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Decisions of the Superior Courts of New South Wales, 1788-1899

Solomon v. Lee (1843) NSW Sel Cas (Dowling) 79; [1843] NSWSupC 21

indemnity bond, imprisonment for debt

Supreme Court of New South Wales

Dowling C.J., Burton and Stephen JJ, 16 October 1843

Source: Dowling, Select Cases, Vol. 7, S.R.N.S.W. 2/3465, p. 196

Where an indemnity bond was given to the plaintiff against the consequences of a damages claim being brought by Hunt, a third party, and Hunt recovered judgment against the plaintiff and the plaintiff went to gaol in execution of that judgment; held that the defendant was liable for breach of the indemnity bond by failing to hold the plaintiff harmless from any action brought by Hunt, that the obligation to indemnify was a primary obligation and that a request to indemnify was not required.*

Dowling C.J. This was a demurrer to a declaration on an indemnity bond for £500 executed by the defendants to the plaintiff. The conditions of the bond recited that one V.G. Williams having bequested his estate under the Insolvent Act , 11 Geo. 4 No. 7 (1830) and the plaintiff having at a meeting of creditors been chosen trustee, and a portion of the assets of the insolvent having been claimed by one Hunt as his property and it being apprehended that Hunt was about to commence an action of trover against the plaintiff to recover them back, it was a condition that if the defendants, then being creditors of Williams, should "in all things save harmless and keep the plaintiff indemnified of, from, and against all costs, charges and damages for exposures to which he might be put or obliged to pay by reason of any proceedings which Hunt should take against him, then the bond should be void".

Averment that after the execution of the bond and the further commencement of this term, Hunt brought an action in trover against the plaintiff for the goods claimed, which action he, the plaintiff, defended and Hunt having recovered a verdict, ended up in a judgment for £342.19 for damages and costs of which the defendants had notice, and afterward to which the plaintiff was taken in execution on a capias ad satisfaciendum; and was lodged in custody for the said money and the Sheriff's poundage and expenses, of which the defendant then had notice. By means of which premises the plaintiff had been hindered in his business and sustained damages to the amount of £500, and by reason of which said breach the bond became forfeited and an action hath accrued to demand of the defendants the said sum, but the defendants although often requested to do so, have not yet paid the same or any part thereof to the plaintiff according to the bond and conditions, but have wholly refused and do refuse, to the plaintiff's damage &c.

To this declaration the defendant, Lee, demurred and assigned for causes: 1. That it does not disclose any breach of the condition of the bond by the defendant or by any of the defendants, and that it is quite consistent with all that is alleged that the defendant or her co-obligors, or one or others of them has or have indemnified the plaintiff within the meaning of the bond; 2. That it is not stated that the plaintiff has been put to or been obliged to pay any costs, charges, damages, expenses by reason of any proceedings which Hunt had taken against him; 3. That it does not appear that the defendant or any of the defendants had any notice of the premises, or that she or any of the other defendants was or were ever called upon or requested to indemnify the plaintiff within the terms of the bond or had refused to comply with such requests.

The substantial points raised in argument were, first, that the declaration averred no breach of the condition of the bond, and secondly, supposing a breach were assigned, there was no averment of a request made of the defendant to indemnify the plaintiff. We have looked into the authorities cited and are of the opinion that there is a substantial breach of the condition sufficiently assigned, and this is not a case in which a request need have been averred.

The bond imports a direct engagement on the part of the defendant to indemnify the plaintiff against the consequence of defending the action at the suit of Hunt. The action was defended in the plaintiff's name, in furtherance of the bond, and it is averred that the defendants had notice of the proceedings against him - before execution sued out upon the judgment. Their liability to save him harmless from the consequence of that proceeding became immediate. It was not a collateral but a direct obligation, upon notice, to step in and save him harmless without any request. It may be that the declaration does not aver that the plaintiff was obliged to pay or did in fact pay any damages and costs, but the conditions being that the defendants shall in all things save harmless and keep the plaintiff indemnified from all costs, charges and damages must be taken to be divisible. The plaintiff has not been in all things saved harmless for they have suffered him to go to gaol, after notice of the judgment against him. There is therefore a substantial breach of the bond alleged in their suffering him, after notice, to go to gaol for the damages and costs.

There is nothing in the objections that there is no averment of a request and refusal to save harmless. If there were anything in the conditions that the defendant were to save the plaintiff harmless "on request", there would be much weight in the argument, but this being a direct and not a collateral engagement of a mere surety. The averment is that the defendants had notice of the liability incurred by the plaintiff under the bond is sufficient without a request. There is indeed no allegation in terms that they did not indemnify him after the judgment recovered, but there is an affirmative allegation that by reason of the promises there was a breach of the bond which became forfeited, and an action had accrued for the penalty, which the defendants had refused to pay, though often requested so to do.

On the whole, we think the declaration is wide enough and judgment must be given for the plaintiff on the demurrer.

Judgment for the plaintiff.

Published by the Division of Law, Macquarie University