United States Fidelity & Guaranty Co. v. Dickason

Mr. Justice Farmer

delivered the opinion of the court:

This litigation arises out of the following state of facts: In January, 1900, C. E. Loss & Co. was awarded a contract to do certain work for the Ohio and Kentucky Railroad Corjipany. The railroad company required, the contractor to give a bond in the sum of $20,000, with security, for the performance of the contract, and Loss & Co. applied to plaintiff in error, the United States Fidelity and Guaranty Company, to sign its bond to the railroad company. Plaintiff in error was unwilling to sign the bond unless Loss & Co. would indemnify it. Loss & Co. proposed L. T. Dickason as surety on an indemnifying bond to plaintiff in error. After some investigation as to the financial standing of Dickason plaintiff in error agreed to accept him as surety on an indemnifying bond to it. The bond of Loss & Co. to the railroad company.with plaintiff in error as surety, and the indemnifying bond of Loss & Co. to plaintiff in error with Dickason as surety, were executed the same date, January 8, 1900, the penalty of each being $20,000. Loss & Co. defaulted in the performance of its contract and abandoned it in 1901. The railroad company employed other contractors to complete the work at an increased cost, and in November, 1901, rendered to plaintiff in error a statement of account of the cost of completing the. work Loss & Co. had failed to do. The claim was something over $30,000. J. K. Bartlett, the general counsel of plaintiff in error, with offices in Baltimore, took the matter up at once by correspondence with J. L. Bennett, of Chicago, the then attorney for Dickason. Many letters passed between them. Dickason did not want the claim of the railroad company paid without litigation, and it was finally agreed the suit, which was begun March 4, 1903, should be resisted, and the management of the defense was left to Bennett, Dickason’s attorney, and other counsel employed by him, with the approval of the plaintiff in error. The case was not tried until June 9, 1910, and then resulted in a judgment against plaintiff in error for the penalty of the bond, $20,000, and interest from January 1, 1902, at six per cent; amounting to $10,126.66, making the total sum for which judgment" was rendered, $30,126.66. Some preliminary steps were taken by Dickason’s counsel toward having the case reviewed by a higher court, but that was abandoned and the judgment was paid off by plaintiff in error June 7, 1911, which, with interest at that time, amounted to $31,934, besides costs. Dickason died March 22, 1913, and plaintiff in error filed in August following, a claim against his estate for the sum of $32,748.11 paid by it in settlement of the judgment of the Ohio and Kentucky Railroad Company. An amended claim for the same amount was filed May 14, 1914. The amended claim sets out more fully the facts and circumstances upon which the claim is based than did the original claim. After a hearing in the probate court the claim was allowed in the sum of $37,979-22, which was the amount paid on the judgment by plaintiff in error, with interest from the time of payment of said judgment. The. executrix of the Dickason estate appealed from that judgment to the circuit court, where a trial was. had by .jury. At the conclusion of all the evidence the executrix of the Dickason estate submitted to the court a motion to instruct the jury to find the issues for the claimant in the amount of $20,000, the .penalty of the bond, with interest on that amount at five per cent per annum from Juné 7, 1911, the date the judgment of the railroad company was paid off. The court refused to give this instruction, but on motion of counsel for claimant instructed the jury to find for claimant in the sum of $20,000, with interest from January 1, 1902, at the rate of five per cent, making a total of $33,330.55. Upon verdict returned in obedience to said instruction the court rendered judgment in favor of plaintiff in-error for the sum of $33,330.55 and $333.30 interest from the date of the verdict. The executrix of the Dickason estate appealed from that judgment to the Appellate Court for the First District. That ppurt held the circuit court erred in refusing the instruction offered by the executrix and in giving the instruction offered by the claimant and rendering judgment for the penalty of the bond, with interest thereon from January 1, 1902. It was the view of the Appellate Court that interest could not be computed from the date of the breach, January 1, 1902, because "of the bar of the Statute of Limitations, and that the claimant was only entitled to recover the penalty of the bond, with interest on that sum from the -date the judgment was paid to the railroad company, June 7, 1911. It accordingly reversed the judgment of the circuit court and rendered judgment in the Appellate Court in favor of plaintiff in error for .$24,750, that being the penalty of the bond and interest thereon at five per cent from June 7, 1911. The case was brought to this court for review by writ of certiorari.

