.

The complainant testifies positively that he never made any inquiries as to the condition of the bank, or of Smith’s account, other than those made of Armstrong above referred to, and never requested that any special examination of his accounts or of the accounts of the bank should be made. These reports, therefore, constitute the only representation made by the directors or any of them bearing any relation to the bank or its business, of which the complainant had any knowledge, and constitute the alleged fraudulent representations.

No question is raised as to the good faith of the directors or any other officer of the bank, and it is not suggested by the complainant that they had any knowledge or suspicion of Smith’s defalcation prior to or during the time covered by the bond in which complainant was a surety. In fact, it is evident from the whole testimony, that Smith was a favored and trusted employee of the bank, and nothing in his conduct to excite suspicion had been brought to the attention of any of the directors until after the period covered by complainant’s bonds.

The only question, therefore, for me to consider in this connection, is whether the incorrectness of these reports which are shown to have been read and weighed by the complainant in the manner described in his testimony, which I have quoted, operated to discharge him from his obligation as surety.

The learned counsel for the complainant cites from Mr. Bigelow the principle, that a false representation may be made scienter, if made by one of the parties to a contract, either without knowledge of its truth or falsity, or under circumstances in which the person making it ought to have known its falsity. 1 Bigelow, Fraud 509. And he cites at length a great number of cases setting aside or rescinding contracts obtained by material false representations, or sustaining actions brought by depositors against the individual directors of insolvent banks, whose false statements of the solvency of their banks, although made without knowledge, had induced such depositors to continue or become such.

All this is unquestionably sound law, and so is another proposition cited by complainant’s counsel, from 1 Bigelow on Frauds, 411: “The general rule in equity is that any contract of however solemn character, may within certain limits be rescinded for constructive and a fortiori for actual fraud; or to state the matter with reference to the title of this section, any contract may be rescinded for innocent misrepresentation, which was sufficient inducement thereto.”

The last phrase is an essential element of the proposition and is the essential fact, existing in every case cited by the learned counsel. The misrepresentations, in every case cited, were sufficient inducement to the contract. And whereever these equitable principles are fully stated, or whatever the case may be in which they are applied, whether it be in a suit for the specific performance of a contract, or for the rescission of a contract, or for the discharge of a surety from the obligation of his contract of suretyship, it is either expressly stated or necessarily implied that the misrepresentations are such as to be sufficient inducement to the contract. And furthermore there must be such a connection between the nature of the representations and the nature of the contract that the person making the representations might reasonably infer that they would constitute an inducement to enter into the contract. This seems to me to be too obvious as a general proposition to require elaboration.

Now let us apply this principle to the facts of this case, and let it be taken for granted for that purpose that these reports made by the directors in the manner described must be taken to have been made by the corporation respondent. I will again repeat that the reports were required by the statute to contain, and did contain, an exhibit “in detail, and under appropriate heads of the resources and liabilities of the association at the close of business on a past day by the comptroller specified,” and that they contained nothing else; and also that they were in fact incorrect to the extent of Smith’s defalcation, although believed to be correct when made.

It is obvious that the object of the publication of such statements was to inform stockholders and depositors and all those who might intend to become stockholders or depositors, or who might in any manner entrust their money to the bank, of its financial condition. For this purpose, whatever statements may be contained in these reports might be sufficient inducement to act, and the directors might reasonably infer that they would be relied upon, and constitute such an inducement. But would any reasonable man infer that they would operate as an inducement to any one to become surety on the bond of an employee of the bank, and could be so construed as to make the validity of the bond depend upon their correctness? Would any reasonable man look to those reports for information as to the former fidelity of an employee of a bank, with a view to ascertaining whether he could become with safety a surety on his official bond for the faithful performance of his duties? In short, do the statements contained in these reports go to the subject matter of a contract of suretyship? I think not.

The learned counsel for complainant has presented a single case, Graves vs. Lebanon National Bank, 10 Bush (Ky.) 23, which held that the sureties in an official bond were released by the incorrectness of such a bank report. But that case stands absolutely alone and unsupported, and therefore I will not stop to analyze it, although I am disposed to think that the suspicions evidently entertained by the learned judge as to the bad faith of some of the directors involved in that case might have influenced somewhat his decision. That case is cited and vigorously opposed in a New Hampshire case, Ashuelot Savings Bank vs. Albee, 63 N. H. 161, 163, and I will quote at some length from the vigorous opinion of the Court delivered by Chief Justice Doe:

“The law required that a thorough examination of the plaintiff’s affairs should be made by the trustees or by a committee of trustees, once in every six months; that a report of such examination signed by a committee of the trustees should be returned to the bank commissioners; that a copy of the report should be published by the plaintiff in a newspaper; and that proper blanks for these examinations should be furnished to the plaintiffs by the bank commissioners, G. L., c .170, 55. 2, 3, 4.

“These duties were performed with an exception by which the examination, reports and publications were rendered useless. The committee erroneously believed their examinations were thorough. By their superficial inspection the annual defalcation was not discovered. They acted in good faith, and according to their understanding of their duty; but as frequently happens in such business, confidence in the treasurer, and lack of special detective skill, made the examiners incompetent for the task assigned them. The case is not an exceptional instance but the, operation of a general system. Many trust funds, private and public, need the service (obtainable for an adequate compensation, under the law of demand and supply) of investigators, not only mentally and morally sound, but also trustworthy as experts, laborious, capable of inquisition, and not disqualified by confidence in any body.* * * * * *

“The committee’s duty of diligent examination and truthful report was not due to persons considering the question of becoming sureties of the treasurer. It was a duty imposed by statute for the benefit of depositors and not to enable a reader of the public reports to determine whether the treasurer was a man whose official bond he could safely sign. Publications ordered by the Legislature for the protection of the depositors, the defendants seek to employ in depriving the depositors of protection. If the defendants had been induced by the reports to make deposits in the bank, they might have claimed that they were of a class whom the reports were intended to influence. The publication was for the information of the public, and to supply all of the evidence which they might consider on the question of taking certain action. But the question of becoming a surety of the treasurer, was not one for the decision of which the law compelled the reports to be made public, as evidence furnished by the plaintiffs, with the consequence of subjecting the trust fund to a great risk of losing the security of the bond. Whatever authority it might be claimed any of the plaintiff’s officers or managers had to accomplish or defeat, the purpose of the statutory trust by performing the duty of publishing the result of the committee’s examinations, the duty of publication was not imposed to aid the treasurer in obtaining sureties, or to clothe any one with the power of nullifying the statutory requirement of a bond. The doctrine of Graves vs. Lebanon National Bank, 10 Bush, 23, cannot be accepted as a discharge of these sureties without unreasonably imputing to the Legislature an implied intention to expose the savings of depositors to unnecessary and unjust peril by authorizing the protective bond required by s. 7 of c. 170, Gen. Laws, to be destroyed by the protective publication required by s. 2 of the same chapter. There is no evidence that the reports were published or were understood to be'published, with any other object than the execution of the legislative command, the purpose of which did not establish between these parties the privity of representation necessary for this defence.”

