§ 805. NOTICE OF SUIT. 553 Justice Story, on the Massachusetts Circuit, and applied to the subject of reinsurance; and the Supreme Court of the United States has declared, that a judgment against the person to be indemnified, if fairly obtained, especially if obtained on notice to the warrantor, is admissible in a suit against him on his contract of indemnity; and the law has been similarly declared in New Hampshire, on a suit upon an execution bond.' To these general rules an exception was taken by Lord Chancellor Hardwicke as to extents. In an early case, where extent was taken out against a surety to the crown, and after contesting it some time, he paid the claim, and prosecuted his principal for the amount paid by him, including his expenses, it was insisted that, the debt being a just one, and improperly disputed, the principal should not be charged with the expense of the litigation; but Lord Hardwicke said: "I know of no such distinction"; and then taking notice that an extent is both an action and an execution, and that the surety could not be supposed prepared to pay the claim immediately, he allowed the demand. But the general rule seems well and clearly established, that the principal shall not be subjected to the expense of unnecessary litigation; how the fact is to be arrived at, and on whom the burden of proof lies, will, as has been said, frequently turn on the question of notice. Where bail employed a third party to find the principal debtor, and then, refusing to pay the expenses of the person so employed, was sued and compelled to pay his bill with costs, it was held in a suit against the principal debtor that the bail could recover the sum paid, but not the costs; Lord Ellenborough, at Nisi Prius, saying: 1 N. Y. State Marine Ins. Co. v. Protection Insurance Co., 1 Story 458. " Clark v. Carrington, 7 Cranch 308, 322. French v. Parish, 14 N. H. 496. "As for the costs of the action which the plaintiff took defense to unadvisedly, he should have either defended that action if the demand was unfounded, or paid the money if it could be legally claimed from him; but having defended that action without foundation, he cannot charge the defendant with the costs incurred in such an improvident defense."1 In a case at Nisi Prius, where the plaintiff, an auctioneer, was employed by the defendant to sell an estate, and the title proved defective, the purchaser brought suit against the auctioneer for his deposit; the auctioneer gave notice to the defendant, who refused to defend the suit. The auctioneer then paid the deposit, with the purchaser's costs and his own, and brought suit against the defendant, claiming these costs and the excise duty on the sale. The action was assumpsit for money paid, with the usual money counts, but Lord Ellenborough held that, as to the costs, "there should have been a special count, inasmuch as the right to these costs by the plaintiff was not so apparent. The plaintiff might have defended the action of his own wrong, and without any authority from the defendant. If he had done so, he would not be entitled to call upon his principal to pay the costs, as they were incurred without his consent "; and, on the ground that the declaration should have been special, the costs were refused.*** * In a case on a guaranty to indemnify the plaintiff against the expense of a commission of bankruptcy, the messenger had sued the plaintiff for his bill of six pounds. The plaintiff defended the suit, and claimed sixty pounds 1 555 costs paid to the messenger in his suit, and also his own costs; but the claim was denied, Lord Tenterden saying: "I think the defendant is not liable for the costs beyond the writ; a man has no right, merely because he has an indemnity, to defend an action, and to put the person guaranteeing to useless expense." But, on the other hand, where debt was brought by the plaintiff, as sheriff, against the defendants, on a bond given to the plaintiff as surety to the jail liberties for a debtor in execution, it appeared that the sheriff had given notice to the defendants, and that they assisted in the defense of the suit; it was held in New York that the costs of the suit against the plaintiff were properly recoverable against the defendants.