Opinion
No. 29511.
November 2, 1931.
1. CONTRACTS.
Guaranty to secure making of federal bail bond held not to violate public policy.
2. INDEMNITY.
Guaranty to secure making of bail bond in sum of one thousand five hundred dollars held not unenforceable because bond executed was for one thousand dollars.
3. INDEMNITY. Bail bond executed held within guaranty to secure making of bail bond, though title of statute violated was erroneously stated in bond.
The guaranty was given to guarantee bondsman against loss on bond conditioned for principal's appearance to answer charge of violation of federal revenue laws, and, although bond filed described charge as violation of Revised Statutes, section 3450, National Prohibition Act, Revised Statutes, section 3450 (26 U.S.C.A., sections 1181, 1182) is not part of Prohibition Act, but of the internal revenue laws.
APPEAL from chancery court of Calhoun county; HON. N.R. SLEDGE, Chancellor.
Creekmore Creekmore, of Jackson, for appellant.
An agreement by which a person receives a sum of money from another in consideration of his becoming bail for the latter's son, who is accused of felony, in order that such son may get out of jail and run away and thus escape trial, is void as obstructing or interfering with the administration of public justice; and money paid under such an agreement, if not used, cannot be recovered back.
Dunkin v. Hodge, 46 Ala. 523.
A rule of law upholding such an indemnity contract in effect allows one to be his own surety for his own appearance. Thus he or his friends may buy his freedom from answering the law.
Dissenting opinion of Carr v. Davis, 63 S.E. 326, 20 L.R.A. (N.S.) 58; Ratcliff v. Smith, 13 Bush. 172.
Contracts indemnifying bail in criminal cases have, however, on more than one occasion been before the courts, and by the courts they have been declared to be illegal and against public policy.
Herman v. Jeuchner, L.R. 15 Q.B. 561; U.S. v. Simmons, 47 Fed. 575, 14 L.R.A. 78.
A contract to indemnify bail is contrary to public policy.
United States v. Ryder, 110 U.S. 729, 28 L.Ed. 308; 3 R.C.L., p. 60.
After the intention of the parties or the scope of the indemnitor's undertaking has been determined by the ordinary rules of construction, the rule of strictissimi juris applies, that is, that the indemnitor is entitled to have his undertaking as thus determined strictly construed and that it cannot be extended by construction or implication beyond the terms of the contract. Nothing can be read into the contract which does not actually appear in it or which is not warranted by legal interpretation of the language used to express the intention of the parties.
31 C.J., p. 127.
A contract of indemnity is to be strictly construed against the party seeking its protection.
Tulare County Power Co. v. Pacific Surety Co., 43 Cal.App. 315, 185 P. 399; Smith v. Scott, 261 S.W. 1089; Schroeder v. Gulf Refining Company, 300 P. 405, 150 A. 665.
Indemnitors can stand on the very letter of the contract.
221 Ala. 550, 130 So. 73; Brandt on Suretyship and Guarantee; Wier Plow Co. v. Walmsley, 11 N.E. 232; Runnels v. James, 115 Miss. 607, 76 So. 566.
Any change in the terms of the principal contract which obliges the debtor to do something which he was not before bound to do will discharge the surety or guarantor.
Stearns on Suretyship, p. 98.
G.E. Williams, of Clarksdale, for appellees.
The majority of the courts of this country recognize the doctrine, that such indemnity agreements are not even within the statutes of fraud and that such indemnity agreements, even though oral and not in writing, can and will be upheld by the courts.
McCormick v. Boylan, 83 Conn. 686, 78 A. 335; Ann. Cas. 1912, A. 882; Clark v. Toney, 17 Ga. App. 803, 88 S.E. 690; Anderson v. Spence, 72 Ind. 315, 37 Am. Rep. 162; Keesling v. Frazier, 119 Ind. 185, 21 N.E. 552; Perley v. Spring, 12 Mass. 297; Hawes v. Murphy, 191 Mass. 469, 78 N.E. 109; Fidelity C. Co. v. Lawler, 64 Minn. 144, 66 N.W. 143; May v. Williams, 61 Miss. 125.
The contract of indemnity between the surety on bail bond and third persons is not contrary to public policy but a valid binding contract.
Leary v. United States, 244 U.S. 566, 56 L.Ed. 889.
It is generally conceded that where a third person agrees to indemnify the bail the agreement is valid and enforceable at law. Such an agreement is not within the statute of frauds. It is an original promise given for valid consideration.
3 R.C.L., Bail and Recognizance 60; 31 C.J. Indemnity, 425; Leary v. United States, 224 U.S. 567, 56 L.E. 889; Simpson v. Robert, 35 Ga. 180; Maloney v. Nelson, 144 N.Y. 182, 39 N.E. 82; Western Surety Co. v. Kelly, 27 S.D. 465, 131 N.W. 808; Essig v. Turner, 60 Wn. 175, 110 P. 998; Carr v. Sutton, 70 W. Va. 417, 74 S.E. 239; McCormick v. Boylen, 83 Conn. 686, 78 A. 335.
Though adhering to the rule of the minority, that such indemnity agreement must be in writing, Mississippi impliedly recognized the right to enter a contract of this kind and character.
May v. Williams, 61 Miss. 125.
It has long been the established rule in this state and in every state in the union, that contracts will always be construed with the idea in mind of giving full credence and determination to their validity and legality, and with every doubt resolved in favor of such validity and legality. Conversely, contracts in order to be determined invalid as against public policy must appear to be against public policy beyond every doubt.