The reasoning of the New Hampshire Court seems to me to apply with equal force to the facts in this case; and, after the careful consideration I have given to the authorities and principles applicable to the plain facts of this case, I am clearly of the opinion that the complainant is not discharged from the obligation of his contract of suretyship by reason of the incorrectness of the published reports of the financial condition of the respondent. To hold the contrary would be to establish a precedent unwarranted by principle or authority, and tending to produce disastrous confusion and uncertainty in the most important business relations.

The second and only remaining ground upon which the complainant claims relief through the interposition of this Court, is the bar of the Statute of Limitations. The language of our statute is as follows: “Section 11. No action should be brought upon any bond given to the president, directors and company of any bank, or to any corporation, by any officer of such bank or corporation, with condition for his good behavior or for the faithful discharge of the duties of his station, or touching the execution of his office, against either the principal or sureties, after the expiration of two years from the accruing of the cause of such action; and no action shall be brought, and no proceedings shall be had upon any such bond, or upon any judgment thereon against either the principal or sureties, for any cause of action accruing after the expiration of six years from the date of such bond.” Rev. Code (1893) 889, ch. 123, sec. 11.

The defalcations under each of the bonds accrued within six years from the date of the bond, and therefore the second clause is inapplicable, and we are only concerned with the first clause, which provides that no action shall be brought against either principal or sureties after the expiration of two years from the accruing of the cause of such action.

It was long ago settled in this State that a warrant of attorney to confess judgment, such as we have in the case under consideration, does not take the case out of the statute. This was one of the points decided by our Court of Errors and Appeals in the well-known case of Whittaker et al. vs. Parker, State Treasurer, a case which was argued by some of the ablest counsel then at our Bar, and which appears in our reports three several times—once as reported from the Superior Court, 2 Harring. 136, and twice from the Court of Errors and Appeals, 2 Id. 413, and 4 Id. 527, Chief Justice John M. Clayton delivering the opinion of the Court which finally disposed of the case.

So far as this case applies, it, of course, controls absolutely the decisions of the Court of Chancery, and I shall therefore reviewit at length since it settles certain principles necessarily involved in the decision of this case.

It was a case where judgment d. s. b. was confessed under a warrant of attorney, annexed to the bond dated October 3, 1835, on the official bond of Whittaker as Collector of State taxes, and others, his sureties. The bond was dated May 2, 1831, and the act of limitation directed that no action should “be brought upon the official obligation of any collector after the expiration of three years from the accruing of the cause of such action.”

The case was heard in the Court below on a rule to show cause why the judgment should not be stricken off, having been entered after the bond was barred by the Statute of Limitation. The ground upon which the State relied to take the case out of the Statute was a new promise made by Whittaker by letter. It was also claimed by the counsel for the State that the warrant of attorney to confess judgment took the case out of the Statute, whilst on the other hand the opposing counsel contended that such an entry of judgment was absolutely void, because the limitation had run at the time of entry.

Chief Justice Clayton entirely disposed of both of these contentions. Of the one he said: “We do not rest the case on any supposed effect of a mere warrant of attorney as taking the case out of the Statute.” Of the other he remarked, “Nothing could be more erroneous than to suppose that such an entry of judgment was absolutely void, because the limitation had run at the time. To establish such a principle would be virtually to overrule all the leading decisions governing these statutes, which are held to be in pari materia and demanding the same general rule of construction. The Statute of Limitation admits the cause of action or consideration of the action still existing, and merely discharges the defendant from the remedy, so that a new promise without any other consideration, is sufficient to revive or restore the action therefore, if the defendant will take advantage of that circumstance, it is necessary he should plead the Statute. Hodson vs. Harridge, 2 Saund. Rep. 63, a. n. 2..”

He further says, “The State is not excluded from the opportunity of entering its judgments, merely because the time prescribed by the Statute has run. It is not to be taken for granted that the public defaulter will plead the Statute.” And the subject of entry of judgment under warrant of attorney was then clarified by the Chief Justice as follows: “Stress was laid, in the argument, upon the express words of the Statute ‘no suit’shall be brought upon any collector’s bond after three years from the accruing of the cause of the action;’ and it was very properly said by the defendant’s counsel that this was a suit on the bond. It was a suit commenced without writ, by virtue of the warrant of attorney, the defendant voluntarily appearing to the plaintiff’s declaration and confessing the judgment in that suit. But the language of this part of the statute is precisely the same with that of other parts, which have always received the same judicial construction, and that is that suits may be commenced, although the time fixed by the statute for it has expired, and although the very record itself discloses that fact. For the law will not presume either that the defendant is entitled to plead it or that if so entitled he will plead it.” 4 Harring. 527.

There is more to the same effect, but I have cited the case sufficiently to show fully the reasoning of Chief Justice Clayton, as well as the propositions he so distinctly laid down.

This brings me to the consideration of the only two decisions in the Court of Chancery in this State, which bear at all upon the point under consideration,—the decisions to which we must look in order to ascertain whether the question is to be considered as already settled and determined so far as this Court is concerned, or whether it is still to be discussed and determined as an open question.

The first case is that of Sparks et al. vs. Farmers’ Bank, 3 Del. Ch. 275, decided by Chancellor Bates in 1869, ten years prior to the date of the first bond in this cause. Like the cause under consideration, it was a bill in equity by the sureties in the official bonds of a defaulting bank officer, to restrain the bank from proceeding at law to collect from complainants the amount of certain alleged defalcations of Heston, their principal, committed while cashier of the Farmers’ Bank at Wilmington.

