Martin v. Hartford Accident Ind. Co.

Full title: MARTIN et al. v. HARTFORD ACCIDENT INDEMNITY COMPANY et al

Court: Court of Appeals of Georgia

Date published: May 15, 1953

76 S.E.2d 584 (Ga. Ct. App. 1953)

76 S.E.2d 584

Opinion

34629.

DECIDED MAY 15, 1953.

Action on realtor's bond. Before Judge Henson. Fulton Civil Court. March 6, 1953.

G. S. Peck, for plaintiffs in error.

Edward E. Dorsey, Powell, Goldstein, Frazer Murphy, McCord Cooper, contra.

1. Count 1 of the petition is controlled adversely to the plaintiff by Hopkins v. Hartford Accident Indemnity Co., infra.

2. The bond in the present case is not an official one so as to bring the case within the provisions of Code § 89-418 (4).

3. The bond sued upon being a purely statutory penalty bond and being, insofar as the realtor was concerned, an involuntary one, it could not be treated as a common-law bond so as to authorize an action thereon as such by the plaintiff.

DECIDED MAY 15, 1953.

Millard R. Martin and Jessie Martin brought an action against J. A. Marks and Hartford Accident Indemnity Company, as surety on Marks's realtor's bond. The allegations of the petition, as finally amended, are substantially as follows: Marks qualified as a real-estate broker with the Georgia Real Estate Commission and executed a bond as provided by Chapter 84 of the Code of Georgia as amended. The bond was given to save harmless all persons who might be injured or damaged by any wrongful act or default of Marks. The condition of the bond was "that, if the said J. A. Marks shall comply with the provisions of the act governing the licensing of real-estate brokers, then this obligation to be void; otherwise to remain in full force and effect." The bond was approved by the Georgia Real Estate Commission. A copy of the bond was attached to and made a part of the petition. One of the acts making a real-estate agent subject to a penalty under the terms of Code § 84-1417 (f) is the "failure to account for or to remit any moneys coming into his possession which belong to others." On or about June 30, 1950, Marks procured the signature of the plaintiff Millard R. Martin, to a proposed contract to purchase certain property, and took from him an earnest-money deposit of $40 and further took from him earnest-money deposits of $20 on July 2, 1952, and of $500 on August 5, 1952, making a total of $560. On August 5, 1952, Marks procured the signatures of both the plaintiffs, who are husband and wife, to a new proposed contract to purchase said property for $10,500. Marks was unable to procure the acceptance by the owner of the property of either of the proposed contracts and they were never consummated. The plaintiffs have demanded the return of the $560 and Marks has returned $300 of that sum, and although he has frequently promised to return the remainder of $260, he has failed to do so. The $260 has been wrongfully withheld since August 13, 1952, and Marks is liable for interest thereon at 7 percent per annum. The plaintiffs sue on the bond as a statutory bond as provided by the laws of Georgia. The defendant Marks has been guilty of bad faith in failing to account for the remainder of the deposit after demand and has caused the plaintiffs unnecessary trouble and expenses in prosecuting this action, in the sum of $250. The attorney for the defendant Hartford Accident Indemnity Company has stated to the plaintiffs' attorney that, if the plaintiffs prevail, he will appeal the case and such appeal will cost the plaintiffs an additional $250 for defending against the appeal to which they are entitled, due to the bad faith of the defendants and the trouble and expense to which the plaintiffs have been put.

By the addition of another count to their petition, the plaintiffs alleged substantially the same facts as were alleged in the original petition as amended, except in this latter count it is alleged that the plaintiffs are suing on the bond as a common-law bond, and that the bond was entered into by Marks, the real-estate broker, as principal, and by Hartford Accident Indemnity Company, as surety, voluntarily, in order that Marks might obtain a real-estate broker's license, which license was issued to Marks on the strength of such bond.

Hartford Accident Indemnity Company demurred generally and specially. The trial court, without ruling on the special demurrers, sustained the general demurrer and dismissed the petition.

CARLISLE, J.

1. The surety bond, by virtue of which the plaintiffs seek to hold Hartford Accident Indemnity Company liable in count 1 of the petition, under the theory that the bond is a statutory one, is the identical bond which was under discussion by this Court in Hopkins v. Hartford Accident Indemnity Co., 87 Ga. App. 513 ( 74 S.E.2d 494). In that case this court held: "A real estate broker's license bond, given pursuant to the provisions of Code § 84-1409, as amended by the acts of 1949 (Ga. L. 1949, pp. 943, 945) and of 1950 (Ga. L. 1950, pp. 278, 279), is purely a statutory bond, conditioned that the said broker shall comply with all the laws enacted in reference to real-estate brokers; and the surety on such bond is not liable to a third person alleged to be damaged by reason of the wrongful conduct of the broker while acting as her agent in the purchase of real estate." See also, in this connection, Talmadge, Governor, for use, v. General Casualty Co. of America, ante. It follows that the trial court did not err in sustaining the general demurrer as to count 1 of the petition.

