
    Joel Wheeler et al., App’lts, v. Charles A. Sweet et al., Resp’ts.
    
    
      (Court of Appeals,
    
    
      Filed March 14, 1893.)
    
    1. Trial — Instructions to jury in the absence oe counsel.
    Upon the trial of an action on an indemnity bond the trial judge, on the return of the jury into court for further instructions, in the absence of plaintiffs and their counsel, instructed them that the question as to the validity of the chattel mortgage under which the plaintiffs claimed title to the property taken by the sheriff on the execution in favor of a third party, was not material for their consideration in the disposition of the case. Held, error.
    
      2. Same — Appeal.
    Such a proceeding may be reviewed here either upon the appeal from the order refusing to grant a new trial, or upon the appeal from the judgment.
    3. Indemnity — Rights oe indemnitors.
    A sheriff who has taken a bond of indemnity should not by his collusive act deprive the indemnitors of the opportunity to present and have tried and determined in the ordinary course of judicial proceeding his liability when sued by third persons for an act to which the indemnity extends, and where the sheriff intentionally and in bad faith prevents the indemnitors from presenting a defense interposed in good faith, and which is not frivolous, he cannot afterwards avail himself of a judgment obtained in that action as a ground of recovery on the bond.
    Appeal from judgment of the superior court of Buffalo, general term, affirming judgment in favor of defendants, and affirming order denying new trial.
    
      Spencer Clinton, for app’lts ; Adelbert Moot, for resp’ts.
    
      
       Reversing 43 St. Rep., 225.
    
   Andrews, Ch. J.

We think the judgment and the order refusing to grant a new trial must be reversed for the reason that the trial judge, on the return of the jury into court for further instructions, erroneously and in the absence of the plaintiffs and their counsel, instructed them that the question as to the validity of the chattel mortgage under which the plaintiffs claimed title to the property taken by the sheriff on the execution in favor of the Third National Bank, was not material for their consideration in the disposition of the case. It obviously was a fact of great importance as bearing upon the defense that the judgment obtained by the plaintiffs in the action against Bartholmy, the administrator of the sheriff, was collusive and fraudulent

It was properly conceded by the counsel for the defendants on the argument- that this instruction was erroneous. But it was urged that, in the absence of an exception, the error was not available for the reversal of the judgment. In the case of Watertown Bank & Loan Co. v. Mix, 51 N. Y., 558, it appeared that the judge, after the jury bad been charged and had retired for consultation, returned an answer in writing to a written inquify by the jury upon a material point, prejudicial to the plaintiff, and without the knowledge or consent of the plaintiff, or of its counsel. Subsequently, the plaintiff moved the judge at special term to set aside the verdict and grant a new trial for this error, which motion was granted. The defendant appealed to the general term from the order of the special term, setting aside the verdict and granting a new trial, and the order was there reversed. The plaintiff thereupon áppealed to this court from the order of reversal, and this court reversed the order of the general term and affirmed the order of the special term, and upon the point of jurisdiction determined that the order was appealable to this court on the ground that it affected a substantial right in a matter not resting in discretion. The opinion of Johnson, J., contains a clear and satisfactory statement of the reasons upon which the court proceeded, and we entertain no doubt of the soundness of the conclusion reached.

This case is decisive of the present appeal upon the point taken, unless a distinction arises upon the form in which the question is presented. In the present case, a motion for a new trial was made before judgment upon a case and exceptions, in which the proceeding in question was set out in full. What particular grounds were urged in support of the motion do not appear. An order was made denying the motion, and, on judgment being entered on the verdict, the plaintiffs appealed both from the judgment and order to the general term of the superior court of Buffalo, in which court the action was brought. The general term affirmed the judgment and order, and the appeal here is from both the judgment and order of affirmance.

We are of the opinion the question may be reviewed here either upon the appeal from the order refusing to grant a new trial under subdivision 2 of § 190 of the Code of Civil Procedure, or upon the appeal from the judgment We perceive no substantial distinction as to the appealability of the order between the case cited and the case in 51 N. Y. The fact that the motion in that case was confined to the specific ground of error of the trial judge in the particular matter makes no difference in principle. The same question, with others, was presented upon the case and exceptions, upon which the motion for a new trial in this case was made, and it must be assumed that it was passed upon by the judge in denying the motion.

But independently of the order we are of the opinion that an appeal from the judgment presents a reviewable question in this court, founded upon the erroneous proceedings of the trial judge. There can be no doubt that the judge, in assuming to further instruct the jury, in the absence of the plaintiffs and their counsel, in a matter material to and adverse to their interests and plainly erroneous and prejudicial, committed an error of law. The proceeding appears upon the face of the record. It was a matter occurring in the course of the trial. The plaintiffs had no opportunity to interpose a formal exception. Under such circumstances we think the party injured may, on appeal from the judgment, raise the question, as though a formal exception had been interposed. The protection of a most valuable and important right requires that the court, in the interest of justice, should take notice of the error. The cases in which it has been held that relief against the misconduct of jurors, or referees, or parties not appearing upon the record, in matters arising in pais and presented by affidavits, must be applied for and obtained in the court of original jurisdiction, and that orders made in such cases are not reviewable here, depend upon different considerations.

The nature and extent of the misconduct and how far it affected the proceedings is examined by the court in which it occurred, and the orders made in such cases are regarded as discretionary, and as not presenting strictly legal questions. Williams v. Montgomery, 60 N. Y., 648; Livermore v. Bainbridge, 56 id., 72; Gale v. N. Y. C., etc., R. R., 76 id., 594; Howell v. Mills, 53 id., 322.