I have already cited this case in discussing another question. I shall consider it now solely in relation to the bar of the Statute of Limitation. The Hon. Thomas F. Bayard was counsel for the complainants, the Hon. Anthony Higgins and the late Judge Bradford were counsel for the bank. Chancellor Bates says: “There remains a third and last ground of relief taken for the sureties—that is, that under the statute barring suits on official bonds after two years from the accruing of the cause of action, the sureties are discharged as to so much of the defalcation as occurred more than two years previous to the entering of judgment on the bond, which was in March, 1867.”

After giving the dates and amounts of the checks representing the3 defalcation, and referring to the point raised on the argument, that the defaulting cashier’s failure to pay when his defalcation was discovered, constituted a new defalcation, the Chancellor says: “It is not necessary to decide that question; for even supposing the abstraction of $3,046.46 on December 1st, 1864, to be the only breach of the bond as to that sum, still the bank is entitled to collect it. Their equity to do so arises out of the fact that the defalcation was a fraud concealed from the" bank with respect to which a court of equity -will not permit the statutory bar to be set up until the lapse of the prescribed term after the discovery of the fraud.

“It is a settled and familiar principle that a court of equity will not permit a party to make an unconscientious use qf an advantage gained at law, hence it will deprive him of defences when set up to protect fraud, though such defences be founded upon the most positive statutory enactment.”

Then, after citing and discussing a number of authorities, the learned Chancellor thus concludes: “There is nothing in the present case to except it from the operation of the rule. It is true that equity will not relieve against the bar of the Statute in favor of a party who has been in loches in not using means within his power to discover the fraud. But a close supervision by large moneyed corporations over their officers, sufficient to insure the speedy detection of fraud is not practicable, and if it were so would become intolerable. These institutions must uavoidably trust their officers and rest upon the official bond as the guaranty for their fidelity. It is to this end that the bonds are taken. Their value would be destroyed and their purpose defeated were it in the power of a shrewd cashier to absolve himself and his sureties by covering up his frauds for two years.

“If the rules applied to this case seem to bear hardly upon the sureties, it must be remembered that by their bond they undertook for the cashier’s fidelity absolutely and at all events, and engaged unconditionally to make good his default. They had the power to limit their responsibility expressly to one year, or to make it subject to any conditions which might be agreed upon, but this was not done.

“It would be a prudent practice and one best securing all parties, that the obligation of such bonds be expressly limited to one year, and that upon the giving of a new bond by an officer re-elected, an examination be made sufficient to test his integrity at that time.”

This case, it will be observed, is the exact counterpart so far as the applicability of the bar of Statute of Limitation is •concerned to the case under consideration, for it can make no difference in principle that the period of successful concealment in the present case is much longer and the consequent loss much greater.

The second decision to which I refer, is that of Chancellor ■Saulsbury in the case of Grimshaw vs. Mayor and Council of Wilmington, 5 Del. Ch. 183. This was a bill in equity by one of the sureties in the official bonds of Joseph L. Killgore, a defaulting city treasurer,to restrain the city from further proceedings at law to collect from complainant the amount of certain alleged defalcations committed by Killgore, his principal, while City Treasurer of Wilmington. The reported case contains in the statement of facts the following:- “The act of the General Assembly of this State in respect to the entry of judgments on the official bond of the City Treasurer of the City of Wilmington, provides that judgment on said bond shall not be entered after two years from the expiration of his term of office.”

The Chancellor says in his opinion: “I shall not enter into a general discussion of the principle applicable to a case where a concealment of fraud has been proved to exist •on the part of the defendant in a suit brought against him •after the discovery of the fraud has been made, but not within the period mentioned in the Statute in that respect, to make him account for the amount of said fraud, because I am of the opinion that the principles adjudged in cases of that kind, where the statutory limitation has been pleaded as bar to the cause of action, are not applicable to the case before me.

“It is true, as contended .by the solicitors of the City Council of Wilmington, that where one person defrauds another of his just rights, and the fraud is concealed at the time •of its commission and not discovered within the period embraced by the Statute of Limitation, the party defrauded has .3. right to bring his action for the recovery of the amount of which he has been defrauded, at any time within the proper legal period for bringing actions.

“This principle does not apply to the present case. The judgments mentioned in these proceedings were not entered within the period prescribed by law. They were therefore nullities. The judgments themselves being absolutely void, and the entry thereof being absolutely prohibited by an act of the General Assembly, the several executions issued upon them cannot have any possible legal effect.

“The sheriff could not justify any act done under them. The complainant might lawfully resist their execution; and he certainly has, as a surety, the right to avail himself of their illegality in an attempt to enforce, as against him as surety for Killgore, a claim for the amount of Killgore’s defalcation in office, even if such defalcations were proved to exist.”

A decree was made by the Chancellor refusing the prayer of the bill in so far as it prayed a permanent injunction against further proceedings on the execution in the. case, and dissolving the preliminary injunction that had been issued, with direction to the complainant to apply to the Superior Court for a rule upon the plaintiff in said judgment to show cause why judgment 594 to Nov. T, 1874, in said Superior Court should not be set aside, annulled and vacated.

Subsequently, upon the petition of Grimshaw to the Superior Court, a rule issued to show cause why the said judgment should not be set aside, annulled and vacated; and by consent of all parties, all matters and controversies were referred to the Hon. Edward G. Bradford to be heard and determined; and in accordance with the report, which was accompanied by a long and interesting opinion, the rule was made absolute.

It is manifest from this examination that nothing can be found in this case to affect the authority of Sparks vs. Farmers’ Bank, supra, as decisive of the point under consideration. To repeat a quotation already made, Chancellor Bates said in that case the equity of the bank to collect “arises out of the fact that the defalcation was a fraud concealed from the bank, with respect to which a court of equity will not permit the statutory bar to be set up until the lapse of the prescribed time after discovery;” whilst Chancellor Saulsbury says in Grimshaw vs. Wilmington, supra, “It is true, as contended by the solicitors of the City Council of Wilmington, that when one person defrauds another of his just rights and the fraud is concealed at the time of its commission, and not discovered within the period embraced by the Statute of Limitation, the party defrauded has a right to bring his action for the recovery of the amount of which he has been defrauded, at any time within the proper legal period for bringing action.”