Rankin County v. Busick, 22 So. 801; Merrill v. Melchior, 30 Miss. 516; Orell v. Bay Mfg. Co., 87 Miss. 632, 40 So. 429; Clay v. Allen, 63 Miss. 426; Weil v. Neary, 22 F.2d 893; Steele v. Drummond, 275 U.S. 198, 72 L.Ed. 238; Baltimore O.S.W.R. Co. v. Voight, 176 U.S. 498, 44 L.Ed. 560.
An unbroken line of adjudged cases and textbooks sustains the proposition that a mortgage for indemnity of sureties is valid.
State v. Hemingway, 69 Miss. 491.
Section 3450 of the Revised Statutes, is an enactment under the Internal Revenue Laws of the United States of America.
The general rules which govern the construction and interpretation of other contracts apply in constructing a contract of indemnity and in determining the rights and liabilities of the parties thereunder. In accordance with such rules the important question for determination is the intention of the parties, and the contract should be so construed, if it can be done consistently with legal principles, as to ascertain and give effect to such intention and in making such construction the terms used in the language employed in the contract must be given a fair and reasonable interpretation, the contract must read in his entirety, and consideration must be given not only to the language of the contract but also to the situation of the parties and the circumstances surrounding them at the time the contract was made.
31 C.J. 427; 14 R.C.L. 46.
The appellees exhibited an original bill against the appellant, which she answered. Thereafter the appellees filed an amended bill of complaint, which the appellant was allowed thirty days to answer; but, failing so to do, a decree pro confesso was taken against her, resulting in a final decree in accordance with the prayer of the bill.
The amended bill of complaint alleges, in substance, that one Carter was under arrest by the federal authorities, charged with the violation of the federal prohibition and revenue laws, and that the appellant, desiring to secure his release pending his trial by the federal court, executed and delivered to the appellees a written promise to indemnify and save them harmless against loss on account of their executing three bail bonds for the said Carter, one of which was described therein as "one federal bond upon a charge of violation of the federal revenue laws in the sum of one thousand five hundred dollars;" that, pursuant to this promise, and because thereof, the appellees executed a bail bond for Carter, a copy of which was filed with the bill of complaint, as an exhibit thereto, in the penalty of one thousand dollars, conditioned that Carter would appear before the federal district court for the Northern district of Mississippi, and answer a "charge that on or about the ____ day of 19__ within said district, in violation of section (3450, R.S.) Nat. Prohi. Act," etc.
Carter failed to appear when called for trial and a judgment nisi was rendered against him and his sureties, reciting that "Carter, being called to come into court and answer unto the indictment against him for violation of section 3450 of the Revised Statutes of the United States, came not," etc. This judgment nisi was afterwards made final, and was paid by the appellees.
The prayer of the bill is for a judgment for the amount paid by the appellees in settlement of this judgment, and two other items of damage sustained by them because of Carter's failure to appear, and answer to the federal court on the charge pending there against him.
Two reasons only are assigned by counsel for the appellant for the reversal of the decree of the court below: First, the guaranty is void for the reason that it is against public policy for sureties on a bail bond to be induced to become such because of a guaranty given them against loss therefrom; and, second, the bond executed is not the bond described in the contract therefor.
In a few jurisdictions a contract guaranteeing a surety on a bail bond against loss thereon is void, as being against public policy, on the theory that the surety is thereby rendered indifferent to the appearance, vel non of the person bailed, to answer the charge against him. According to the weight of authority, however, such guaranties are valid; and, while this court has not expressly decided the question, the validity of such guaranty was assumed in May v. Williams, 61 Miss. 125, 48 Am. Rep. 80, provided the Statute of Frauds was complied with in the making thereof. The guaranty here being to secure the making of a federal bail bond, its validity, in so far as public policy is concerned, is probably ruled by Leary v. U.S., 224 U.S. 567, 32 S.Ct. 599, 56 L.Ed. 889, Ann. Cas. 1913d 1029, wherein the court held that such a guaranty does not violate public policy. But, if not, the reasoning of that case is in accord with the weight of authority, and meets with our approval.
In support of their second contention, counsel for the appellant say that her agreement was to guarantee the appellees against loss on a bond in the sum of one thousand five hundred dollars, conditioned for Carter's appearance to answer "a charge of violation of the federal revenue laws," but that the bond executed was for the sum of one thousand dollars for Carter's appearance to answer a charge of violating the National Prohibition Act (27 U.S.C.A.).
The manifest purpose for which the guaranty was executed was to obtain a bail bond for Carter, so that he might be released from custody; and, in the light of that purpose, the one thousand five hundred dollars provision of the contract would seem to be but a limitation of the amount of liability therefor that the guarantor was willing to assume, and not a requirement that the bond should be for that sum.
Assuming that the description in the guaranty of the crime for which Carter was in custody is descriptive of the character of the bond to be executed, and that the bond must be in accordance therewith, in order to come within the guaranty, that requirement seems to have been here met. The bond filed with the amended bill of complaint describes the charge against Carter as a "violation of (section 3450, R.S.) Nat. Prohi. Act." Section 3450, Revised Statutes (26 U.S.C.A., secs. 1181, 1182), is not a part of the Prohibition Act, but of the Internal Revenue Laws, and designating a violation of it as a violation of the National Prohibition Act (27 U.S.C.A.) does not make it such. The federal court so construed the bond when the forfeiture on it was taken.
Affirmed.