Lake v. Thomas

Briscoe, J.,

delivered the opinion of the Court.

The appellee brought suit against the appellants as surviving obligors on a bond conditioned for the faithful performance of duty by an agent employed by him. The record in the case presents the questions argued upon this appeal in a very unsatisfactory manner. It contains voluminous pleadings, the bond sued on, and merely an agreement as to few of the facts involved. The case was tried before the Court below without the intervention of a jury. No bill of exceptions was taken to any of the rulings of the Court, and the appeal is from a judgment for the plaintiff. The main question on the appeal is, were the defences relied on properly presented by the pleadings in the case. *622 The bond sued on was executed October 2nd, 1891, and recites that the plaintiff, Thomas, had employed the principal obligor, John E. Sard, as his agent in selling and leasing sewing machines, in the discretion of Thomas, and in collecting money due upon such sales, See., and for the discharge of any and all duties connected with said business. It also provides that “ upon the first call or demand of said Thomas after he (the agent) has received or collected any money for the use or benefit or belonging to Thomas, he will make a return thereof and pay the same over to him or his order.”

The condition of the bond was that the same shall be void if John E. Sard shall well and truly do and perform all his duties connected with said agency, and shall well and faithfully fulfill and perform all his agreements and undertakings in the premises, but otherwise to remain in full force and virtue in law. The breach assigned by the declaration is, that Sard, under the agency, after the date, execution and delivery of the bond, did receive and collect certain moneys for the use and benefit of Thomas, but did not pay over the moneys so received and collected, although demand for such payment was duly made, &c. To the declaration the defendants filed seven pleas. Subsequently the third, fourth and fifth pleas were amended, and the amended pleas will be here considered as taking the place of the pleas first filed because the original pleas bearing the same numbers must be considered as withdrawn. Mitchell v. Williamson, 9 Gill, 71 . We will then consider the pleas in their order. The first alleges that Sard never collected the moneys as alleged; the second that he paid over the moneys collected by him. Issue was joined on these pleas and there is no contention as to their correctness. The third plea alleges that the plaintiff changed the time and manner of' settlement as provided in the bond. And to this plea the plaintiff demurred. Now the bond which is a part of the declaration provided that Sard should pay over the money collected by him, "upon the first call or demand *623 of Thomas. And as under this bond no particular time of settlement was provided for, but the whole matter was left to the discretion of Thomas, the demurrer to this plea was properly sustained. The plea is also defective in not alleging that the sureties were injured by the alleged change in the time and manner of settlement because if the changes were made after a defalcation and after the liabilities of the sureties had become fixed it would be no defence to the action. McShane v. The Howard Bank, 73 Md. 135 .

While a surety is discharged if the contract is materially changed without his consent, yet an agreement between the creditor and the principal obligor which is not a binding contract to extend the time of payment or change the original contract does not operate to discharge a surety. Schaeffer v. Bond, 72 Md. 501 ; Smith v. State, 46 Md. 617 ; Gott v. State, 44 Md. 319 . The mere indulgence by a creditor in collecting a debt due him does not discharge a surety of the debtor. Freaner v. Yingling, 37 Md. 491 .

The amended fourth ' plea sets forth that Thomas had knowledge of the defalcations of Sard, “shortly after the occurrence thereof,” but kept Sard in his employment and permitted the defalcations to continue and did not notify the defendants. The demurrer to this plea was properly sustained. Even assuming that the defendants would not be liable for defalcations,committed by Sard after knowledge by the plaintiff of his prior defalcations, yet the fact that he was thereafter retained would not discharge the defendants from liability for such prior defalcations. This question was conclusively settled in McShane v. Howard Bank, 73 Md. 135 Where a plea undertakes to answer the whole declaration, but in fact answers but a part, it is bad upon demurrer. Willing v. Bozman, 52 Md. 62 . Nor would the allegation in the plea that plaintiff did not notify defendants of Sard’s defalcations, furnish them with a defence. The mere failure of the creditor to give voluntary information to the surety of the default of the principal cannot have the effect of discharging the surety. Taylor v. State, 73 Md. 208 ; Forrester v. State, 46 Md. 154 .

*624 (Decided January 5th, 1897).

■ The amended fifth and eighth pleas are open to the same objections as the fourth plea. They were stricken out by the Court upon the ground that they were substantially the same as the fourth plea, and need not be further considered here.

We come then to the sixth and seventh pleas. These pleas set forth that at the time of accepting the bond the plaintiff had knowledge of prior misconduct and irregularities on the part of Sard in applying funds collected by him to his own use, that the plaintiff failed to communicate to the sureties this fact but fraudulently concealed and suppressed the same. A demurrer to this plea was overruled and the plaintiff then filed a replication denying every material allegation of the plea. The defendants demurred to the replication, but the demurrer was overruled. We find no error in the action of the Court upon this demurrer. A creditor is not bound in the absence of inquiries from the sureties to communicate to them all the circumstances that may effect their undertaking.

In Magee v. Manhattan Life Ins. Co., 92 U. S. 99 , the Supreme Court said: “ A fraudulent concealment is the suppression of something which the party is bound to disclose. To constitute fraud the intent to deceive must clearly appear. The mere relation of principal and surety does not require the voluntary disclosure of all the material facts in all cases. The same rule as to disclosures does not apply in cases of principal and surety as in cases of insurance on ships or lives.” “To render the general allegation of concealment sufficient in a pleading, it is necessary also to aver that the creditor either procured the surety’s signature, or was present when the instrument was executed, and then misrepresented or concealed essential facts which should have been disclosed; otherwise the allegation of fraud is only the pleader’s deduction.” Burks v. Wonterlien, 6 Bush. 24.

For these reasons the judgment will be affirmed.

Jttdgment affirmed.