It is unnecessary to comment at all upon that part of the learned Chancellor’s opinion, in which he stated that the judgment entered in the Grimshaw case was absolutely void, inasmuch as I have already shown that our Court of Errors and Appeals, in Whittaker vs. Parker, State Treasurer, supra, has expressly passed upon the status of such judgments as those which are the subject matter of this suit.

I cannot, therefore, sustain the contention of the learned counsel for complainant that this Court should permit the statutory bar to be set up by a surety, if not by his principal, before the lapse of the prescribed term after the discovery of the fraud which constituted the breach of his bond. Such a contention is not now open to discussion in this Court." The question, as has been pointed out, was distinctly, clearly, and unequivocally decided by this Court nearly thirty years ago and the authority of that decision has not been questioned since.

An independent discussion by me would necessarily involve a lengthy consideration and analysis of a long series of authorities upon the general subject, and would necessarily imply upon my part a disregard of the doctrine of stare decists as applied to the carefully considered decisions of this Court, which would be in my judgment of doubtful propriety, if not practically injurious to the authority of the decisions of the Court of Chancery.

The situation of the complainant is a hard one, the loss and annoyance brought upon him by the dishonesty of the defaulting teller whose honesty he guaranteed, must command sympathy, especially in view of the long series of years during which, by abusing the confidence reposed in him, the dishonest official so enormously increased the magnitude of that loss.

Such losses, however, are unhappily matters of daily occurrence, and in this case I cannot refrain from referring again to the concluding words of the opinion of Chancellor Bates, which I have already quoted, and which were intended to serve as words of warning to prevent the occurrence of just such cases as this, and were uttered ten years before the complainant entered into the contract of surety-ship from the disastrous consequences of which he now seeks to be relieved by the active interposition of the Court of Chancery.

The prayers of the bill are denied and á decree will be entered dissolving the injunction, so far as to allow the bank to collect the amount of the defalcation proved, and covered by the complainant’s bonds, with interest.

The Question as to the Form of Decree:—Shortly after the delivery of the foregoing opinion, counsel for the respondent submitted a form of decree, following that of Chancellor Bates in Sparks vs. Farmers’ Bank,

To this, counsel for the complainants objected, in respect to the allowance of interest on the several defalcations covered by the bond, and the collection of interest on the judgment entered under warrant of attorney, from the date thereof. Argument was had and briefs were filed, including several supplementary briefs in reply and' rejoinder. Argument of counsel may be summed up, as follows:

L. C. Vandegrift, for respondent.

Obligors in a bond given by an officer for faithful performance of official duties are liable thereon to reimburse the obligee for all loss sustained by the defalcation of the officer.

Each abstraction was a breach for which the obligors were liable with interest from its date. In a suit on the bond, the judgment would have been for the aggregate amount with interest on each item to the date of the verdict.

On the first bond the aggregate amount of the defalcations between its date June 1, 1879, and July 6, 1885, (the date of the second bond) exclusive of interest was $11,650. If interest on each item from its date to - the date of the judgment is added to the aggregate of the sums abstracted, the total sum would exceed the penalty of the bond. So the judgment was taken only for the amount of the bond.

In ascertaining the defalcations under the first bond, the dates of almost all the abstractions were proved. But it appears that several sums were abstracted between June 1, 1879, and July 6, 1885, the exact dates of each abstraction not being known, the aggregate being proved to be $520. Interest therefore would be calculated on this $520 from July 6, 1885, the last date upon which they could have been abstracted.

As to the second bond, dated July 6, 1885, the total amount of the sums abstracted while this bond was in force was $27,750, exclusive of interest, and it is also unnecessary to consider whether the liability of the obligors extended beyond .the amount of the bond, for judgment was entered for the penalty of the bond, $15,000. Interest on this judgment is surely collectible.

The theory upon which the decree was framed, is supported by authority.

Interest on moneys abstracted by an officer of a bank is. due from the time each sum is abstracted, and may be recovered in an action on the official bond against principal and sureties. Murfree on Official Bonds sec. 326; Sedg., Dam. sec. 303; Supervisors vs. Clark, 92 N. Y. 391; Supervisors vs. Birdsell, 4 Wend. 453; Wyman vs. Robinson, 73 Me. 384.

In the cases cited from New York, interest was allowed from the time the officer should have paid over the amounts received by him officially; that is, from the dates of certain settlements.

But in this case, Smith, the teller, abstracted sums of money by false entries, &c., which he did not have a right to take or retain for any length of time. So that interest is due on each item from the date he took it.

Each abstraction was a breach of the condition of his bond, and interest on the sum abstracted from the time of abstraction is allowable to the Bank.

Interest is always allowable on money ilegally obtained or detained from the date obtained or detained.

The draft of the decree submitted follows the form of decree entered in a similar case in Chancery in this County, Sparks vs. Farmers’ Bank, supra.

Following the above rule and allowing interest on each sum abstracted from the time abstracted, it appears by calculation that on the bond dated June 1, 1879, the aggregate of the several sums abstracted with interest thereon severally from the time of abstraction to the date of entry of judgment on the bond, exceeded the penalty of that bond.

It is unnecessary to consider whether in suit on the bond, judgment could have been recovered for more than the penalty of the bond, for judgment was entered by the warrant of attorney for the amount of the penalty only; and the plaintiff in that judgment cannot collect by execution more than the judgment, and costs. There are authorities which would have allowed recovery for an amount larger than the penalty as damages for detention. Wyman vs. Robinson, supra.

The sole question remaining for discussion is whether the plaintiff is entitled to interest on the judgment from the time of the entry thereof.

This is easily answered in the affirmative, for the entry of judgment by warrant of attorney is of the same effect as if suit had been brought on the bond and judgment recovered in that suit. It is no objection that it would be allowing interest on interest, for this always happens when judgment has been recovered for a principal sum with interest to the date of verdict or judgment. Interést is damages for detention and becomes necessarily a part of the judgment. In a suit on a note, bond for the payment of money, &c., interest is always added to the principal in fixing the judgment. McClure vs. Dunkin, 1 East 436.

