AMERICAN SURETY COMPANY OF NEW YORK
v.
ANNA GEDNEY

Fla. | 1939-01-20
Terrell, C. J., and Buford and Thomas, J. J., concur.,, Whitfield, P. J., and Brown and Chapman, J. J., concur in the opinion and judgment.
136 Fla. 10 Florida Supreme Court (1939) Positive Treatment
Also reported at: 185 So. 844
Cited by 12 cases

AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.

Synopsis

This case addresses whether a surety's liability on a bond can exceed its stated penalty when interest is included. The court held that interest can be collected on the principal debt from the time it became due, even if the total exceeds the bond's penalty, as it represents damages for the surety's delay in payment. The court affirmed the lower court's decision to direct a verdict for the plaintiff.


Holding

Yes, a surety can be held liable for interest on the principal debt from the time it became due, even if the aggregate of principal and interest surpasses the bond's penalty. This interest is considered damages for the surety's delay in payment.


Key Quotes

“In a majority of the jurisdictions it is held that, while the debt for which the surety can be held liable is limited by the penalty named in the bond, yet interest may be collected on such debt from the time when it became the surety’s duty to pay it, even though the aggregate of principal and interest is more than the penal sum.”

Establishes the general rule regarding surety liability for interest exceeding the bond penalty.

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Facts & Procedural History

A divorced wife sued the surety on a bond for unpaid child support. The surety had previously paid $1322.13, which included principal and costs, on a …

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Opinion of the Court
Per Curiam.

Per Curiam.

— This is an action by a divorced wife against a surety on a bond; given to secure the payment of support money to a child of the divorced parties. It is a continuation of the differences presented before this Court on two prior occasions. (Gedney v. Gedney, 117 Fla. 686, 158 So. 288; American Surety Company of New York v. Gedney, 123 Fla. 703, 167 So. 355.) In American Surety Company of New York v. Gedney, supra, the defendant herein was compelled to pay and did pay the total sum of $1322.13 to Anna Gedney, plaintiff herein. This sum was comprised of the items of $865.00, $110.00, $61.00 and .$46.00 (which add up to $1082.00), together with interest on this sum in the aggregate amount of $170.88, besides $69.25 costs advanced by defendant. The latter item does not enter into this controversy, but was allowed defendant on settlement of the judgment as reimbursement for costs advanced during the course of the litigation below.

*12Further and continued breaches occurred, whereupon defendant in error instituted this second suit on the bond. In her declaration she claimed the amount of support money-accumulated for seventy-four weeks at $15.00 per week, amounting to $1110.00. A plea was filed setting up that there had been a prior action on this s'ame bond, as a result of which the defendant had paid to the plaintiff, exclusive of costs, $1322.13, and that the limit of liability was $2000.00. In other words, the maximum recovery as the defendant contended was the difference between $1322.13, and $2000.00, or $677.87. A replication was filed alleging that the amount of the first judgment was $1082.00, plus interest thereon, and that “defendant is liable to plaintiff upon its bond aforesaid in the sum of $2000.00 less $1082.00, together with interest on said balance of $918.00 from the institution of this suit to the date of payment thereof.”

The matter was brought on for trial before a • jury, whereupon the court directed a verdict for the plaintiff. The Court directed the jury to find for the plaintiff in the principal sum of $918.00 (which is $2,000.00 less said sum of $1,082.00), plus interest in the amount of $157.42. The record shows that this suit was instituted on March 2, 1935, and was tried January 11, 1938. The interest on $918.00 for this interval of time, two years, ten months and nine days, at 6%, was computed to be $157.42. This is the judgment to which the writ of error in this case is directed.

The first question to be determined is whether the surety can be held liable for interest on the principal amount due where the effect is' to exceed the penalty named in the bond In a majority of the jurisdictions it is held that, while the debt for which the surety can be held liable is limited by the penalty named in the bond, yet interest may be col - lected on such debt from the time when it became the surety’s duty to pay it, even though the aggregate of princi*13pal and interest is more than the penal sum. Mower v. Kip, 29 Am. Dec. 748, 6 Paige Ch. 88; Harris v. Clap, 1 Mass. 308, 2 Am. Dec. 27; American Surety Company of New York v. Pacific Surety Company, 81 Conn. 252, 70 Atl. 584, 19 L. R. A. (N. S.) 82; Note in 19 L. R. A. (N. S.) 84; Note in Ann. Cas. 1914C, 1194; 16 Am. Eng. Enc Law 1009; 11 C. J. S., Bonds, Sec. 132 (b), p. 511; 8 Am. Jur., Bonds, Sec. 88, p. 740.

