The President, Directors & Company of the Farmers and Mechanics Bank of Delaware, vs. William Polk, Thomas Townsend, William Moore, Jr., Peter G. Wootten, Isaac Cooper, Henry Bacon, and George Parker and Nancy his wife, late Nancy Moore, administrators of Solomon Moore, deceased

Delaware Court of Chancery1821-07

1 Del. Ch. 167

Summary · law.co

Holding. The Chancellor's decree ordering an account was reversed by the High Court of Errors and Appeals, which found the bank guilty of laches and breach of duty toward the cashier, thereby absolving the sureties from responsibility.

The Farmers and Mechanics Bank sought to hold sureties liable on a bond for William Polk, the bank's cashier, based on alleged defaults. The defendants raised three objections: that not all interested parties were before the court, that the bond did not comply with statutory form requirements, and that an accounting should not be ordered. The Chancellor rejected each objection. On the party requirement, the court found that since Polk had died insolvent and his estate had no administrator, his absence did not prevent the suit from proceeding—the law does not demand an impossibility. Regarding the bond's form, the court determined that although the bond's language differed slightly from what the statute prescribed, the bond was valid under common law principles because its condition (faithful performance of duties as cashier) did not violate fundamental legal principles and the statute did not explicitly void bonds differing only in wording. The court also found that the complexity and length of the transactions involved necessitated an accounting rather than jury trial.

The Chancellor entered an interlocutory decree ordering an account. However, the High Court of Errors and Appeals reversed this decree at the June 1822 term, not on the points the Chancellor had decided but on independent grounds. The appellate court found that the bank itself had been guilty of laches and breach of duty in its dealings with the cashier, circumstances that absolved the sureties from liability and made the accounting unnecessary.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether all materially interested parties must be parties to suit when some reside outside the court's jurisdiction
Whether a bond is void when it differs in wording but not substance from the form prescribed by statute
Whether courts of equity should order an accounting when transactions are too complex for jury determination
Whether a surety may be absolved from liability due to the creditor's own laches or breach of duty

Procedural posture

The case was initially heard by the Chancellor, who issued an interlocutory decree for an account, but the High Court of Errors and Appeals reversed that decree.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Ridgely, Chancellor.

Three principal objections are made by the defendants to this bill. First, that there are not proper parties before the Court. Second, that the bond was not made according the Act of the General Assembly; and third, that this is such a case that the Court ought not to decree an account.

1. As to parties. The rule is, that all persons materially interested should be parties to the suit, either as complainants or defendants, so that the Court may determine the rights of all the persons interested in the subject matter of the suit, and make a complete decree. But if some of the persons interested reside out of the jurisdiction of the Court, or cannot for any other reason be brought before the Court, and the fact is charged, that forms an exception; An impossibility cannot be required. If it is not in the power of the party to bring every person interested in the matter before the Court, then the party may proceed without such person. William Polk was made party to this bill; he has since died, and administration has not been taken on bis estate. Besides, he died insolvent. It is most evident then, that the complainants can obtain no satisfaction from Polk, if he were a defaulter; nor from his representative, if he had any ; neither could the defendants ; and as to any discovery or disclosure, neither party is bound to administer. The Bank could not by itself, and it is not its duty to constitute an agent for that purpose. Any of the defendants may, but as this has not been done the objection cannot be sustained.

2. As to the bond. The bond is good at common law. The Act of Assembly has not prescribed a particular form in which it shall be taken, and it has not made a bond void, if not taken in the words of the Act. In Mitchell vs. Reynolds, 1 P. Wms. 181, Parker, Chief Justice, in delivering the resolution of the Court, says; “ all the instances “ of conditions against law in a proper sense, are reducible “ under one of these heads: First, either to do something “ that is malum in se, or malum prohibitum,. 2 Co. Inst. 206. “ Second, to omit the doing of something that is a duty. “ Palm. 172 : Hob. 12 : Norton vs. Sims. Third, to " encourage such crimes and omissions. Mtzherb, Title, “ Obligation, 34 : Dyer, 118. Such conditions as these the “ law will always, and without regard to circumstances, “ defeat; being concerned to remove all temptations and “ inducements to those crimes; as in 1 Co. Inst. 206 ;—a “ feoffment shall be absolute for an unlawful condition,— “ a bond shall be void.”

Here, the bond differs from the Act of Assembly in words only. The condition is to“ discharge the duties enjoined “ on him as cashier, &c., agreeably to the laws and regu- “ lotions therein made and provided,” which amounts too condition of good behavior, because it was his duty to conform to the laws and regulations established. However, the bond is according to all the rules of law, and is binding on the parties. This is not so strong a case as Beaufage’s, 10 Co. Rep. 99, in- relation to bonds given to Sheriffs under the Act, 23 Hen. 6, ch. 10 : and there, although bonds taken in any other form than thatprescribed by the Statute are declared to he void, yet there are several instances cited where bonds which did not essentially differ by addition, alteration or diminution were adjudged to be good. Here, the Act does not make void a bond which may differ from it; and if it is not, as this bond is not, to commit malum in se, or malum prohibitum, or to omit the performance of a duty, or to encourage such crimes or omissions, it is good in law; and then, according to the cases cited by the complainant’s counsel, the defendants are bound by it in this Court.

3. Is this such a case that the parties should be decreed to account ? Upon that point I have no doubt. These transactions are so complicated, so long and intricate, that it is impossible for a jury to examine them with accuracy. They will require time, assiduous attention and minute investigation, and are involved in so much confusion and difficulty that no other tribunal, by reason of the forms of proceeding of the courts of law, can afford the plaintiff a remedy.

An interlocutory decree for an account was entered.

The Chancellor afterwards adverted to this case, and remarked that in ordering the account he bad not at all determined the extent of the liability of the sureties and the ultimate right of recovery in this Court. He considered that the reasoning of the complainant’s counsel and the authorities cited warranted the decree for an account; but how extensively the sureties were responsible for the acts or defaults of William Polk was a question yet to be determined, after it should have been ascertained by the account whether any default had been committed.

The decree of the Chancellor for an account was reversed by the High Court of Errors and Appeals at the June Term, 1822. Thé reversal did not proceed upon a difference of opinion on the points above decided by the Chancellor ; but the appellate court considered that, upon the proofs, the complainant had been guilty of loches and breach of duty in its dealings with the cashier, such as to absolve the sureties from responsibility; and, therefore,that any inquiry, under the decree for an account, into the alleged defalcations of the cashier was unnecessary. It was on this ground that the decree was reversed.