There is no difference in the liability of principal and sureties on an official bond. Harris vs. Clapp, 1 Mass. 308; Wyman vs. Robinson, supra.

In the federal cases cited for complainant on the point now under consideration, United States vs. Poulson and United States vs. Curtis, there was no evidence of the time of actual conversion and no proof of demand until suit.

This is the distinction which shows that the line of authorities cited by complainant does not touch the point in issue, and it was fully recognized in United States vs. Denvir, 106 U. S. 536; United States vs. Knowles, 106 U. S. 537, note.

The true rule is that, “Interest should be allowed from the date of embezzlements, or from the end of each year, if the jury or Chancellor choose, * * * up to the penalty of the bond, but not beyond it of course.” Guarantee Co. vs. Bank, 80 Fed. Rep. 766, 785; and no valid argument can be advanced against the allowance of interest on the judgments from the date of their entry.

B. Nields, for complainant, insisted that no well adjudicated case can be found where sureties have been held liable for interest before notice of breach.

There is a well defined and clear distinction made in the cases between the liability of the principal debtor for interest on money fraudulently abstracted and the liability of his sureties for interest from the time of such abstraction. The latter cannot be held liable for interest beyond the penalty of the bond, except for such interest as accrued from their own default in unjustly withholding payment after having been notified of the default of their principal. Murfree on Official Bonds sec. 689; McGill vs. Bank of U. S. 12 Wheat. 511; s. c. 1 Paine C. C. 670; Washington Bank vs. Shurtleff, 4 Metc. 30.

The surety’s liability for interest accrues,

(1) Either after proper demand on the principal and his refusal to pay; or

(2) From the commencement of the suit, in which latter case interest accrues from the day of service. 1 Brandt. Sur. G. sec. 112; United States vs. Poulson, 30 Fed. Rep. 231; United States vs. Curtis, 100 U. S. 119.

In the cases of United States vs. Denvir and United States vs. Knowles, cited on the other side, the fact oLconversion did not appear and the Court held simply that the surety was liable for interest from the service of the writ; anything more in the opinion is obiter.

Sedg., Dam. sec. 303, cited on complainant’s brief, has no application whatever to the liability of sureties for the payment of interest before notice of breach. The case of Wyman vs. Robinson, 73 Me. 384, cited on complainant’s brief, was an action upon a replevin bond against principal and sureties, and the Court allowed interest from the date of the judgment against the principal in the original action; that being the date of the breach of the bond, and the judgment recovered was notice to the sureties. The case of Supervisors vs. Birdsell, 4 Wend. 453, was a case against a County Treasurer, and the question of liability of sureties for interest before notice of breach, is not considered. The case of Supervisors vs. Clark, 92 N. Y. 393, is founded on the case in 4 Wend. 453, and is not a case where liability of sureties for interest before notice of breach was considered by the Court.

We also contend that in any event interest should not be allowed on the penalty in either bond from the date of the judgment, but only from the date of the decree to be entered in this Court, since the amount to be collected is then first ascertained.

In the case of Sparks vs. Farmers’ Bank, the question of interest was not discussed or referred to by counsel on either side and no argument was heard on the form of decree.

It is now six months since this cause was formally decided by me, and my reasons for holding the sureties liable given at length in an opinion which was read and filed June 1st. The concluding paragraph of that opinion was as follows:

“The prayers of the bill are denied and a decree will be entered dissolving the injunction, so far as to allow the bank to collect the amount of the defalcations proved and covered by complainant’s bonds, with interest.”

I deemed this to be a sufficiently clear direction for the preparation of a decree, following closely the form of decree made by Chancellor Bates in Sparks vs. Farmers’ Bank, in accordance with the opinion delivered by him in that case, the concluding paragraph of which is as follows:

“A decree will be entered dissolving the injunction so far as to allow the bank to collect the amount of the defalcation proved, with interest.”

The decree in the Sparks’ case, in the Chancellor’s own hand writing, is on file with the other papers in that cause, and was used by Mr. Vandegrift, counsel for the bank, in preparing the form of decree submitted by him, but this was objected to by Mr. Nields, counsel for the complainant, in two important particulars; and inasmuch as counsel laid much stress on the fact that no argument was heard on the form of decree in the Sparks case, I have given all the time desired for argument on the decree in this cause, and the preparation of supplementary briefs. The points discussed concern the principles upon which interest is collectible from the sureties, amounting to thousands .of dollars, so that their decision is of vital importance to the parties in this cause, although debated as on the form of the decree only.

After patient investigation and careful consideration, I have been unable to arrive at any other conclusion than that the decree proposed by counsel for the respondent is correct in every particular, and that the contentions of complainant’s solicitor are neither correct in principle nor supported by authority.

The complainant filed his bill in order to be relieved from paying to the bank any of the defalcations of Peter T. E. Smith, the paying teller, which constituted the breaches of the condition in .each of the bonds, upon which judgment for the penalty ($15,000.00 in each case) was entered Februarly 23, 1893, pursuant to warrants of attorney, after the defalcations had been committed and discovered.

Now it has already been held by me in this cause that nothing has been shown by the complainant to entitle -him to be relieved by a court of equity from the payment of the damages alleged, and covered by the bonds. But this contention about interest having arisen, it becomes necessary for me to consider the. effect in the Courts of Law, as well as in the Court of Chancery, of the judgments which have been entered upon the bonds in order to ascertain the rules which must govern the Court in formulating its decree, the terms of which necessarily involve the amount collectible under them.

In the case of what is commonly called a money bond containing a warrant of attorney to confess judgment for a penal sum, it is required by our statute that “when judgment is confessed by virtue of a warrant of attorney for a penalty, the attorney confessing the judgment shall, in a written direction to the officer entering the judgment, set down the real debt and the time from which interest is to be calculated; which shall be entered by said officer upon the docket of the judgment.” Revised Code as amended in 1893, page 811, ch. 110, sec. 14.

In the case, however, of a bond with what is commonly called a collateral condition, accompanied by a warrant of attorney to confess judgment for a penal sum, such as the bonds in controversy in this cause, bonds not for the payment of money, but for the performance of some collateral condition, there is no statutory provision and they are governed by the common law rule.