It vías admitted in open court at the hearing of this case in the circuit court by counsel for defendant in error, executrix of Dickason’s estate, that the bond of Loss & Co., with plaintiff in error as surety, was executed and delivered to the railroad company in the penal sum of $20,000, as alleged in the claim, January 8, 1900, and that on the same day Loss & Co:, with Dickason as surety, executed a bond in the same penalty to plaintiff in error to indemnify it for signing the bond of Loss & Co. to the railroad company, and that each of the said bonds was delivered on the day of its date; that Loss & Co. proceeded with the work under its contract with the railroad company until January 16, 1901, when it abandoned the contract, and that a claim was made by the railroad company against plaintiff in error for damages resulting from the abandonment of the contract by the contractor, and that said claim on January 1, 1902, became an obligation in favor of the railroad company in the amount of $35,000; that the railroad company brought suit on that claim in March, 1903; that Dickason was notified to defend the suit, and did so in cooperation with plaintiff in error, and that the suit resulted in a judgment in favor of the railroad company against plaintiff in error for $30,126.66, which was paid June 7, 1911. Counsel admitted in a statement to the court and jury that the claim should be allowed against the Dickason estate in favor of plaintiff in error for $20,000, and interest on that amount, at five per cent from the date plaintiff in error paid the judgment to the railroad company.

The bond of plaintiff in error, as surety for Loss & Co., bound Loss & Co. to faithfully perform and fulfill its contract' and to protect the railroad company from all loss by reason of claims, defects, errors, objections, liens and incumbrances arising from the failure of the principal to perform the covenants of the bond and contract. The indemnifying bond of Dickason to plaintiff in error bound Dickason to keep plaintiff in error indemnified “against all suits, actions, debts, damages, demands, costs, charges and expenses, including court costs and counsel fees, at law or in equity, and against all loss and damages whatever,” that might accrue to plaintiff in error by reason of its surety-ship on the bond of Loss & Co. to the railroad company.

Plaintiff in error contends that if its cause of action against Dickason by reason of the breach of the covenants of the bond to the railroad company prior to the bringing of the suit by said company March 4, 1903, is barred by the Statute of Limitations, the bringing of said suit was a new breach, and the statute did not begin to run against the cause of action accruing on account of that breach until the date the suit was commenced. In our view of the evidence nothing was sufficiently proven as to Diclcason’s temporary absence from the State in March, 1903, to arrest the running of the statute, but we are further of opinion that the cause of action for which the claim was filed accrued January 1, 1902. It was so held in the suit in the Federal court in Kentucky, and in the admission made by counsel for defendant in error in the circuit court for the purpose of obviating the necessity for certain proof that was the date it was conceded the obligation occurred, and that admission was not controverted or denied. In our opinion that was the date which must be accepted as the date the cause of action accrued.

Section 16 of the Limitation law requires actions on bonds to be commenced within ten years next after the cause of action accrued, but if a payment or new promise to pay shall have been made in writing within or after said period of ten years, then the action may be commenced at any time within ten years after such payment or promise to pay. It is not contended that the causé of action was taken out of the Statute of Limitations by any payment or promise to pay in writing, but it is contended that defendant in error is estoppéd from setting up the bar of the statute because, in accordance with Dickason’s wish and request, no settlement of the claim of the railroad company was made before suit,, and Dickason was permitted by the plaintiff in error to manage and conduct the defense of the suit by the railroad company against plaintiff in error. The cause of action accruing January i, 1902, was barred in ten years unless something occurred to toll the Statute of Limitations. The statute began to run when the cause of action accrued, and the rule is that when the statute begins to run it will continue to run until it becomes a bar, unless there is some saving or qualification in the statute itself. (People v. White, 11 Ill. 341; Peoria County v. Gordon, 82 id. 435 ; Beattie v. Whipple, 154 id. 273.) The plaintiff in error was not bound to wait until the claim of the railroad company against it was reduced to judgment before it could maintain its action against Dickason. This, we understand, is not disputed by plaintiff in error, but it is contended the suit would have interfered with or embarrassed the indemnitor in the defense of the suit by the railroad company against the indemnitee. If plaintiff in error had settled with the railroad company before the validity of the claim against it had been adjudicated, the burden would have been upon it, in an action against its indemnitor, to prove a valid and legal liability to the railroad company. By notifying the indemnitor of the claim of the railroad company and of the suit brought to establish the claim and permitting the indemnitor to defend the suit, the plaintiff in error, in an action against the indemnitor, was relieved of the burden of establishing the liability to the railroad company. The judgment in that suit was conclusive against the indemnitor.

The matters relied on by plaintiff in error to toll the statute do not arise out of any saving or qualification in the statute itself but out of the circumstance that Dickason was notified by plaintiff in error of the claim of the railroad company and of the suit to enforce the claim and permitted to assume the management ■ of the defense to the suit. On that ground it is contended defendant in error is estopped from asserting the bar of the Statute of Limitations ran during the pendency of the suit of the railroad company against plaintiff in error. We do not think this position of plaintiff in error is aided by the fact that this action was begun by filing a claim in the probate court against the estate of Dickason and that probate courts may exercise equitable powers in adjusting claims and in the settlement of estates. This suit is for the enforcement of a legal demand, and any defense Dickason might have interposed to it. during his lifetime can be availed of by his executrix. If he could have set up the Statute of Limitations in bar of the action it. would seem to necessarily follow that his executrix can do so. The decision of the case, therefore, in our view of it, depends upon whether the running of the statute was suspended during the pendency of the suit of the railroad company against plaintiff in error.

