Page images

Bank of the United States v. Magill et al.

trusts reposed in Magill, for and during the term he should hold the said office of Cashier; and the question is, when did that office and trust cease, within the true intent and meaning of the bond ? Or when did the suspension take effect; whether on the 27th of October when the resolution was passed, or on the 30th when it was made known to Magill?

The jury having found that the embezzlement was before the 30th, any neglect on the part of the President in not carrying into effect the resolution of suspension, until the afternoon of that day, may be laid out of view. And I cannot think, that not having done it on Sunday is to be imputed to the President, as that want of due diligence which ought on this ground to exonerate the sureties.

If then, there has been no negligence which can affect the question, the single inquiry is, whether the sureties are responsible for any act of Magill's after the 27th of October. And notwithstanding the circumspection with which the law guards and protects the rights of sureties, from the best consideration I have been able to give to the question, I think the liability of the surețies did not cease instanter upon, passing the resolution of suspension : But that a reasonable time must be allowed for the resolution to be made known and carried into effect. It was undoubtedly within the power of the Directors of the mother bank so to have modified the resolution by express terms, as to have it take effect upon due notice thereof being given ; and such is by implication the reasonable intendment of the law. The appointment and removal of the officers in the branches being under the authority and control of the mother bank in Philadelphia, time must necessarily be allowed for communicating such determination.

This was not a removal from office; Magill was still Cashier, and so within the letter of the bond. Had he given satisfactory explanations respecting the complaints made against

Bank of the United States v. Magill et al.

him, so that the Directors had seen fit to continue him in office, no new appointment would have been necessary, and upon his restoration the liability of the sureties 'would unquestionably have attached without any new bond. The expression in the bond “during the term he shall hold the said office of Cashier,” must be construed to mean, so long as he shall have authority to act by virtue of his office. And Magill clearly had authority to act, until he received notice of his suspension; and the bank would until such time have been bound by his official acts. And if so bound, it must be because he was an officer of the bank, and having authority to bind it; which brings the case within the spirit and intention, as well as within the letter of the bond.

The liability of the sureties must according to every reasonable intendment be co-extensive in point of time with the authority of the Cashier to act, unless the plaintiffs or their agent are chargeable with want of due diligence in giving notice of the suspension and taking the affairs of the bank out of his hands, which in the present case I think they are not. So long as Magill was clothed with the official character of Cashier, and legally left in trust with the property and concerns of the bank, and in a situation to enable him to do the mischief, against which the bond was intended as an indemnity, the responsibility of the sureties ought to remain.

Had he been removed instead of being suspended he would not have had the official character of Cashier, and a new appointment would have been necessary to give him such character, and a different rule of construction might perhaps have applied to the liability of the sureties. Whenever the Cashier was so suspended, or placed in a situation that he could perform no official act binding on the bank, the responsibility of the sureties must also have ceased. But whilst the trust existed and was legally exercised, the sureties were bound to guarantee its faithful execution. I am accordingly of opinion

Bank of the United States v. Magill et al.

that the bond covers the time up to the 30th of October, previous to which by the finding of the jury the embezzlement took place.

The next inquiry is, whether the recovery can extend beyond the penalty in the bond..

On an examination of the English authorities upon this point, some contrariety of opinion will be found. Before the statute 8 & 9 William 3, it was held that the penalty of the bond was the debt, and payment of it might be pleaded in bar of the demand. And in many cases since the statute, satisfaction has been ordered to be entered of record on payment of the penalty of the bond and the costs. This practice, however, was not sanctioned by the Court, in the case of Lord Lonsdale v. Church. And the Court refused to stay the proceedings on the payment of the penalty into Court. But in a later case of Wilde v. Clarkson, Lord Kenyon expressly lays it down, that the recovery cannot be beyond the penalty, and disapproves of the doctrine in the case of Lord Lonsdale v. Church.

I am inclined to adopt as the better opinion, that where a bond with a penalty is given for the performance of covenants, although damages may have been sustained to a greater amount, yet the recovery must be limited to the penalty. That becomes the debt due, and upon which interest according to circumstances may be added.

I the more readily adopt this rule in the present instance, because it is a case of sureties. In such cases it is peculiarly fit and proper that they should not be made liable for damages beyond the penalty. If the responsibility was without limitation, prudent and discreet men would be unwilling to become security, and expose themselves to such hazard. No judgment could be formed as to the extent of the risk ; nor

a 2 Term Rep. 388. 6 6 Term Rep. 303.

Bank of the United States v. Magill et al.

any calculation made as to the indemnity or counter security necessary for their protection.

I do not mean to be understood as extending this rule to bonds where the condition is for the payment of money only. Such cases might probably require the application of a different rule, and depend on different principles.

Considering then the penalty as the debt due, the only remaining question is, whether interest is recoverable, and if so, from what time the calculation is to be made.

The general principles of law will, I think, sanction the allowance of interest from the commencement of the suit, but no farther. Had there been any previous demand of the penalty, or any acknowledgment that the whole was due, interest might be recoverable from such time. But that not having been done, the defendants may not be deemed in default until the commencement of the suit. It may be considered somewhat analogous to an obligation to pay a certain sum of money on demand ; in which case interest accrues only from the commencement of the suit, when no actual demand is shown.

I am accordingly of opinion that judgment be entered for the penalty of the bond, deducting the payments proved to have been made, together with interest on the balance from the commencement of the suit. I reject the interest on the payments. Such payments were an admission of a breach of the condition of the bond, and damages sustained to that amount at least, and were of course made towards satisfaction of a demand admitted to be due.

Judgment must accordingly be entered upon the special verdict, for such sums as shall, upon calculation, be found due upon the principles laid down in this opinion.

[merged small][ocr errors]

The risk of the lender and his right to repayment only on the sale arrival of

the vessel, constitute the essential difference between a bottomry and simple

loan. Marine interest is also requisite to a bottomry loan, but if not expressed in the

bond, it will be presumed to have been included with the principal. The jurisdiction of Courts of Admiralty over contracts depends principally upon

their subject matter; and in cases of bottomry, it is not the absolute necessity

of the loan that gives the jurisdiction. And the owner as well as the master of a vessel may pledge her by bottomry

in a foreign port. The master of a vessel in a foreign port, acting in the character of agent, is

limited in his power, and can only pledge the vessel in case of necessity ; but the owner, having an absolute control over his property, may pledge her for money to purchase a cargo, and thereby create an admiralty lien. In November, 1822, the owner of a vessel in Connecticut, gave a bill of sale of

her in the nature of a mortgage, but was suffered to remain in possession and act as absolute owner, and her register and all her papers remained unaltered. In July following, he gave a bottomry bond for money advanced to purchase a cargo for the vessel in the West Indies, without notice to the lender of the mortgage: Held, that upon common law principles, the claim of the lender was to be preferred to that of the mortgagee.

THOMPSON, J. This case comes up on appeal from the decree of the District Court, dismissing the libel which had been filed in that Court against the sloop Mary, upon a bottomry bond given by William H. Young, captain and sole owner of the sloop, which is described as of Fairfield in the state of Connecticut. The bond bears date on the 1st day of July, in the year 1923, and purports to have been executed at the port of Nassau, in the island of New. Providence, to Robert Wear Elliot of that place, pledging the said sloop, her tackle, apparel, and furniture, together with her freight and earnings, for the payment of one thousand one hundred dollars, alleged in the bond to have been advanced for the repairs, outfits, and other disbursements, for the use of the said

« PreviousContinue »