Southern Surety Co. v. Bender

The plaintiffs and the defendant, all being dissatisfied with the decree rendered in the court of common pleas, filed separate appeals in this court, which were separately docketed and numbered. They constitute, however, only one case, and both proceedings will be consolidated and disposed of together under No. 11779.

The Southern Surety Company and the Metropolitan Casualty Insurance Company originally brought this action to enjoin the defendant Edna B. Bender, from having an execution issued or taking any other steps to collect a certain judgment rendered in her favor. The liability of the plaintiffs in this action arose on certain official bonds which they had signed as sureties, and they contend that they have paid on a judgment rendered in favor of George H. Bender the full penalty named in the bonds since rendition of the judgment in favor of Edna B. Bender, during the time that her case was pending in the Court of Appeals, and are therefore not further liable; while the defendant in this action contends that, notwithstanding the payment of the George H. Bender judgment by these plaintiffs, they are still liable on the bonds for the amount of the penalties named therein. The court of common pleas held that the sureties should have prorated their liability between the claims of George H. Bender and Edna B. Bender, and, not having done so, are still liable on the judgment rendered in favor of Edna B. Bender for a pro rata share of the amount of her judgment.

The question therefore for decision is whether these plaintiffs, having paid on a prior judgment the full amount of the penalty named in the bonds, are discharged from further liability, and, if they are not thus discharged, whether their liability should be pro-rated between the judgments, or whether, if liable, that liability is for the full amount of the judgment of Edna B. Bender; that judgment being less than the penalty named in the two bonds.

The case was tried on an agreed statement of facts. From this statement it appears that George H. Bender and Edna B. Bender are husband and wife, and were such on and ever since August 19, 1925, living together in a bona fide private residence in the city of Cleveland; that on that day William J. Patrick was a duly appointed and acting state prohibition inspector, having given bond as such under the provisions of Section 6212-35, General Code, in the sum of $2,000, with the Metropolitan Casualty Insurance Company as surety, conditioned upon the faithful discharge of the duties of his office; that John Connors was a duly appointed and acting special policeman of the city of East Cleveland, having given bond as such in the sum of $1,000, pursuant to an ordinance of the city of East Cleveland, with the Southern Surety Company as surety, conditioned for the faithful performance of the duties of his office; and that on that day Patrick and Connors, under color of office, searched the home of George H. Bender and Edna B. Bender for intoxicating liquors, but found nothing of that kind.

Shortly thereafter George H. Bender and his wife filed separate suits for damages against them and the plaintiffs in this action on the bonds of said officers; both suits being filed on the same day; George H. Bender and Edna B. Bender being represented by the same attorney, who continued as such throughout the litigation and still is the attorney of the defendant in this litigation. The suit of George H. Bender resulted in a verdict and judgment in his favor on February 15, 1929, against the principals and sureties on the bonds in the sum of $3,000, which judgment was affirmed by the Court of Appeals on June 11, 1929. On June 28, 1929, judgment was rendered in the suit of Edna B. Bender against the same parties on the same bonds in the amount of $2,000.

Some time after November 7, 1929, George H. Bender assigned his judgment to his attorney, Guy O. Farquharson, who persisently pursued these plaintiffs for payment thereof, threatening to have an execution levied and a receiver appointed if it was not promptly paid. Under these circumstances, these plaintiffs paid said judgment in full on December 14, 1929; each company paying the full penal sum named in the bond it had signed, with interest. Thereafter on April 12, 1930, the judgment rendered in favor of Edna B. Bender was affirmed by the Court of Appeals and is still unsatisfied, and this action was brought when she attempted to collect said judgment from these plaintiffs by execution.

It is insisted by the defendant that the plaintiffs in this action could have urged in their defense in the original action brought by Edna B. Bender against them that they were already liable on a judgment in favor of George H. Bender for an amount equal to the full penalty of the two bonds, and she claims that, not having made the defense in that action, they are not now entitled to an injunction. This contention made by her is not tenable. Judgment was rendered in her action against the sureties on June 28, 1929, at which time they had not paid the judgment in favor of George H. Bender. The sureties remained liable to successive judgments against them, as it is only a plea of satisfaction of the judgment that would have been available to them. As they could not successfully have made that defense in the original case brought by Edna B. Bender, they are now entitled to make their contention in the present action.

We proceed then to consider the rights of the parties on the merits of the present action. The bond which the Metropolitan Casualty Insurance Company signed as surety was executed pursuant to statute, and is in the penal sum of $2,000, while the bond signed by the Southern Surety Company as surety was executed pursuant to an ordinance of the city of East Cleveland, and is in the penal sum of $1,000; each bond being conditioned that the principal should "faithfully, diligently and impartially discharge all the duties of his said office."