Sections 18, 19, 20, 21, 22 and 23 of our Limitation law .provide the savings or qualifications which arrest the running of the statute, but none of them are involved in this case. If the statute ceased to run in this case it was not by virtue of any qualification or exception in the statute itself. While the general rule is as above stated, that when the statute begins to run it will continue to run unless arrested by some saving or qualification of the statute itself, the rule is not without exceptions. The exceptions were pointed out in Braun v. Sauerwein, 10 Wall. 218, and Amy v. Watertown, 130 U. S. 320. In the latter case the court said: “There is one class of cases which is excluded from the operation of the statute by act of the law itself. * * * This class embraces those cases in which no action can be brought at all, either for want of parties capable of suing or because the law prohibits the bringing of an action. In such cases the general law operates as a qualification or tacit condition of the particular statute.” In the same case the court recognized the general rule to be that the language of the statute must prevail, and said no reason based on apparent inconvenience or hardship would justify a departure from it. There are not wanting cases where the rule has not been strictly adhered to, and plaintiff in error cites in its brief decisions tending to support its contention, but it appears to us the weight of authority is contrary to its position, and the reason upon which the weight of authority is based seems to us much better than that of the cases to the contrary. There was no. legal bar by reason of any qualification or saving in the Statute of Limitations, or of any law, to the bringing of an action against Dickason by plaintiff in error at any time during the pendency of the suit by the railroad company. The most that is or could be claimed is, that because plaintiff in error did not bring suit but permitted Dickason to defend the suit of the railroad company against plaintiff in error, it would be an injustice to hold the Statute of Limitations continued to run while that suit was being contested, during which time the plaintiff in error refrained from bringing suit against Dickason, awaiting the outcome of that litigation. It is not claimed Dickason promised or agreed not to plead the Statute of Limitations. All lie did and said was inconsistent with any such theory, for he denied the validity of the railroad company’s claim from the first and defended against it until it was reduced to judgment. He was not guilty of any fraud or concealment which, under section 22 of the Limitation act, would arrest the running of the statute. Plaintiff in error had full knowledge of the facts at all times and of its rights, and nothing was concealed from it by Dickason.

Able and industrious counsel have cited many decisions, and each has analyzed and attempted to explain away the apparent force of the cases cited by the other. Shapley v. Abbott, 42 N. Y. 443, (1 Am. Rep. 548,) was a suit to recover on a note more than six years after the note became due. The defendant pleaded the Statute of Limitations. Plaintiff alleged and relied on an oral promise made by defendant before an action on the note was barred, that if the note was not paid until it was “outlawed” he would not plead the Statute of Limitations. The limitation act of New York provided that an acknowledgment or promise to take a case out of the Statute of Limitations must be contained in some writing signed by the party to be charged thereby. The court said the only ground that plaintiff had to stand on was that the defendant was estopped, by reason of his promise not to plead the Statute of Limitations, from interposing that defense. The court discussed at length the doctrine of an equitable estoppel in pais and held it did not apply; that a promise to take a cause of action out of the operation of the statute was required by the statute itself to be in writing; that courts must administer the law so-as to uphold the policy of the statute, and said if a parol promise not to plead the statute be held a waiver or an estoppel it would subvert the statute and let in the mischief which it was the policy of the statute to shut out. The opinion of the court is lengthy and appears to us to be. sound, although it is pointed out in the brief of plaintiff in error that the Supreme Courts of Missouri and Iowa have expressly refused to follow it, and some other courts have held a verbal promise not to plead the Statute of Limitations estops the promisor from interposing that defense. On the other hand, it is stated in the brief of defendant in error that the Shapley case has been cited by this court and the courts of a number of other States, and also by Federal courts, including the Supreme Court of the United States.

That plaintiff in error elected not to compromise or settle the claim of the railroad company but to permit Dickason to defend the suit and to forbear asserting its claim against him by suit until the action by the. railroad company was terminated by a judgment was not a saving or qualification of the statute which arrested the running of the limitation during the pendency of the suit, and did not bring the case within the class of cases where the general law operated as a qualification of the statute. By the weight of authority, we think, as well as the better reasoning, Dickason did nothing which would constitute an equitable estoppel against him in his lifetime, or his executrix after his death, from setting up the bar of the Statute of Limitations. Some of the cases sustaining, in principle, this conclusion are Boone v. Colehour, 165 Ill. 305, Ennis v. Pullman Palace Car Co. 165 id. 161, Best v. Davis Sewing Machine Co. 65 Hun, 72, Andreae v. Redfield, 98 U. S. 225, and Kennedy v. Foster’s Exr. 77 Ky. 479.

We are of opinion the judgment of the Appellate Court was right, and it is affirmed.

judgment affirmed.