Certain provisions for the assignment of breaches in actions on such bonds are contained in chapter 117 of the Revised Code as amended m 1893, but section 14 of that chapter, page 862, provides that “none of the foregoing provisions shall extend to a warrant of attorney to confess judgment, nor to any action or judgment under, or confessed in pursuance of such warrant of attorney.”

In Staats vs. Herbert, et al., 4 Del. Ch. 508, 518, the subject is discussed by Chancellor Bates, as follows:

“But it appears that upon judgments entered by warrant of attorney, as this is, upon a bond in a penal sum with condition other than for the payment of money, there is no proceeding at law for suggesting breaches of the condition and assessing the damages. Judgments entered under warrants of attorney were held, by construction, to be not within the Statute of 8 and 9 Will. Ill for ascertaining damages in suits on bonds and penal sums, and such judgments are expressly excepted from our statute on the same subject. Rev. Code (1852) 416.

“At common law, prior to the Statute of Will. Ill, all judgments recovered on bonds or penal sums were rendered for the whole penalty upon proof of a breach of the condition, without any proceeding at law to assess the damages; and under the common law rule, ‘that execution must follow the judgment, executions, issued upon such judgments, went for the whole penalty, subject to the direction of the plaintiff on the judgment as to the sum to be collected under the execution. If more than the damage actually sustained was exacted from the defendant he could be relieved only by a court of equity. 1 Tidd. 584; Foster on Scire Facias (73 Law Lib.) (33); 2 Burr 824; 5 T. R. 636.

“It was to obviate this necessity of a resort to equity that the Statute of Will. Ill, and our own on the same subject, were passed. These statutes provide that in all suits on bonds and penal sums the damages shall be assessed upon breaches either assigned in a case pleaded to issue, or suggested on the record, in the case of a judgment by default or on demurrer; and the damages being thus ascertained, the judgment is to be rendered for their amount only. But judgments entered under warrants of attorney not being within the statute are governed by the common law; and consequently, all such judgments are entered for the penalty as debt, and execution go'es for the penalty, with no method of ascertaining, upon the record, the actual damage sustained, except, that when the judgment entered under a warrant of attorney is to secure a money debt, it is required under our statute, Rev. Code (1852) 391, that the real debt, with the time from which interest is payable, be entered on the record; and although execution even then goes for the penalty, the real debt, with interest, being endorsed on the execution, is alone collected. But where the condition of the bond, on which judgment is entered under a warrant, is not for the payment of money, but for the performance of some collateral undertaking, there is no statute applicable, and consequently, the execution following the judgment goes for the penalty without anything on the record to restrain the plaintiff from collecting the whole. He proceeds at his peril, subject to the interference of a court of equity, if he takes the execution before any breach of the condition has been committed, or, if after a breach he directs the collection of a larger sum than the damages actually sustained. This Court in a proper case will restrain the execution, direct an issue of quantum damnificatus, and, when the damages are ascertained upon the trial of such an issue, it will grant relief upon the payment of such damages. 2 Sto. Eq. Jur. sec. 1314; Sloman vs. Walter, 1 Bro. C. C. 418; Hardy vs. Martin, 1 Cox 64; Errington vs. Aynesley, 2 Bro. C. C. 342.”

The complainant in this cause did not invoke the interference of the Court of Chancery on the ground that the bank was seeking the collection of a larger sum than the damages actually sustained, nor is there any dispute between counsel at this time with reference to the amount of damages covered by the second bond, inasmuch as the defalcations covered by that bond amounted to $27,750 without interest, a sum largely in excess of the amount for which judgment was entered, which of course was for the penalty, $15,000.

It is in like manner admitted that the defalcations covered 'by the first bond, with interest added, calculated from the date of each defalcation to the date of the judgment, amounted to a sum largely in excess of the judgment on that bond.

The defalcations, however, without interest amount to a sum less than the penalty, to wit, $11,500, and it is contended by counsel for the complainant that under the judgment entered on that bond the bank is not entitled to collect the judgment entered for the penalty, but only $11,500, the amqunt actually embezzled, without the addition of interest.

If the contention between the counsel involved any disputed question of fact, it would be necessary for me to direct an issue of quantum dammficatus, but as the point at issue is purely a question of law, there can be no issue sent to a jury and it must be decided by the Court.

Each defalcation was a breach of the condition of the bond, and in any ascertainment of the damages actually sustained by the bank in consequence of the breaches of the condition of the bond, interest, calculated from the date of each defalcation to the date of the judgment, would necessarily constitute a part of the damages. The amount of the judgment to be entered on the bond was limited by the terms of the bond, and the accompanying warrant of attorney, to the penalty, $15,000.00, but up to the penalty, defalcations and interest upon the defalcations are alike recoverable, and I am unable to see any ground for making a distinction between them.

The complainant’s counsel cited the following cases in support of his contention:

' Murfree on Official Bonds sec. 689; McGill vs. Bank of U. S., 12 Wheat. 511; 5. c. 1 Paine C. C. 670; Washington Bank vs. Shurteff, 4 Mete. 30; 1 Brandt, Sur. G. sec. 112; United States vs. Poulson, 30 Fed. Rep. 231; United States vs. Curtis, 100 U. S. 119.

Upon examination and analysis of the foregoing cases, however, it will be found that not one of them sustains the view urged by the complainant’s counsel.

The respondent’s counsel cited the following cases, which support the principle I have laid down:

Murfree on Official Bonds sec. 326; Sedg. Dam. sec. 303; Supervisors vs. Clark, 92 N. Y. 391; Supervisors vs. Birdsell, 4 Wend. 453; Wyman vs. Robinson, 73 Me. 384; McClure vs. Dunkin, 1 East 436; Harris vs. Clapp, 1 Mass. 308; United States vs. Denvir, 106 U. S. 536; United States vs. Knowles, 106 U. S. 537; Guarantee Co. vs. Bank, 80 Fed. Rep. 766, 785; Sparks vs. Farmers’ Bank, 3 Del. Ch. 225.

It seems manifest, therefore, that at the time the judgments were entered on the bonds, the breaches of condition having been committed, and the damages actually sustained by the bank having amounted to more than the amount of the judgments in each case, it necessarily followed that the whole amount of the judgments, or in other words the penalty became immediately collectible on execution following the judgment.

It only remains to consider very briefly the one other question raised by the complainant’s counsel in his objections to the proposed decree.

