
    Simon D. Heinemann and Richard Schloss, Respondents, v. Bertha Brasch and Leo Jacobi, Appellants.
    (Supreme Court, Appellate Term,
    April, 1907.)
    Principal and surety — Remedies of creditor — Necessity for demand on surety.
    Bonds — Breach — What constitutes breach. '
    An action cannot be maintained upon the contract of a surety, who agrees to make good upon demand up to a certain amount, any loss on account of misappropriation of funds collected by his principal, until a demand has been made.
    Appeal from a judgment of the City Court of the city of Hew York against the defendants, entered upon the verdict of a jury, and from an order denying a motion for a new trial.
    Henry Goldstein, for respondents.
    Joseph 0. Kadane (Solomon De Young, of counsel), for appellants.
   Giegerich, J.

The action is brought upon the following undertaking:

“ Know all men by these presents, that we, Leo Jacobi and Bertha Brasch, are hereby held and firmly bound unto Heinemann & Co. in the sum of five hundred ($500) dollars, lawful money of the United States, to be paid to the said Heinemann & Go., their executors, administrators or assigns; for which payment, to be made, we bind our heirs, executors and administrators firmly by these presents. Sealed with our seals, Dated the twenty eighth day of February nineteen hundred and three. The condition of the above obligation is such, that if the above bounden Leo Jacobi shall misappropriate any of the funds of the said Heinemann & Co., we, or our heirs, executors and administrators, shall pay or cause to be paid unto the above named Heinemann & Co., their executors, administrators or assigns, the sum of Five Hundred Dollars ($500) or less on demand, to make good any loss to them on account of said misappropriation.

“ Witness our hands and seals this twenty-eighth day of February, 1903.

“ Leo Jacobi [l. s.] Bertha Bbasch [l. s.]”

It was shown upon the trial that Jacobi had failed to account for various sums collected by him and judgment was rendered for the aggregate of the sums so misappropriated. On behalf of the defendant surety, it was urged upon the trial, among other objections, that no demand had been made before suit brought. In support of the proposition that no demand was necessary, the plaintiffs cite Wilson v. Field, 27 Hun, 46; Krause v. Rutherford, 37 Misc. Rep. 382, and Epstein v. United States Fidelity & G. Co., 29 id. 295; but the two former actions were upon the customary form of undertaking given on procuring an order of arrest, while the latter was on the form of such undertaking given on procuring an attachment, neither of which forms of undertaking provides for any demand. In this case, on the contrary, there is an express provision for a demand; and, not only on the general rule that the contract of a surety should he construed strictly in his favor, but also because of the. nature of this case, such requirement should be enforced. Until demand was made, the surety would have no means of knowing how much the misappropriation amounted to, or, indeed, that there had been any misappropriation. As was said by this court in Packard v. Long Island R. R. Co., 52 Misc. Rep. 98, “ when the fact upon which the defendant’s liability depends is within the plaintiff’s knowledge, notice should be given to the defendant before bringing the action,” citing Cole v. Jessup, 2 Barb. 309; Bunn v. Lett, 65 Hun, 43, and Wangler v. Swift, 90 N. Y. 38. The respondent attempts to argue that the failure of the defendant to plead a want of demand was a waiver; but, in the view I take of the contract, the proof of such demand was a part of the plaintiffs’ case.

The judgment should be reversed and a new trial ordered, with costs to the appellants to abide the event.

Gildebsleeve and Belanger, JJ., concur.

Judgment reversed and new trial ordered, with costs to appellants to abide event.  