*** Where a surety allowed a suit to go by default without notice, he was only allowed to recover the costs incident on the service of the summons, as he should have notified his principal and allowed him to settle without further costs. (*) * The French law peremptorily requires notice, if the surety desires to charge the debtor with his expenses. Its language is clear: "The surety who has paid has recourse against the principal debtor, whether he entered. into the contract of suretyship with or without the knowledge of the debtor. And he shall recover the principal, interest, and expenses; but the surety shall recover only such expenses as are incurred after the principal debtor is notified of the suit against the surety; and the surety shall also recover damages in a proper case. * The same principles which we have been considering 1 Gillett v. Rippon, 1 Moo. & Mal. 406. It is suggested in this case, by Gurney, of counsel for plaintiff, that "notice was given to the defendant, and he might have paid or stopped the action"; but nothing is said of any no tice in the statement of the case, which 2 Kip v. Brigham, 7 Johns. 168. (*) Steinhart v. Doellner, 34 N. Y. Super. Ct. 218. 1** are applied to claims made against sureties; so it has been said, that if one becomes surety for a debtor, the creditor cannot recover from the surety the costs of a fruitless suit against the debtor unless he give notice of his intention to sue.1 In New Hampshire, in a suit by a sheriff on a bond given by sureties of his deputy, conditioned to indemnify him against all loss, damages, and costs, on account of the acts and neglects of the deputy, he is entitled to receive, as damages, in addition to the sums paid by him or his sureties on his official bond to the county to satisfy judgments recovered against him for the default of the deputy, and interest thereon, all such reasonable expenses as were incurred by him in and about the defense of the suits in which the judgments were rendered, including counsel fees and a reasonable compensation for his personal services; and in the suit on the bond the same expenses and compensation for services, beyond the taxable costs, but not the costs or expenses incurred in a suit upon his official bond, brought to enforce payment of such judgment; and upon a judgment in favor of the sheriff for the penalty of the bond, execution will be awarded as well for the damages that may have accrued subsequently to the commencement of the suit upon the bond, as for those prior thereto.(") So in New York, in an action by a sheriff against the sureties of his deputy to recover damages for the neglect of the deputy to levy on execution, in consequence of which the execution creditor has recovered a judgment against the sheriff, the reasonable expenses of the sheriff in defending the suit against himself are recoverable as a part of his damages.() 1 Baker v. Garratt, 3 Bing. 56, per the sheriff for taking insufficient sureties Best, C. J. This was an action against on a replevin bond. (a) Hoitt v. Holcombe, 32 N. H. 185. () Westervelt v. Smith, 2 Duer 449; acc. Robertson v. Morgan, 3 B. Mon. § 806. CONSEQUENTIAL LOSS. 557 § 806. Consequential loss.-On a covenant to indemnify against all damages, costs, and expenses, by reason of a demand, the surety is not liable for a premium or bonus which the party is compelled to pay to raise the amount necessary to meet the demand,(") or for a loss through selling his property at a sacrifice to pay the debt.() In an action on an indemnity bond, if the plaintiff states no special damage in his complaint, he is confined in his recovery to such only as arise from the breach, and then such only as are proximate and the fair, legal, and natural result of the act complained of.() In a bond of indemnity from loss by reason of suits for infringement of a patent on goods sold by the defendant to the plaintiff, to be retailed by the latter, the plaintiff can recover the deterioration of his goods by attachment in the patent suit, but not for loss of credit by the attachment, or for the expense of a bond for dissolution of the attachment.(*) Where the defendant guaranteed a debt which was secured by a second mortgage on property of the debtor, he was not liable for the cost of foreclosing the mortgage when it appeared that the prior mortgage had already been foreclosed.(°) Where a surety on a stay bond, whose property has been sold in satisfaction of the judg ment, moves for judgment against his principal, the measure of his damages is the amount of the judgment paid by the sale of his property, not the value of the property.() But in Indiana it was held that where the defendant had engaged "to pay and satisfy the mortgage, together with all interest and costs thereon accrued, ac(*) Low v. Archer, 12 N. Y. 277. () Vance v. Lancaster, 3 Hayw. 130. (4) Ripley v. Mosely, 57 Me. 76. Peck v. Cohen, 40 N. Y. Super. Ct. 142. (Coleman v. Riggs, 61 Ia. 543. |