BAILEY V. ERNY, (Supreme Court of Colorado, 1920. 68 Colo. 211, 189 P. 18.) Action by Louis P. Erny against Dewey C. Bailey, Manager of Safety and Excise, and ex officio Sheriff and Acting Sheriff of the City and County of Denver, State of Colorado. There was a judgment for plaintiff, and defendant brings error. TELLER, J. The facts necessary to be considered in this case are as follows: The Germain Investment Company foreclosed a trust deed on certain real estate, of which one Cornish and one Scherrer each owned a half interest; said company becoming the purchaser at the foreclosure sale. After the time for redemption by the debtors had expired, the defendant in error, having a judgment against said Cornish, sued out an execution and placed it in the hands of the plaintiff in error, he being ex officio sheriff of the city and county of Denver, for the purpose of redeeming the property sold on foreclosure. Shortly thereafter he tendered to the sheriff the amount required for such redemption, but it was refused on the ground that the Germain Investment Company had that day deposited with him a sum of money sufficient to satisfy Erny's judgment. Said sum was thereupon tendered to Erny, and refused by him. Plaintiff in error argues two questions in this case. It is first contended that Erny, as a judgment creditor, could redeem only from the sale of the Cornish half interest in the land. We are unable to see, however, that this question concerns plaintiff in error or the Germain Investment Company, the real party here in interest. It may be said, however, that the general rule is that a party must redeem the entire property, where it is owned by different persons, because a purchaser is not required to accept a partial redemption. Freeman on Executions, § 312; Jones on Mortgages, § 1063. It is further contended that Erny was entitled to nothing more than his judgment, and that when the holder of the certificate of purchase tendered him an amount sufficient to pay his judgment and costs, his right of redemption was thereby extinguished. Upon this point it is said that plaintiff in error, the holder of the certificate of purchase, has the right to pay a subsequent judgment creditor for the purpose of protecting its interest in the property for which it holds such certificate. To support this contention counsel rely upon Sutherland v. Long, 273 Ill. 309, 112 N. E. 660, and McGowan v. Goldberg, 281 Ill. 547, 117 N. E. 1045. In the first case cited the judgment creditor who had started to redeem, consented to receive payment of his debt from the holder of the certificate of purchase. That case, therefore, is not authority here. In the second case, the appellant, holder of a certificate of purchase sought to compel the issue to him of a deed upon payment of the judgment held by Goldberg, upon which Goldberg had posted redemption money with the sheriff. The court held that McGowan had no right to the deed because the money posted by Goldberg was, under the statutes of Illinois, a binding bid at the coming sale to the extent of the redemption money posted by him. The quotations made from the opinion by counsel to support their contention are merely dicta. The writer of the opinion stated, it is true, that, had Goldberg not already posted the money, McGowan's right to pay off the judgment would have been plain. This was no part of the decision, and not required by the facts. No one can say what the other judges of the court would have held upon the state of facts here presented. This dictum is the more peculiar, because it ignores well-settled rules of law in Illinois. Beginning with the case of Phillips v. Demoss, 14 Ill. 410, the Supreme Court of that state has, through a number of decisions, held that the holder of a certificate of purchase on an execution. sale acquired by the purchase no title to the land, either legal or equitable, but merely the alternative right to receive the redemption money, in case of a redemption, or a deed for the land after the time for redemption had expired; that is to say, the holder of the certificate had no such interest in the property as would entitle him to pay off a subsequent judgment without the consent of the judgment creditor.. In Phillips v. Demoss, supra, the court, by Judge Caton, speaking of the purchaser at an execution sale, said: "When he purchased, knowing that he must either get his purchase money back again, with 10 per cent. upon it, within 15 months, or get the land, he was aware that others, and not himself, had the right to say which he should take. This was the alternative character of his investment. * * * The statute holds out no inducements for a speculation at a sheriff's sale beyond 10 per cent. for the use of the purchase money, and the purchaser can set up no equitable claim beyond that where the redemption is made according to the provisions of the statute." The contention of counsel, that the investment company had such an interest in the property as to entitle it to pay off the judgment without the consent of the judgment creditor, is not sustained, even by the authorities cited on that point. In this state the title remains in the judgment debtor until a deed is made according to the terms of the law; that is, after the time for redemption has expired. * And that is the rule in other jurisdictions. * * * A purchaser's interest is not subject to levy and sale prior to the expiration of the period for redemption. * * * * * The right of redemption is given by statute, and the holder of a certificate of purchase has, in our opinion, no right to prevent a judgment creditor from exercising his right of redemption if exercised within the statutory period. The Germain Investment Company had no right to preserve its status as a potential owner of the land as against the undoubted right of Erny to redeem. As stated in the quotation from Judge Caton, the redemption law is not intended to induce speculation upon the part of the execution purchasers. The defendant in error, having this right, was entitled to determine for himself whether he would accept payment of his judgment, or redeem the property. There is no error in the judgment, and it is accordingly affirmed. GARRIGUES, C. J., and BURKE, J., concur. 2. CHAPTER I NATURE OF THE CONTRACT Introduction. Construction of the Contract. 3. The Difference between a Guarantor and a Surety. SECTION 1.-INTRODUCTION Security rights in personam are classified mainly into two groups, viz.: Contracts of suretyship, and contracts of guaranty. In many cases it makes little difference whether the contract is one of suretyship or guaranty, inasmuch as the rules applicable to both contracts are much the same. Because of the fact that the rules are almost identical, in the cases which follow we shall use the term "suretyship" as including both contracts, unless there is need for a distinction, which may be true in a few cases. The method of securing the performance of an obligation, by gaining some responsible party to become liable upon the contract in case the principal debtor fails to perform, has long been known to the business man. It is still in common use among business men, and is perhaps as satisfactory as any method where it is possible to obtain a third party who is willing to take the responsibility. The relationship of surety has become so important that a large number of corporations have been organized for no other purpose than acting as surety or guarantor in various types of obligations. The following cases in this chapter will consider the nature of the contract, and attempt to distinguish between contracts of suretyship and guaranty. SECTION 2.