Singer Manufacturing Co. v. Drummond , 47 N.Y. Sup. Ct. 260 ( 1886 )

Follett, J .:

The judgment in this ease was ordered upon the authority of People v. Bostwick et al. (43 Barb., 9; affirmed, 32 N. Y., 445), and Grimwood v. Wilson (31 Hun, 215).

In People v. Bostwick et al., Bostwick, one of the obligors, did not defend, and it was proved by the defending obligors that they executed the bond upon condition that it should be executed by Dickinson before delivery. The report of the case (43 Barb., 12) shows that “ he (Bostwick) told the auditor (who accepted the bond) that Dickinson would call and sign the bond, and the auditor replied that it was good enough as it was.” In that case the auditor had notice that another person was to sign, -which was sufficient to put him upon inquiry as to the rights of those who had signed. In Russell v. Freer (56 N. Y., 67) the defendants executed a bond to secure the faithful discharge of the duty of a deputy collector of internal revenue to his principal. "When defendants executed it the name of James Dolson was written iu the body of the bond as a co-obligor, and they executed and delivered it to the deputy, upon the expectation that it was to be signed by James Dolson before delivery to the collector. Subsequently James Dolson’s name was stricken from the bond without defendant’s knowledge, and in this condition delivered to the obligee.

It was held that these facts constituted no defense, upon the ground that defendants, by executing and leaving the bond with the deputy, placed it within his power to deliver it as a valid and complete instrument; and that it was a case for the application of the maxim that when one of two innocent parties must sustain a loss from the wrongful act of a third, the loss must be borne by the one who has enabled the wrong-doer to commit the act. This case wat decided upon the authority of Dair v. The United States (16 Wall., 1), and State v. Peck (53 Me., 284), both of which criticise People v. Bostwick. Judge Grover, in speaking for the court in Russell v. Freer (all concurring), said that it may well be questioned whether People v. Bostwick was well decided. In Grimwood v. Wilson (supra) an undertaking, o-n appeal to the Court of Appeals, was executed by one surety upon condition that another surety should execute it, which the appellant and principal obligor in the undertaking failed to have done, but filed it as executed. Section 335, authorizing undertakings on appeal, provided that they must be executed by “ at least two sureties.” The court held the surety was not liable upon the ground that the obligee was presumed to know the law, and that the circumstances were sufficient to put him to an inquiry as to whether the surety executing it consented to assume the whole responsibility. Neither of the cases relied upon control the case at bar. In this case the bond was perfect on its face as found by the referee and as it appeal’s to us upon an inspection of the original. The obligee was without notice that it was executed conditionally and without knowledge of any fact which should have put him upon inquiry, and under such a state of facts we think he was bound. (Dair v. The United States, 16 Wall., 1; Butler v. United States, 21 id., 272; Richardson v. Rogers, 50 How. Pr., 403; Tidball v. Halley, 48 Cal., 610; State v. Peck, 53 Me., 284; Murfree on Bonds, §§ 44, 166.)

In many cases an agency is implied by law from the relation of parties or from necessity. (Story’s Ag., §§ 58, 89.) When several joint and several obligors entrust one of their number with the possession of a bond, perfect in form and substance, which is accepted and acted upon by the obligee in good faith and without sufficient notice to cause a prudent man to inquire into the circumstances of its execution or to suspect the existence of collateral infirmities, the obligors will be presumed to have authorized its delivery and estopped from proving the contrary. Bonds in legal proceedings, by trustees, guardians, public officers and by private individuals, have become important and necessary instruments without which public and private business cannot well be carried on ; and a rule requiring obligees to have a delivery from all of the obligors or run the risk of having the security destroyed by secret •oral agreements between tbe obligors, will- be productive of great •embarrassment in public and private affairs.

The judgment is reversed and a new trial granted, with costs to abide the event.

HaediN, P. J., and BoakdMAN, J., concurred.

Judgment of Oneida County Court reversed and a new trial ordered in that court, with costs of the appeal to abide the event.