The only question on the merits presented by this record of which we can take notice, aside from the one just considered, relates to the defense that the judgment obtained by the plaintiffs against Bartholmy, the administrator of Lawson, the sheriff, was collusive. The other defenses relied upon at the trial were either overruled by the court or were not considered, and we cannot consider them for the purpose of sustaining the judgment of the respondents. On the new trial these defenses will be open for litigation and may then be determined.

The judgment recovered January 8, 1889, by the plaintiffs against Bartholmy, administrator of Lawson, was relied upon by the plaintiffs in the complaint and on the trial as concluding the defendants as to the existence and extent of their liability on their bond of indemnity to the sheriff. The bond bound them to indemnify the sheriff against any judgment which might be obtained against him by reason of his levying upon and selling the property under the executions in favor of the Third National Bank. The recovery of a judgment against the sheriff by the plaintiffs, for taking and selling the property levied upon, obtained in due ■course, and without fraud or collusion, would fix the liability of the indemnitors, because by their contract they made themselves privy to any action brought against the sheriff for that cause, although they were not parties in fact to the litigation, and even although they had no notice of the action, and on the recovery of the judgment they would become immediately liable to the sheriff on the bond for the amount of the judgment so recovered before satisfaction. Gilbert v. Wiman, 1 Comst., 550, and cases cited; Douglass v. Howland, 24 Wend., 53; Casoni v. Jerome, 58 N.Y., 315.

The plaintiffs here, as assignees of the bond, stand in the place, and upon the right of the sheriff. Whatever defense the defendants would have had if the sheriff, or his administrator, had retained and sued upon the bond they have against the plaintiffs, who have merely succeeded to his right. If the judgment obtained by the plaintiffs against Bartholmy, as administrator, could not have bound the indemnitors, if the action had been brought by the sheriff or his administrator, it does not bind them in the present action. It was an implied condition of this bond that the sheriff should act in good faith, and not permit or suffer a collusive judgment to be obtained against him, with a view to bring upon the indemnitors a liability within the words of the bond, when there was no rightful claim made against him, or any claim which would stand against an honest defense.

The only judgment to which the defense of collusion properly relates, is the judgment of January 8,1889. The prior judgment of February 3,1888, was vacated before the commencement of the action. The circumstances connected with the obtaining of that judgment are unimportant, except so far as they tend to throw light upon the motives of the parties to the judgment of January 8, 1889. In other words, if the former judgment was collusive or fraudulent, that of itself does not affect the subsequent judgment and make that collusive also. The facts in respect to the prior judgment may give significance to the acts and transactions resulting in the later judgment, and only such prior facts as were relevant for this purpose were admissible. We express no opinion as to the alleged fraud or collusion in procuring the judgment of January 8, 1889, or in respect to the subsequent proceedings tending to prevent a review of the judgment This will necessarily be the subject of another investigation by the court and jury.

It is claimed by the counsel for the plaintiffs that the plaintiffs were entitled to the charge requested by him, “ that unless there was a good defense to the action brought by the plaintiffs against Lawson, the defendants were not entitled to recover.” The court denied this request, but charged in substance that if the defense was made in good faith, and was meritorious, then if Lawson, by collusion with the plaintiffs, prevented the trial of the issues, and suffered judgment, the judgment did not conclude or bind the indemnitors.

It is to be observed that this action is not brought to set aside the j udgment against the estate of Lawson. The validity of that judgment between the parties to it is not assailed. The indemnitors had been permitted by the sheriff to defend the action brought by the plaintiffs against him, and their attorneys had interposed several defenses, and the questions were stoutly litigated before the referee, and although judgment passed for the plaintiffs, an appeal was taken by the indemnitors in the name of the sheriff. The questions raised by the defenses were not frivolous. While the matter was in this situation, by arrangement between the plaintiffs and Bartholmy, the administrator of Lawson, the judgment of February 3, 1888, was vacated, a new attorney was appointed by Bartholmy, the case was referred to the same referee to hear and determine the case on the evidence taken on the former trial, and a new report and judgment entered for the plaintiffs. The vacation of the judgment and all the subsequent proceedings referred to took place on one day, January 8, 1889. It is doubtless true that it is the general rule that acts which work a discharge of a surety must be legally injurious or inconsistent with his legal rights. Clark v. Sickler, 64 N. Y., 231. But here the indemnitors do not rely upon the acts relating to the manner of obtaining the judgment as a discharge of their liability on the bond. They simply insist that a judgment so obtained does not establish a breach of the bond.

It is certainly reasonable that a sheriff who has taken a bond of indemnity should not by his collusive act deprive the indemnitors of the opportunity to present and have tried and determined in the ordinary course of judicial proceeding his liability when sued by third persons for an act to which the indemnity extends, and where the sheriff intentionally and in bad faith prevents the indemnitors from presenting a defense interposed in good faith, and which is not frivolous, we are of opinion that he cannot afterwards avail himself of a judgment obtained in that action, as a ground of recovery on the bond. The law is extremely jealous of the rights of all who are not parties to an action, where it is sought to bind them by the judgment therein. Cowen, J., Douglas v. Howland, supra.

The proper time to try the question of the sheriff’s liability is in the action brought against him. The investigation of the question collaterally in an action on the bond would be attended with difficulties. We think good faith and fair dealing require that a sheriff, if requested, should give the indemnitors a right to present any defense in the action against the sheriff, and that if this is refused or prevented by his act, he cannot say that the indemnitors have not been injured, or that the judgment determines their liability.

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

All concur.  