-CONSTRUCTION OF THE CONTRACT PEOPLE v. CHALMERS et al. (Court of Appeals of New York, 1875. 60 N. Y. 154.) CHURCH, C. J. The question is whether a surety upon a bond, given by an assignee under a voluntary assignment for the benefit of creditors, in pursuance of the statute (Laws 1860, c. 348), is liable for the default of the principal to account for assets in his hands, upon judgments in favor of certain creditors, declaring the assignment void as to them, and directing the assignee to pay over the funds in his hands, to apply on the same. We concur with the court below that the surety is not liable; and we concur substantially with the views of Daniels, J., who delivered the opinion; and it is, therefore, unnecessary to elaborate the reasons for this conclusion. It is a familiar rule that sureties can only be charged when the case is brought within the very terms of their contract (Birckhead v. Brown, 5 Hill, 635), and that the obligation of sureties is not to be extended by construction to embrace purposes and objects not contemplated by the parties (McCluskey v. Cromwell, 11 N. Y. 598). * BARTLETT et al. v. WHEELER. (Supreme Court of Illinois, 1902. 195 Ill. 445, 63 N. E. 169.) MAGRUDER, J. Appellee, Eleanor Wheeler, was surety upon the bond upon which this suit is brought. The condition of the bond was that if T. H. Wheeler should perform his agreements and covenants as set forth "in the within contract," and in every respect comply therewith, and, on the termination thereof by limitation or otherwise, should fully pay Bartlett, Frazier & Co. the money which might be due them, their executors, etc., then the obligation was to be void. In order to determine what the agreements and covenants were which T. H. Wheeler was to do and perform, it is necessary to refer to the contract referred to in the bond, and pasted upon the back of it. "Where a guaranty is appended to a contract and makes reference thereto to indicate the liability assumed, the contract becomes a part of the guaranty." 2 Story, Cont. (4th Ed.) § 866. Both instruments are to be taken together in order to ascertain the agreement of the parties; but, while the guarantor will be bound to the full extent of the terms of his agreement, a contract of guaranty will never be construed so as to embrace anything which is not included within the fair scope of the terms of the agreement. Id. As a general rule, "sureties are only liable for the defaults of their principal during the term for which their bond was given, and after it was given, unless it is retrospective in terms." 2 Suth. Dam. (2d Ed.) § 480, and cases referred to in note 1. It is said in 2 Brandt, Sur. (2d Ed.) § 526: "As a general rule, the bond of a public officer has no retroactive effect, and does not cover past delinquencies, unless it in terms says that it is to have such effect." In Mahaska Co. v. Ingalls, BAU.& DIL.B.L.-21 16 Iowa, 85, the supreme court of Iowa, speaking through Mr. Justice Dillon, said: "The bond was not retrospective in its terms. Consequently, while the sureties would be bound for the public moneys in the hands of their principal at the time of the execution of the bond in suit, although a previous bond then existed, with different sureties, and also for money subsequently coming into his hands, yet they would not be bound for his past derelictions of duty or misconduct.' * * * In the case of Hyatt v. Machine Co., 41 Mich. 225, 1 N. W. 1037, where the appellee brought suit against appellant on a bond given him for the good conduct of one Tuttle as agent of the company, the court said: "The question turns on the construction of the obligation, and it must be held to speak from the time it took effect. No other view is admissible now. It is not to be assumed that the surety intended to become responsible for acts or delinquencies accomplished before he bound himself. * * * On the other hand, it is just to suppose that, if the parties had understood that past transactions were to be covered, the bond would have been made retrospective in its language. * * * Such, however, is not the case. The terms are all future. The language imports an undertaking relative to posterior transactions only, and it cannot be applied to antecedent ones without violating its natural sense. We are therefore of opinion that the court erred in applying the bond to matters which arose before it was given." See. also, U. S. v. Boyd, 15 Pet. 187, 10 L. Ed. 706. The same doctrine has been announced by this court in the case of Stern v. People, 96 Ill. 475, where it was said (page 479): "If the defaulting officer misappropriated funds that came to him in his official capacity during a term of office when defendants were not his sureties, they were under no legal obligation to make good such defalcation. That obligation rested upon his sureties on his bond for the term in which the misappropriation occurred. It is but stating a truism to say, if the funds were misappropriated during a former term, it was not possible for him to deliver them to his successor. The fact such officer was his own successor can make no difference." In the case at bar it appeared from the evidence that T. H. Wheeler, named in the bond and contract, had been the agent of the appellants for the purchase of grain from May, 1896, down to May 1, 1899, when the present contract was executed. It does not appear, however, that any written contract existed between the appellants and T. H. Wheeler prior to May 1, 1899, or that any bond such as is here sued upon had been executed prior to that time. Upon the trial below, appellants offered proof for the purpose of showing that T. H. Wheeler was chargeable with a defalcation or shortage which had occurred in the dealings between him and appellants prior to the date of the bond and contract here sued upon. The trial court ruled that plaintiffs below might show a failure to deliver any grain purchased with funds furnished by them to T. H. Wheeler subsequent to the execution of the written contract of May 1, 1899, but refused to permit them to prove grain in his hands which had not been turned over, purchased with funds furnished to him prior to May 1, 1899. In other words, the ruling of the trial court was, in substance, that the appellants might not show any grain on hand by the books and receipts other than grain purchased and received within the period of the contract of May 1, 1899. The correctness of the ruling BAU.& DIL.B.L. |