He urges that the bank should be restrained by this Court from collecting interest on the judgments from their date, because the amount collectible against the sureties is first legally ascertained by its decree, although the collection of anything on those judgments has been restrained by the injunction of this Court for more than five years at the suit of complainants—a suit brought by the surety, as already stated, not on the ground that the judgments, the collection of which has been restrained, were in excess of the damages actually sustained, but on the ground that the bank was not entitled to collect anything from the sureties. «

As soon as judgment is entered on a bond, transit m rem judicatam, the nature of the demand is altered.

In the case of Cook vs. Gray, 3 Houst. 49, heard in the Court of Errors and Appeals on a writ of error to the Superior Court after it had been heard by the Court in banc, the Court after remarking that the bail is not liable for interest on the judgment against a principal for an amount exceeding the penalty, say, “Of course, judgment against him would bear interest from recovery” and no case can be found in which it was ever suggested that a valid judgment did not bear interest from the date of entry or recovery, no matter for what or against whom it was recovered.

I have already shown in this discussion, that in our Courts of Law, judgments in pursuance of warrants of attorney to confess judgment for the penalty on bonds with a collateral condition, are collectible with interest as of course, from the date of recovery or entry, without regard to the question whether a breach of condition had been committed, or whether the damages actually sustained were equal to the amount of the judgment. In other words, execution follows the judgment.

This being the effect of such judgments in a court of law, let us consider what is the nature and extent of the jurisdiction of the Court of Chancery with respect to them, when it is contended in that Court that the breaches had not been committed prior to the recovery of the judgment, or that the damages actually sustained were less than the amount of the judgment, which the plaintiff seeks to collect as it stands on the docket. Obviously, on bill filed making out a proper case, it would restrain by preliminary injunction the collection of such a judgment until the merits of the complainant’s contentions could be determined. Then, if it should be ascertained that the breaches had been committed before the judgment was recovered, and that the damages actually sustained had equalled or exceeded the amount of the judgment and that the judgment was otherwise valid, this Court could not do otherwise than withdraw its hand and leave the judgment creditor free to exercise his legal right to collect the judgment with interest from the date of its recovery by execution following the judgment.

In the present case, having ascertained that the breaches had been committed before the entry of the judgments, the collection of which was restrained, and also that the damages sustained by the bank in consequence, amounted, prior to the entry of the judgment, to a sum exceeding the penalty for which judgment was entered on each bond, it follows necessarily that I must dissolve the injunction, which for more than five years has restrained the bank from collecting its judgments against the sureties.

The decree of this Court cannot forbid the respondent to exercise the right to collect the full amount of its judgments, with interest thereon from the date of entry, and at the same time, in the same decree, declare that it has been ascertained by it that from and after the date of those judgments the respondent had the right to collect them with interest by execution following the judgment—the exercise of that right having been prevented by the injunction of this Court obtained at the suit of the judgment debtor.

If the law were otherwise, it would always be within the power of a defendant in such a judgment to deprive his creditor of his lawful interest during the whole period required by the Court of Chancery to sift out the merits of a suit in chancery and ascertain the amount collectible on the judgment, if any.

The proposed decree will be signed and the respondent left free to collect the full amount of the judgments, with interest from their date.

The following was the decree entered in this cause:

And now to wit, this Third day of December, A. D., 1898, this cause having been heard before the Chancellor upon the bill, answers, exhibits and depositions, and having been de"bated by solicitors for the respective parties, and the same having been held under advisement until this date and maturely considered, and it appearing from the proofs in the cause that the complainant, together with John Sparks, Christian Messick and Joshua Maris, became bound in the sum of Fifteen thousand dollars to The First National Bank of Wilmington, one of the defendants as surety for Peter T. E. Smith, in an official obligation entered into by him as teller of the said The First National Bank of Wilmington, bearing date the first day of June, A. D., 1879, the said obligation having been entered into upon the selection of the said Peter T. E. Smith as teller as aforesaid, and as security for the faithful performance of his duties as such teller during the term of office which should be held by him pursuant to such selection; aad it appeared further that although the said Peter T. E. Smith was re-elected teller of said bank in the years 1880, 1881, 1882, 1883, 1884 and 1885 he gave no new official bond upon such re-election, until the sixth day of July A. D., 1885, so that the term of office for his good behavior in which the sureties in the said bond dated June First, A. D., 1879, became bound, continued until the giving of the official bond dated July 6th, 1885, hereinafter mentioned, upon his re-election as teller of said bank in said month of July;

And it further appearing from the proofs in the cause, that while the aforesaid official bond dated June 1st, 1879, was in force, the said Peter T. E. Smith abstracted from the said The First National Bank of Wilmington, and-converted to his own use the following sums of money on the following dates, to wit:

January 9, 1880........................... $100

April 22, 1880............................. 50

March 31, 1881............................ 150

June 4, 1881.............................. 200

July 30, 1881............................ 200

August 8, 1881............................ 50

August 17, 1881........................... 130

December 30, 1881......................... 500

February 20, 1882......................... 300

March 4, 1882............................. 300

May 10, 1882.............................. 500

June 1, 1882.............................. 300

June 19, 1882.................... 150

July 27, 1882.............................. 250

August 18, 1882........................... 200

September 4, 1882......................... 150

September 28, 1882........................ 200

October 21, 1882........................... 150

November 7, 1882.....................■..... 100

November 29, 1882.......................... 350

December 21, 1882......................... 50

January 18, 1883.......................... 100

March 12, 1883............................ 100

April 25, 1883............................. 150

May 18, 1883.............................. 150

June 13, 1883............................. 100

July 10, 1883.............................. 200

July 27, 1883.............................. 300

August 13, 1883........................... 200

September 4, 1883......................... 100

September 12, 1883........................ 100

September 21, 1883........................ 100

September 26, 1883...’..................... 300

October 11, 1883........................... 200

November 9, 1883.......................... 100

December 4, 1883.......................... 200

January 18, 1884.......................... 200

February 7, 1884.......................... 350

March 21, 1884............................ 150

April 17, 1884............................. 200

June 7, 1884.............................. 300

July 29, 1884.............................. 450

August 28, 1884........................... 350

October 2, 1884............................ 450

October 22, 1884........................... 450

January 22, 1885.......................... 300

March 20, 1885............................ 350

April 30, 1885............................ 300

Juñe 11, 1885............................. 500

aggregating the sum of eleven thousand one hundred and thirty dollars ($11,130), and also abstracted and converted to his own use at various times between the first day of Novvember, 1879, and the sixth day of July, 1885, other sums amounting in the aggregate to the sum of five hundred and twenty dollars ($520), making the total aggregate of the said sums so abstracted between November 1, 1879, and July 6, 1885, the sum -of eleven thousand six hundred and fifty dollars ($11,650).

