In Hatch v. Elkins, 65 N.Y. 489, which cited and approved Douglass v. Howland, 24 Wend. 35, where a letter was written by the principal long after the account was rendered and closed, admitting the correctness of a certain account and the balance therein stated to be due, it was held on appeal to be inadmissible as against the surety.Summary of this case from Singer Manuf'g Co. v. Coon
Submitted May 7, 1875
Decided June term, 1875
Henry E. Knox for the appellants.
Thos. H. Rodman for the respondents.
There was very little proof (and that controverted) except the admissions of Badger that the accounts thus received in evidence were true, and that the balance claimed was justly due, and hence the material inquiry is, whether the evidence thus objected to was competent? The claim is made by the learned counsel for plaintiffs, that the relations between Badger and Elkins were such that the admissions and acknowledgment of the former as to the amount due from him to the plaintiffs upon the short account are competent and sufficient evidence against the latter to establish the fact. I cannot doubt that this claim is not well founded. Badger was in no sense the agent of Elkins, in his dealings with plaintiffs. He was principal in all his transactions with them, and hence the rules of law applicable to the admissions of agents have no application to this case. Elkins was surety for Badger to the plaintiffs. He had bound himself by his agreement with them dated April 28, 1869, "to indemnify them against all losses or damages" which they had sustained or might sustain by acting as Badger's brokers in the short sales of stocks and bonds. In such a case the party holding the indemnity claiming loss against his indemnitor must prove it by evidence competent against him. He cannot prove it by the mere admissions or statements of the principal, however formally made. The declarations of the principal made during the transaction of the business for which the surety is bound, so as to become part of the res gestæ are competent evidence against the surety; but his declarations subsequently made are not competent. It is said, in 1 Greenleaf's Evidence (section 187), that "the surety is considered bound only for the actual conduct of the party, and not for whatever he might say he had done, and therefore is entitled to proof of his conduct by original evidence when it can be had, excluding all declaration of the principal made subsequent to the act to which they relate." In Evans v. Beatties' Executor (5 Esp., 26) the defendants' testator had undertaken and promised the plaintiffs to guarantee them the payment for such goods as they should send to one Coppee in the way of their trade. Upon the trial plaintiffs offered to prove the delivery of certain goods to Coppee by his admissions. This evidence was objected to and it was argued for plaintiffs that the liability of the testator depending on the extent of the debt due by Coppee by which the testator had made Coppee's debt his own, what would be evidence to charge Coppee should be evidence to charge the testator; and as his omissions would be sufficient as against himself, it should be so against the defendant. Lord ELLENBOROUGH ruled "that what Coppee had been heard to say was not sufficient evidence to charge the defendant. The engagement was to pay for such goods as should be delivered to Coppee, not which he should acknowledge to have received." Here the engagement was substantially to pay the loss Badger should actually cause the plaintiffs, not that which he should acknowledge he had caused them.
The authorities to which plaintiffs' counsel has called our attention fall short of sustaining the claim made by him. In Bullock v. Boyd (2 Edw. Ch., 293) the complainant, on the 10th day of November, 1827, assumed the indebtedness of one Lampson to the defendants, and entered into a covenant with them to pay it. On the 10th day of October, 1827, Lampson and the defendants had had a settlement of their accounts and a balance was struck which Lampson then acknowledged, at the foot of the account, to be correct and justly due. The amount of the indebtedness of Lampson to the defendants was thus fixed by the act of the parties, and the balance due to the defendants was as thoroughly established as if Lampson had given them his note for it. It was this balance which the complainant assumed to pay, and the vice-chancellor held that the complainant was bound by a settlement thus made which was binding upon the parties thereto. If the defendants had offered to prove a settlement, or statements made subsequently to the promise of the complainant, a different question would have been presented. In Fenner v. Lewis (10 J.R., 38) the plaintiff and his wife agreed, by articles, to live separate, and the defendant, as trustee and surety for the wife, covenanted to pay the plaintiff a sum of money upon his delivering to the wife a carriage and horses for her separate use, and it was held, in an action by the plaintiff for the money, that the wife's admissions of the receipt by her of the carriage and horses were admissible. The decision was placed upon grounds which will not aid the plaintiffs in this case. It is said in the opinion, that "both parties by the covenant concurred in her capacity to receive those articles, and she became for that purpose their mutual agent. Her declarations or confessions, that the act was done, became legal evidence of that fact as a necessary consequence of her authority, under the articles to receive the coach and horses; for no principle would seem to be more clear, than that the person to whom performance of an act is agreed to be made is competent to acknowledge such performance. If she was competent to receive she was competent to give a receipt for them, and if her receipt would have been good evidence of the delivery, her parol admission must be equally so." In Douglass v. Howland (24 Wend., 36) one Brigham had agreed in writing, to account in reference to certain matters with the plaintiff, and pay to him such sum as should be found due him upon such accounting, and the defendant covenanted with plaintiff, that Brigham should faithfully perform the agreement on his part. The plaintiff sued Brigham in Chancery and thus compelled an accounting and obtained a decree against him. The judge at the Circuit held, that the decree was conclusive as to the defendant, although he was not a party to it. This was held error, but Judge COWEN, writing the opinion, says: "Had Brigham voluntarily accounted, on the principle prescribed by his covenant, the surety would have been liable for the balance struck. The striking of such a balance would be an admission making part of the res gestæ. Indeed, that and every act leading to or connected with it, would be the res gestæ themselves, for which the defendant undertook in his covenant." In this case, the admissions of Badger were no part of any res gestæ in reference to which Elkins undertook in his agreement. All he undertook to do was to pay the loss. He did not undertake that Badger should adjust the loss and to pay the balance found due.
More nearly in point, but against the plaintiffs, are the following authorities: Hotchkiss v. Lyon (2 Blackf., 222); Shelly v. Governor (2 id., 289); Beal v. Beck (3 Har. McHen., 242); Bacon v. Chesney (1 Stark., 192). These cases all hold that the declarations of the principal bind the surety only when they are part of the res gestæ in reference to which the surety has covenanted, but that his subsequent admissions, not part of the res gestæ, do not bind and are not competent evidence against the surety. In a nisi prius case ( Cutler v. Newlin, cited in 3 Starkie's Ev. 1387), a most eminent judge (HOLROYD) refused the admission of the principal against his surety in an indemnity bond going to show the amount of damage. Here the statements of Badger were made, not when he was engaged in any transactions as to buying or selling stocks, but after all the transactions were closed. They were admissions as to the balance due the plaintiffs upon the short account, and were claimed to furnish and were received as furnishing competent evidence of that balance against the defendant.
For this error the judgment should be reversed and new trial granted, costs to abide event.
All concur, except DWIGHT, C., not voting.