2. The plaintiffs contend that the bond here sued on is an official one, and that they are entitled to bring the suit by virtue of the following provisions of Code § 89-418 (4): "Every official bond executed under this Code is obligatory on the principal and sureties thereon . . . (4) For the use and benefit of every person who is injured, either by any wrongful act committed under color of his office or by his failure to perform, or by the improper or neglectful performance of those duties imposed by law." We can no more conceive that every licensed broker of real estate is an official of this State than that every licensed attorney is such. But be that as it may, in Talmadge, Governor, for use, v. General Casualty Co. of America, supra, in which Hopkins v. Hartford Accident Indemnity Co., supra, was thoroughly reconsidered by the court, we held: "1.(b) Under the provisions of Code § 89-418, bonds of public officers are conditioned for the use and benefit of every person who is injured by the principal under color of office. But, as to statutory penalty bonds which are not bonds of public officers, this provision does not apply, and a member of the public who is injured by the principal's failure to observe the conditions of the bond cannot sue the principal and sureties on such bond to collect damages for such wrongful act where the statute gives him no right to bring such action. Alexander v. Ison, 107 Ga. 745 ( 33 S.E. 657); Nesbit v. National Surety Corp., 63 Ga. App. 518 ( 11 S.E.2d 667); Hopkins v. Hartford Accident c. Co., supra." It follows that the trial court did not err in sustaining the general demurrer to count 1 of the petition even under this theory of the plaintiffs.

3. In count 2 of the petition, the plaintiffs seek to hold the surety liable on the theory that the bond is a common-law one, as it contains the following provision, not required by the statute: "It is a further condition that this bond is to secure and save harmless all persons who may be injured or damaged by any wrongful act or default of said J. A. Marks, real-estate broker, or his agents and employees."

It is alleged in count 2 that "said bond was entered into by said J. A. Marks, real-estate broker, as principal and by Hartford Accident Indemnity Company, as surety, voluntarily, in order that said J. A. Marks, principal, might obtain a real-estate broker's license, which license was issued to said Marks on the strength of said bond. Plaintiffs sue upon said bond as a common-law bond." [Emphasis supplied.]

We are fully cognizant of that line of Georgia decisions, both from the Supreme Court and this court, upon which counsel for the plaintiffs relies, which are in accord with the general principle of law stated in 9 C. J. 27, § 41, that "a statutory bond may be good as a common-law obligation, although insufficient under the statute because of noncompliance with its requirements, provided it is entered into voluntarily and on a valid consideration and does not violate public policy or contravene any statute." See Mount v. Wall, 127 Ga. 211 ( 56 S.E. 298); Wall v. Mount, 121 Ga. 831 ( 49 S.E. 778); Anderson v. Blair, 118 Ga. 211 ( 45 S.E. 28); Crawford v. Howard, 9 Ga. 314; Stephens v. Crawford, 3 Ga. 499; Fennell v. Davis, 34 Ga. App. 548 (2) (130 S.E. 595). We think the principle of law announced in those cases quite sound, but we are convinced that that line of cases is distinguishable from the present case. In those cases the bond under consideration was held to be insufficient as a statutory obligation. Such is not the circumstance in the present case.

This identical bond, in Hopkins v. Hartford Accident c. Co., supra, and a bond of the same phraseology, in Talmadge, Governor, for use v. General Casualty Co. of America, supra, were not held by this court to be insufficient, defective, or void as statutory bonds. On the contrary, it was held in the Hopkins case (p. 516) that "this is purely a statutory bond, and any conditions and obligations therein that are not required by the statute under which it was executed, and that are beyond the statute requiring such bond, are invalid and must be read out of the contract. See 11 C. J. S. 420, § 40; 9 C. J. 34; Justices of Inferior Court v. Wynn's Adm., Dudley 22." (Italics ours.) We are, therefore, squarely confronted with the question whether a bond which had been held to be a valid statutory penalty bond may at one and the same time also constitute a valid common-law bond? Upon this point we have found no Georgia decision and counsel have referred us to none. However, a Missouri case, which is strikingly similar on its facts to the present one, is cited in the Talmadge, Governor, case, supra, and, we think, answers with considerable logic the question now before us. In that case, State ex rel. Sanders v. Hartford Accident c. Co., 235 Mo. App. 729 ( 143 S.W.2d 483), it appeared that, as a condition precedent to the licensing of stockbrokers in Missouri, a surety bond was required by statute. The plaintiff in that case brought her case on two theories as does the plaintiff here — namely, the defendant violated the statute, and breached the common-law bond. The court held that no violation of the licensing law had been shown, and on the question of the effectiveness of the bond as a common-law one, had this to say: "The record clearly shows that the bond in question was given in contemplation of the statute and, insofar as the respondent [licensee] is concerned, the giving of the bond was an involuntary act, its conditions being imposed by the direction of the State's agency as a prerequisite for relator to receive a license to do business under the provisions of the law. . . If the state official did intend to impose duties and responsibilities beyond the provisions of the statutes, such act was ultra vires and could not impose obligations upon respondent not intended by the statutes. . . `And it would be an anomalous holding to say that a bond may be enforced as a statutory obligation, and also as an obligation at common law.' [quoting from U.S. Fidelity Guaranty Co. v. Iowa Telephone Co., 174 Iowa 476, 166 N.W. 727, 733]." (Italics ours.) The reasoning in these cases commends itself to us, and in the absence of authority to the contrary we hold what is said there to be the law here, and conclude that the trial court did not err in sustaining the demurrer to count 2 of the petition.

Judgment affirmed. Gardner, P. J., and Townsend, J., concur.