And it appearing from the proofs that the said complainant together with John Sparks and Hannah L. Sparks, became bound in the sum of fifteen thousand dollars to The First National Bank of Wilmington, one of the defendants, as surety for the said Peter T. E. Smith in another official obligation entered into by him as Teller of the said The First National Bank of Wilmington, bearing date the sixth day of July, A. D., 1885, the said obligation having been entered into upon the selection of the said Peter T. E. Smith as Teller as aforesaid and as security for the faithful performance of his duties as such Teller during the term of office which should be held by him pursuant to said selection.

And it appearing further that although the said Peter T. E. Smith was re-elected Teller of said Bank in the years 1886, 1887, 1888, 1889, 1890, 1891, 1892, and 1893, he gave no official bond- upon ruch re-election, so that the term of office for his good behavior in which the sureties in said bond dated July 6, 1885, became bound continued until the discovery of the defalcations by the said Peter T. E. Smith by said bank on or about the eighteenth day of February, A. D. 1893.

*

And it further appearing from the proofs in the cause that while the aforesaid official bond dated July 6th, 1885, was in force, the said Peter T. E. Smith abstracted from the said The First National Bank of Wilmington and converted to his own use, the following sums of money on the following dates to wit:

July 10th, 1885............................$ 500

October 21st, 1885......................... 1000

April 20th, 1886........................... 2500

July 17th, 1886............................ 2000

February 25th, 1887........................ 1000

June 30th, 1887............................ 1500

October 31, 1887........................... 1500

May 30th, 1888............................ 2000

September 29th, 1888...................... 2000

February 2d, 1889......................... 1000

April 22d, 1889...........'................. 500

April 26th, 1889........................... 250

May 20th, 1889............................ 1000

August 3d, 1889........................... 2000

January 22d, 1890......................... 500

February 8th, 1890......................... 200

February 20th, 1890........................ 500

April 25th, 1890................>.......... 1000

June 2d, 1890............................. 1000

September 30th, 1890...................... 800

October 29th, 1890......................... 1000

January 9th, 1891.......................... 500

February 13th, 1891........................ 1000

April 11th, 1891........................... 500

July 2d, 1891.............................. 500

July 3d, 1891 .............................. 1500

making the aggregate sum of twenty-seven thousand seven hundred and fifty dollars.

And it further appearing from the proofs that the said several defalcations were committed by the said teller secretly and that the same were by him concealed from The First National Bank of Wilmington, and were not discovered by or become known to said bank until the eighteenth day of February, A. D. 1893, upon which day the official relationship of the said Peter T. E.' Smith with said bank was terminated.

It is therefore considered by the Chancellor that the complainant as one of the sureties for the said Peter T. E. Smith in his official bond dated June 1st, 1879, ought in equity and good conscience to reimburse- and pay to The First National Bank of Wilmington, the aforesaid several sums of money hereinbefore mentioned, so abstracted as aforesaid between the first day of June, 1879, and the sixth day of July, 1885, aggregating the sum of eleven thousand six hundred and fifty dollars ($11,650,00) with interest on said several sums from the several dates whereon the same were abstracted respectively, and with interest on said sum of five hundred and twenty dollars ($520.00) part of said sum of eleven thousand six hundred and fifty dollars ($11,650.00) from the sixth day of July, A. D. 1885; and that the said complainant as one of the sureties for the said Peter T. E. Smith in his said official bond dated July 6th, 1885, ought in equity and good conscience to reimburse and pay to The First National Bank of Wilmington the aforesaid several sums of money herein-above mentioned so abstracted as aforesaid between the sixth day of July, A. D. 1883, and the eighteenth day of February, A. D. 1893, *aggregating the sum of twenty-seven thousand seven hundred and fifty dollars ($27,750.00), with interest on said several sums from the several dates whereon the same were abstracted respectively.

And it appearing to the Court that the aggregate amount of the said several sums so abstracted as aforesaid between the first day of November, 1879, and the sixth day of July, A. D. 1885, with interest thereon from the several and respective dates whereon the same were abstracted will make an aggregate sum larger than the amount of said bond dated June 1st, 1879, and that the aggregate amount of said several sums so abstracted as aforesaid between the sixth day of July, A. D. 1885, and the eighteenth day of February, A. D. 1893*, with interest thereon from the several and respective dates whereon the same were abstracted, will make an aggregate sum larger than the amount of said bond dated July 6th, 1885.

It is therefore ordered, adjudged and decreed by the Chancellor that the injunction heretofore issued in this cause be and the same is hereby dissolved, and that the said defendant, The First National Bank of Wilmington, have liberty to collect its judgment in the Superior Court of the State of Delaware in and for New Castle County against the complainant for fifteen thousand dollars, with interest thereon from the date of the recovery thereof and costs thereon, (No. 299 of February Term, A. D. 1893), being a judgment recovered on said official bond dated June 1st, 1879, and also have liberty to collect its other judgment in said Superior Court against the complainant for fifteen thousand dollars with interest thereon from the recovery thereof and costs thereon, No. 301 of February Term A. D. 1893) being a judgment recovered on said official bond dated July 6th, 1885.

And it is further ordered that the complainant pay the costs of this cause within three months or attachment.

John R. Nicholson, Chancellor.

Upon the entry of this decree the complainant prayed an appeal, which was granted, and the case was there upon removed to the to the Supreme Court.

See footnote on p. 27S post.

This date is a manifest error, doubtless a clerical one. It should be July 5, 1891, that being the date at which the life of the second bond ended, as already stated in this decree. This error does not aSect the total amount as the above table shows the last item included under date of July 3, 1891. See note at the end of this case in the Supreme Court post p.

See note on p. 278, ante.