Section 11242, General Code, relating to the liability of a surety in a suit on a bond, closes in the following language: "A judgment for one delinquency shall not preclude the same or another person from bringing an action on the instrument for another delinquency."

The defendant contends that by virtue of this language a surety remains liable in succeeding suits on a bond, notwithstanding he may have paid on some former judgment the full amount of the penalty named in the bond. This court cannot so construe the statute. It is true that the purpose of the enactment was to make the surety liable in successive actions; but the limit of liability assumed by the surety in official bonds of this character is the penal sum named in the bonds. Any other construction would result in great injustice and render it practically impossible to obtain sureties.

It is also true that the statute must be read into and construed as a part of the bond, but nothing in the statute or in the bond indicates that the surety obligated itself to one party, or to separate parties, for any amounts which, in the aggregate, exceed the penal sum named in the bond. Any different holdings are based upon the peculiar phraseology of the statute or of the bond. If Shylock, the prince of usurers, who was obligee in a bond, could say, "I stay here on my bond," certainly these plaintiffs, who are merely sureties, would have the same right.

Accordingly, it was held in Squires v. Miller, 173 Mich. 304,138 N.W. 1062, 43 L.R.A. (N.S.), 76, that the surety on a saloon-keeper's bond under the Civil Damage Act of that state remained liable for successive recoveries until he had paid the face of the bond, but that his liability could not exceed the penalty named in the bond. The same holding was made in Merrinane v. Miller, 157 Mich. 279, 280, 118 N.W. 11, 25 L.R.A. (N.S.), 585.

So in the case of Bailey v. McAlpin, 122 Ga. 616,50 S.E. 388, the court held that successive actions could be maintained on the bond of a county administrator until the full penalty in the bond had been exhausted. The court on page 631 of 122 Ga. 50 S.E., 388, 395, concludes the discussion of this branch of the case with this statement:

"Of course when this is done the sureties will be no longer liable to any one on account of the conduct of the county administrator."

To the same effect is Albie v. Jones, 82 Ark. 414,102 S.W. 222, 12 Ann. Cas., 433.

In the case of Bradford v. National Surety Co., 207 Ala. 549,93 So. 473, it was held that a surety on a deputy sheriff's bond is entitled to pay the amount required to satisfy the first judgment rendered thereon, and that he could not successfully defend a second suit brought on the same bond based on the fact that judgment had been recovered in the first action, unless he had in fact satisfied such former judgment. It is significant that in the case just cited the court also held that the surety, having satisfied the first judgment, could bring an action to enjoin the collection of a subsequent judgment obtained prior to the satisfaction of the first judgment, and that there could be no prorating of the liability on the several claims. This latter case was cited with approval in National Surety Co. v. Graves,211 Ala. 533, 101 So. 190.

Certainly, in the absence of a statute providing therefor, the surety cannot be made a trustee and the burden be imposed upon him of ascertaining who are all of the present or possible future claimants to share in the amount covered by the bond. However much the idea of prorating liability among the different claims might at first thought appeal to a court of equity, it can have no place in this action because the measure of liability of the sureties is the statute and the terms of the bonds, and the holder of a second judgment can have no equity against a surety who has paid in good faith an earlier judgment which exhausts the full penalty of the bond; the payment being made in order to prevent a levy on the surety's property. To assert a claim of proration in behalf of a second judgment creditor under such circumstances would be to assert an equity which has no existence.

The state of New York has a statute providing that the amounts due under certain bonds are "to be apportioned ratably among the judgment creditors according to the amount of their respective judgments." The statute of that state also provides a complicated procedure for determining the existence of present or future claims, and for the protection of the surety on the bond. The case of Bleimeyer, Admr., v. Public Service Mutual CasualtyInsurance Corp., 250 N.Y. 264, 165 N.E. 286, was brought under that statute, and illustrates the necessity of a statute and the complications which arise in enforcing it. In the absence of a statute, neither the duty nor the right exists.

For another reason equity cannot order proration among the different claimants under the bonds involved in the case at bar. The record discloses that the attorney for the defendant in this action was also attorney for George H. Bender in his action, and was the assignee and owner of that judgment. Of course it was immaterial to the sureties whether the amount they paid was applied on the judgment of George H. Bender, or on the claim asserted by his wife, Edna B. Bender, if she succeeded in securing a judgment. But her attorney refused to await a review of her judgment, and compelled these plaintiffs to pay the full amount of the bond on the judgment which he owned, and which had been rendered in favor of George H. Bender.

The plaintiffs having paid in good faith on the prior judgment the full amount for which they were liable, they are entitled to a decree enjoining the defendant in this action from enforcing her judgment against them.

Judgment and decree for plaintiffs.

WILLIAMS and CROW, JJ., concur.

Judges RICHARDS and WILLIAMS, of the Sixth Appellate District, and Judge CROW, of the Third Appellate District, sitting by designation in the Eighth Appellate District.