Warden v. Nielson, 5 N.C. 275, 1 Mur. 275 (1809)

July 1809 · Supreme Court of North Carolina

5 N.C. 275, 1 Mur. 275

Warden & sons v. Nielson.

From Burke

tn a suit upon a penal bond, the Plaintiff is not entitled to recover beyond the penalty.

This was an action of debt, hroughtupon a penal bond given by the Defendant to the Plaintiffs, merchants in Philadelphia, on the 6th day of November, 1774, payable 1st day of February, 1775. The Defendant removed from Pennsylvania, and settled in this State. On the 15th May, 1794, the Defendant wrote to the Plaintiffs, acknowledging the debt, and praying further time for payment. On 26th December, 1805, he wrote to the same effect, and on the 4th November, .1806, he wrote to the agent of the Plaintiffs, expressing a hope that they would take the amount of the penalty of the bond, divided into three annual payments. Defendant failing to make payment, this suit was commenced on the bond, the condition of which was in the following words :

“ The condition of the above obligation is such, that if the above bounden William Nielson shall -well and truly pay to the said Jeremiah Warden & sons, the just sum of seven hundred eighty-two dollars and twenty-one cents, with lawful interest until paid, then the above obligation to be void, otherwise to remain in Ml force and virtue.”

The Jury, under the direction of the Court, gave a verdict for the penalty of the bond, to wit, fifteeh hundred sixty-four dollars and forty-two cents ; and seven hundred and fifty dollars "ninety-five cents for interest, by way of damages, subject to the opinion of the Court whether the Plaintiffs were entitled to recover beyond the penalty of the bond.

' For the Plaintiffs were cited, Bunbury, 23 — 2 Term Rep. 38S — Butter’s ,7V*. P. 178 — 1 Tidd’s Practice, 483— 2 Dallas Rep. 252. And it was urged, that in contemplation of Law, the condition is the principal part of the obligation, the penalty being merely an accessory. In the condition of this bond, the obligor binds himself expressly to pay lawful interest till the principal is paid. Shall, then, the penalty, which is merely accessory to the principal part of the obligation, and inserted for the benefit of the obligee, control the express contract of the Defendant, contained in the principal part of the obligation 'i — Pothier, 223-225.

For the Defendant were cited, 1 East. Rep. 436 — 2 Mk. 75 — 6 Term Rep. 303 — Doug. 49 — Eq. M. 92 — 3 Ves.jun. 557.

Weight, Judge,

delivered tlie opinion of the Court:

Whether in an action of debt on a penal bond, the Plaintiff can recover a greater sum than the penalty, seems to Lave been a question foe a long time unsettled in the English Courts ; but from an examination of the cases cited upon the argument of this case, it will appear always to have been the better opinion, that no such recovery could be had, at least in a Cour^ of Law, until the decision reported in 2 Term Eep. 388, made by Justice Buller, in Conformity with the opinion expressed in his Law of Nisi Prius, 178. This decision, however, was afterwards overruled by Lord Kenyon, 6 Term Eep. S03. And in the case of M’Clure v. Knight, 1 East. Rep. 426, the Law seems to have been considered by the counsel and the Court as settled : for the only question, made in the argument was, whether on a judgment rendered in Ireland on a penal bond, the Plaintiff in a suit brought in England on such judgment, was entitled to recover beyond the penalty ? which was properly decided in the affirmative, on the ground that the nature of the demand was altered by the judgment, and that it was competent for the Jury to allow interest on what was there ascertained to be due. The other cases cited by the Plaintiff are Btinbunj 23, and 2 Dallas 252.

The first is a Chancery decision, and is reported by the Reporter in a line and a half •, in which he states “that interest was decreed to be paid on a bond, although it exceeded the penalty.” But none of the Cases to which he refers support the principle of the decree, and some of them are entirely opposed to it. The first from Hardress 136, was a bill to be relieved against an extent on a judgment in debt for a penalty of £1500, after satisfaction of the penalty by perception of the profits according to actual receipts, but not according to the extended value. The Court would not give the Complainant relief without paying costs and damages for it appeared there had been a default in him in not permitting the Defendant quietly to receive the profits upon a former extent, whereby he was put to great charges, and the Court declared the Plaintiff should either have all Law or all Equity. 1 Ch. Ca. 271, was the case of a jointress who had paid a mortgage, and she was permitted to hold over until repaid with interest. The other cases, 2 Ch. Ca. 226, and 2 Ver. 509, are in direct opposition to the principle which they were cited by Banbury to support; To which may be added the cases reported in 1 Atk. 75. 3 Bro. 489, 496. 1 Ver. 349, referred to by Defendants. Counsel. The other case cited by the Plaintiff’s Counsel from 2 Balias 252, wpuld at first view seem to conflict with the English decision $ but it is believed a distinction may be drawn between that case and those decisions. That was a suit on a penal bond conditioned for the performance of a.collateral act, on a stated day, to wit,, the procuring of a patent within six months for a tract of land which the Defendant had sold to the Plaintiff. The Judges, in delivering their opinion, considered the penalty as a debt duo to the, Plaintiff, on the day when the collateral act was to have been performed, and that upon that ground he was entitled to retain a verdict for interest beyond the penalty which the jury gave for the detention of the debt — From a review, therefore, of the cases on the subject, it may be considered as a settled point, that except in some particular cases, where a collateral act is to discharge a penalty which is inserted in a bond as a debt which is to become due on the failure of performing that act on the day stipulated $ or in cases in Equity framed upon some specific ground of relief, the penalty of the bond is all that can be recovered, either at Law or in Equity. As to the question made by the Plaintiff’s Counsel, whether there is any difference between common conditions to penal bonds and the one sued on, which binds the obligor to the amount of the condition with interest till paid ; this is nothing more than a condition in Law, which would arise without its being stated in the bond, and was inserted either from an ignorance of the Law, or from an excess of caution : But it cannot be considered as intended to increase the obliga'tion of the Defendant. It is therefore the opinion of the Court, that the Plaintiff should enter a Remittitur for the amount assessed for interest by way of damages.