In a note in 55 L. R. A., at page 384, it is stated:

“The reason for the rule permitting a recovery of interest as damages beyond the penalty of a bond against the sureties thereon is, that the penalty of the bond covers the misconduct of the principal, while the interest allowed on the penalty is' for the misconduct of the sureties for the delay in payment. Burchfield v. Haffet, 34 Kan. 42 7, Pac. 548, Overruling Simmon v. Garrett, McCahon, 82.”

The surety is not in fact charged more than the penalty, but he is charged as of the date when he should have paid the debt, and if, by his neglect or refusal to pay, interest accrues, he is himself alone to blame. Getchell & Martin Lumber & Mfg. Co. v. Peterson & Sampson, 124 Iowa 599, 100 N. W. 550. The interest is allowed only by way of damages for delay upon the part of the surety in making payment after he should have done so, so that all obligee recovers is the penalty, or rather what it would have been if paid at the proper time. This is now the generally accepted rule; Note in 19 L. R. A. (N. S.) 84.

There are, however, a few jurisdictions which adhere to the rule that the penalty of the bond limits the responsibility of one who executes it as stírety, and consequently such surety is not liable in the event of a breach for interest beyond the penalty of the bond. Ann. Cas. 1914C, 1196; 19 L. R. A. (N. S.) 85. Even the Courts applying the minority rule generally do not do so when it appears that *14the surety has in some way resisted or obstructed the recovery of the claim against him. Ann. Cas., 1914C, 1197, and cases cited.

The next question presented by plaintiff in error in it? brief is whether or not the court was in error in directing a verdict for defendant in error. The declaration, taken in connection with the plea, clearly shows that at the time of the institution of the second suit the defendant had paid only $1082.00 upon the principal, and that the balance paid by it in satisfaction of the judgment on the first suit was for interest assessed against it. The debt of defendant is liquidated. 37 C. J. 1264. There was no issue of fact made by the pleadings. The bond, defendant’s liability thereon, the amount previously paid for principal, and the balance unpaid upon principal of the bond are all admitted by the pleas. The only question, aside from the computation of interest, is the legal one shown in the discussion above. Under these circumstances there was no error in the judge directing a verdict for plaintiff.

Therefore, the judgment is affirmed.

So ordered.

Terrell, C. J., and Buford and Thomas, J. J., concur.,

Whitfield, P. J., and Brown and Chapman, J. J., concur in the opinion and judgment.


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Citator

Cited By

  • Nichols v. Preferred Nat'l Ins. Co., 704 So. 2d 1371 (Fla. 1997)
    …amount of $707.25. The trial court reasoned that section 627.428 governed the award of attorney’s fees because Preferred was an insurer for purposes of that section. Consequently, the trial eourt concluded that, under American Surety Co. v. Gedney, 136 Fla. 10, 185 So. 844 (1939), Preferred was liable for attorney’s fees and costs above the face amount of the bond for its own actions in delaying payment. The trial court further explained that Preferred’s fourteen-month delay in satisfying its obligations…
    1 / 2
  • Laramore v. Laramore, 64 So. 2d 662 (Fla. 1953)
    …st may be collected against him by way of damages for the delay, even though the aggregate amount of principal and interest exceeds the penal sum of the bond. Sessions v. Willard, 126 Fla, 848, 172 So. 242; American Surety Co. of New York v. Gedney, 136 Fla. 10, 185 So. 844. It was not until the entry of the 1952 decree in the proceeding brought by the successor administrator that a money judgment was entered' against Musgrove and his surety in favor of the new administrator, who, under controlling law, w…
  • Alpha Elec. Supply, Inc. v. G.E. LEE Enters., Inc., 441 So. 2d 698 (Fla. 2d DCA 1983)
    …ees for payment under their personal guarantees, because to award costs and interest would cause the judgment to exceed the limit of their guarantees. This is contrary to the holding of our supreme court in American Surety Co. of New York v. Gedney, 136 Fla. 10, 185 So. 844 (Fla.1939), and this court, Hughes v. Irons, 370 So. 2d 76 (Fla. 2d DCA 1979). Appellees’ personal guarantees here were limited to a liability not to exceed $30,000. To impose costs and prejudgment interest would cause their liability t…

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