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Machine Co. v. Seago

Supreme Court of North Carolina
Apr 1, 1901
128 N.C. 158 (N.C. 1901)


(Filed 23 April, 1901.)

1. BONDS — Penal — Interest — The Code, Sec. 530.

The recovery upon a penal bond can not exceed the penalty named therein, though the excess is for interest on the amount of the defalcation after breach of the bond.

2. EVIDENCE — Agency.

An agent who takes a bond for the execution of a contract may testify as to his agency in an action on the bond.

ACTION by the New Home Sewing Machine Company against Henry E. Seago, D. R. Seago and W. A. Marks, heard by Judge Thomas J. Shaw and a jury, at the December Term, 1900, of STANLY. From a judgment for the plaintiff, the defendants appealed.

Austin Smith, for the plaintiff.

J. Milton Brown, for the defendants.

CLARK, J., dissenting.

This is an action of debt upon a penal bond of $500, given by the defendants to the plaintiff to indemnify it against loss on account of the agency of the defendant Seago. Upon the trial it was found that the plaintiff was entitled to recover $442.27 for defalcations upon which he was (159) allowed $104.44 interest, making together the sum of $546.71. For this amount the plaintiff was allowed judgment and defendants excepted.

While cases may be found in many jurisdictions to sustain the judgment of the Court, we do not think it can be sustained upon principle, nor under the statutes and decisions of this State.

The penalty of the bond sued on is $500. This, we think, is the extent of the defendants' liability. The Court can not change the terms of the bond, nor increase the liability of the defendants.

We understand it to be admitted by the plaintiff that this would be so if the principal of the plaintiff's recovery was more than the penalty of the bond sued on. But it is contended for the plaintiff that this makes the difference; that the principal of the plaintiff's recovery, or in other words, the amount of the agent's defalcation, was only $442.27, and the balance of the judgment is interest, and incident to the debt. But it is incident to the debt created by the defalcation of the agent, and collateral to the bond sued on, and can not increase the liability of the bond unless the bond draws interest. It seems to us that the contention of plaintiff can not be so upon principle and sound reasoning.

The plaintiff had no debt against the defendants — the sureties — and none against the principal on the bond, until it obtained its judgment; and this judgment under our statute draws interest until it is paid. At early common law, no indebtedness drew interest. 16 Am. Eng. Enc. Law, 991 and note 8. There were English statutes passed afterwards providing for interest. Interest is a creature of legislation and has been provided for by our Legislature. Code, sec. 530. And in this legislation providing for interest, it is expressly provided that penal bonds shall not draw interest; and as this suit is on a bond which can not draw interest, it would seem that this should end the discussion.

At common law, the judgment on a penal bond was (160) for the amount of the penalty, when a breach of the condition was shown. The actual damages were not assessed in that action; and, if they were not so great as the penalty of the bond, defendants' remedy was to go into a court of chancery and ask for relief against the plaintiff's judgment. He there obtained a writ of inquiry, called "Quantum Damnificalus," when the real damages were inquired into and determined. Governor v. Evans, 13 N.C. 383. This was troublesome and expensive, and considered a hardship on defendants; and to prevent this trouble and expense, and for the benefit of defendants, it was provided by statute that the actual damages might be assessed by the Court and jury trying the action on the bond. Before the statute providing that the real damages might be tried and determined in the suit on the bond, the judgment could only be for the penalty of the bond. And it would be singular if this statute, intended for the benefit of defendants, should prove a boomerang and subject them to greater damages than they were liable for before its passage. Before the passage of this statute, a plaintiff recovered judgment upon the bond for the amount of the bond, because his action was upon the bond. After the statute, he still recovered judgment on the bond, but if it turned out that the actual damages sustained by plaintiff were less than the penalty of the bond, the judgment was still for the amount of the bond, but to be discharged by the payment of the actual damages and costs of action.

This seems to have been so well understood by the profession in this State, that we have but little direct authority on the subject. But these are in harmony with the English authorities, and show that plaintiff can only have judgment for the penalty of the bond. Anthony v. Estes, 101 N.C. 541. It is claimed that Stafford v. Jones, 91 N.C. 189, is authority to sustain the judgment of the Court below. But it does not seem to us that it is. That was not an action on a penal bond, but a construction put upon a mortgage in an (161) action to foreclose. And whether the construction put upon the mortgage in that case is correct or not, we can not think it is authority in this case. Justice MERRIMON, who wrote the opinion in Stafford v. Jones, and Chief Justice SMITH were both on the bench when that opinion was delivered, and they were both on the bench when Chief Justice SMITH wrote the opinion in Anthony v. Estes, and Stafford v. Jones is not referred to. This shows, to our minds, that Stafford v. Jones was not considered by that Court as being in conflict with Anthony v. Estes. But if it was, Anthony v. Estes, being the later case, which expressly decides the point in this case, must be held to overrule Stafford v. Jones.

As we have said, we do not find many direct authorities in our Court, but we find quite a number of cases which bear upon the question — such as Bell v. Jasper, 37 N.C. 597; Jones v. Hayes, 38 N.C. 502; Bryan v. Rosseau, 71 N.C. 194; Branch v. Elliott, 14 N.C. 86, where it is held that it is not necessary for the jury to find the amount of the bond sued on, as that is settled by the penalty of the bond, and the judgment is for that amount; Thoroughgood v. Walker, 47 N.C. 15, where there is a clear discussion of the doctrine.

There is one other exception: The plaintiff produced its general agent, who testified that he was a general agent of the plaintiff, and as such made the contract with the defendant Seago and took the bond sued on. The defendant objected to this evidence upon the ground that agency could not be proved by declarations or acts of the agent. This proposition is correct in a proper case, but does not apply in this case. It applies where a party is trying to establish an agency for the purpose of making the principal liable for the acts of the agent. But that is not the case here. In this case, it is for the purpose of holding the agent liable. Besides, we know of no rule of evidence that does not allow an agent to (162) go on the witness stand and testify that he is an agent. It is not a declaration, but the sworn evidence of a witness. This exception can not be sustained.

As this is the only error pointed out affecting the trial, we are of the opinion that the judgment should be corrected by reducing the same to $500, and, being so corrected, it should be


Summaries of

Machine Co. v. Seago

Supreme Court of North Carolina
Apr 1, 1901
128 N.C. 158 (N.C. 1901)
Case details for

Machine Co. v. Seago

Case Details


Court:Supreme Court of North Carolina

Date published: Apr 1, 1901


128 N.C. 158 (N.C. 1901)
38 S.E. 805

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