The opinion of the court was delivered by: Parrillo, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Lefelt, Parrillo and Sapp-Peterson.
At issue is whether a surety's obligation on a bail bond is released by a court's mistaken cancellation of the bond. We hold that absent a showing by the surety of detrimental reliance or a material increase in the risk originally undertaken, a court is not bound by its error, has the power to correct it, and acts within its discretion in ordering the bond reinstated without the surety's consent.
This dispute originated in the arrest of defendant Walter Tuthill (defendant or principal) for sex crimes involving a minor. The judge before whom Tuthill appeared set bail at $250,000 on July 29, 2004. Unbeknownst to the judge and prosecutor at the time bail was fixed was the fact that defendant had a prior sex crime conviction. Three days later, on August 1, 2004, defendant obtained a surety, Safety National Casualty Corporation (Surety), who posted a bail bond in the amount of $250,000 in exchange for a non-refundable fee of $25,000. The indemnitor on the bond was defendant's father.
There is no indication that defendant, awaiting grand jury proceedings, breached any of the terms of the surety agreement or failed to appear in court at all times required of him. On December 3, 2004, only four months after bail was posted, Surety was notified by court personnel that the bond was discharged. The bond was therefore deemed satisfied and it was returned to Surety along with an unsigned "order to discharge recognizance." There was no security to be released but, according to Surety, as a result of the discharge the company ceased monitoring the whereabouts of defendant or the fiscal stability of the father.
Seven months later, in July 2005, it was discovered that the discharge was the result of an error by either court personnel or the prosecutor's office based on the mistaken belief that the grand jury returned a "no bill" in favor of defendant. Actually, the grand jury had issued a "no action," allowing the State to continue its criminal investigation, which eventually resulted in the return of an indictment for which defendant stood trial and was ultimately acquitted of all charges.
In any event, at a hearing on July 13, 2005, without notice to Surety, the court, finding the bond had been erroneously cancelled, ordered the bail bond reinstated. On July 18, 2005, the court amended its order to require the return of the original bail bond. When the original bond could not be located, the court further ordered, at a subsequent bail reduction hearing on July 27, 2005, where Surety was present and voiced objection, that the Surety issue a new $250,000 bond for defendant by August 3, 2005. After we denied an emergent application for relief from that order, Surety complied. This appeal follows.
A bail bond amounts to essentially a contract between a principal and his surety on the one hand, and the government as creditor on the other, governed by "the legal principles applicable to [suretyship]." State v. Weissenburger, 189 N.J. Super. 172, 176 (App. Div. 1983); see also State v. Clayton, 361 N.J. Super. 388, 395 (App. Div. 2003); State v. Ceylan, 352 N.J. Super. 139, 143 (App. Div. 2002); State v. Vendrell, 197 N.J. Super. 232, 236 (App. Div. 1984); State v. Gonzalez, 69 N.J. Super. 283, 286-87 (App. Div. 1961); R. 3:26-4(a). The extent of the surety's undertaking is defined by the terms of the bail agreement. State v. Ceylan, supra, 352 N.J. Super. at 143. In this regard, "[i]t is a well-settled principle of suretyship that the surety is only chargeable according to the strict terms of its undertaking and that, as a result, its obligation cannot be extended or altered beyond the terms of its agreement." State v. Clayton, supra, 361 N.J. Super. at 395; see also Monmouth Lumber Co. v. Indem. Ins. Co. of N. Am., 21 N.J. 439, 452 (1956). Consequently, a modification of the terms of a bail contract "by the principal and creditor without the surety's consent operates to discharge the surety, if the modification materially increases the risk assumed." State v. Ceylan, supra, 352 N.J. Super. at 143; see also State v. Clayton, supra, 361 N.J. Super. at 395; State v. Weissenberger, supra, 189 N.J. Super. at 176; Restatement of Security, § 128(b)(i) at 340-41 (1941) ("Where, without the surety's consent, the principal and the creditor modify their contract otherwise than by extension of time of payment the compensated surety is discharged if the modification materially increases his risk . . . .").
The situation in State v. Clayton, supra, presented just such an increased risk. There, a trial judge, without notice to or consent of the surety, reinstated the original bond and again released a defendant who had fled and been later apprehended and returned to custody by the surety. 361 N.J. Super. at 394. We held the court's unilateral decision "from the standpoint of basic surety law a nullity," id. at 395, reasoning that the defendant's failure to appear materially increased the risk of the undertaking and rendered questionable at best the "surety's willingness to underwrite a further bail . . . ." Ibid.
The bondsman's risk was also materially adversely affected by the government's action in State v. Weissenburger, supra. That case involved a plea agreement, of which the bondsman was not informed, in which in exchange for all charges being dropped, the defendant was permitted to relocate, in violation of the bond, and agreed to assist the government in obtaining evidence against suspected drug distributors. 189 N.J. Super. at 174, 176. There we held that the government should not be allowed to recover against the surety for not producing the principal, when it had itself consented to the defendant's placing himself beyond its reach and control.
Obviously, not every modification or change in the conditions of pretrial release will materially increase the surety's risk, or impose on the surety fundamentally different obligations than those originally undertaken. See, e.g., Wiegand v. State, 768 A.2d 43, 50 (Md. 2001) ("The modification [to permit defendant to leave the jurisdiction] did not create a substituted contract or impose risks 'fundamentally different' from those undertaken. Nor did the modification 'materially increase' the risk the bondsman accepted."); State v. Vaughn, 11 P.3d 211, 214-15 (Okla. 2000) (the prosecution's decision to add new charges, arising from the original transaction, which increased defendant's maximum possible sentence "did not materially increase the Bondsman's bargained-for risk"); see also United States v. Egan, 394 F.2d 262, 265-66 (2d Cir.) (an order that originally required defendant to report daily to the marshal, later modified to require reporting at ten day intervals, did not enlarge the conditions of bail or enhance the chances of absconding), cert. denied, 393 U.S. 838, 89 S.Ct. 116, 21 L.Ed. 2d 109 (1968); United States v. Gambino, 809 F. Supp. 1048, 1056-60 (S.D.N.Y. 1992) (holding that, under the facts of the case, the removal of the electronic bracelet monitoring devices from defendants did not constitute a significant change in the bail conditions and thus did not increase risk of flight), aff'd, 17 F.3d 572 (2d Cir. 1994); People v. Tyler, 797 P.2d 22, 26 (Colo. 1990) (subsequent withdrawal of guilty plea did not increase the risk the surety originally accepted); People v. Smith, 673 P.2d 1026, 1027-28 (Colo. Ct. App. 1983) (where the bail bond agreement stated that the "defendant shall . . . not depart [the court] without leave," there was no material change in the condition of the bond contract where the trial court permitted defendant's absence at a scheduled hearing); People v. Rincon, 603 P.2d 953, 954-55 (Colo. Ct. App. 1979) (there was no material alteration to the surety contract where the trial court permitted defendant to leave the state on the condition that defendant agreed not to leave without permission). In each of these cases, the court's modification of the conditions of a defendant's pretrial release were found not to have significantly increased the bondsman's risk of the defendant's flight and non-appearance at trial as to justify the discharge of the bondsman's obligation under the bail bond.
Here, Surety contends that it detrimentally relied on the court's cancellation of the bond by ceasing to monitor both its principal and indemnitor, and that reinstatement of the bond materially increased the risk of defendant's flight because of its belated discovery of ...