APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY Criminal No. 75-0044
Before Adams, Rosenn, and Weis, Circuit Judges.
We must decide in this appeal when a surety's obligation on a bail bond terminates, as well as how and by whom a surety's obligation may be discharged. The original defendant in this case failed to surrender to serve his sentence after his criminal conviction was affirmed by this Court.*fn1 From a default judgment, entered by consent, ordering forfeiture of the appearance bond, Allegheny Mutual Casualty Company (Allegheny Mutual) appeals*fn2 on the grounds that (1) the bond by its terms was not valid through appeal, (2) if it were, the surety's obligation was released by the action of the clerk of the district court purporting to cancel the bond, and (3) even assuming that the release was a mistake, the bond could not be reinstated under the court's power to correct clerical errors. We hold that the bail bond continued in effect while the conviction was on direct appeal and, inasmuch as the clerk's cancellation of the bond was mistaken and there is no evidence of reliance on the clerk's cancellation, the bond could be reinstated by the district court and must now be forfeited because of Martinez's failure to appear for incarceration pursuant to his sentence.
The genesis of this dispute may be traced to the arrest of Humberto Martinez for selling heroin. The magistrate before whom Martinez appeared originally set bail at $25,000. After several days in detention, Martinez obtained a surety for his bail bond, which was signed by Martinez, by an attorney-in-fact for Allegheny Mutual, and by a magistrate on behalf of the government. As security for the bond, the surety was given a deed for property in California owned by Martinez's wife. The interest of Allegheny Mutual in the bond was later purchased by Cal Rynerson, as agent for Surety Insurance Company.
Martinez appeared in the district court at all times required of him up to and including sentencing. The penalty imposed consisted of two concurrent terms of fifteen years, followed by a special parole term of ten years. At the request of Martinez's lawyer, who now represents the surety, the trial judge continued bail on appeal in the same amount. This decision by the trial judge was based on Martinez's perfect record in appearances at trial, on the fact that security worth $25,000 had been posted, and on counsel's assurance that the bond was "good through appeal."*fn3
While the criminal conviction was on appeal in this Court and Martinez was out on bail, a secretary in the United States Attorney's office mistakenly sent a form letter to the clerk of the district court instructing the clerk to cancel the bond. The letter was not signed by the United States Attorney but, apparently following standard procedure, the clerk stamped "cancelled of record" on the face of the bond and sent a certificate of discharge to Rynerson.
After a panel of this Court affirmed the conviction of Martinez and the Supreme Court denied certiorari,*fn4 the district judge issued an order for the defendant to surrender. Martinez failed to appear, and a bench warrant for his arrest has so far not brought about his apprehension.
Well over a year after the purported cancellation of the bond, the United States Attorney discovered the error and moved, albeit without notice to the defendant's attorney or to the surety, for reinstatement of the bond. In granting the motion, the district court declared that the bond had been "erroneously cancelled at the request of . . . the United States Attorney without the approval or Order of this Court."
Shortly thereafter, counsel for Martinez filed a motion on behalf of the surety to vacate the order of the district court reinstating the bond. Following a hearing at which Cal Rynerson was the sole witness, the motion to vacate was denied. Rynerson testified that he retained the deed for the California property serving as security for the bond and that this property was probably worth more than the face amount of the bond, so that he was fully indemnified against forfeiture of the bond. Finding that "there is no prejudice to the Surety with respect to the reinstatement of the bond since the Surety still has ample security to cover its obligations," and that the security was the property "of the absconding defendant," the district court denied the motion to vacate the reinstatement of the bond. The judge stated that the cancellation was a clerical error which the court could correct under Fed.R.Crim.P. 36, that the clerk lacked the authority to release the surety, and that the surety must have realized that the clerk's action was mistaken and improper.
A bail bond is essentially a contract between the government on the one hand, and a principal and his surety on the other.*fn5 The extent of each party's undertaking therefore depends on the wording of the agreement and the intention of the parties as interpreted within the general framework of suretyship and contract law.*fn6 Generally, the terms of a bail contract are to be strictly construed in the surety's favor, and the surety may not be held liable for any greater undertaking than he has agreed to.*fn ...