Equitable Surety Co. v. Illinois Surety Co.

January 28, 1919. The opinion of the Court was delivered by The Illinois Surety Company was for a while doing business in this State. The statutes of this State require a foreign surety company, doing business in this State, to file with the insurance commissioner an approved bond or approved securities, in the sum of $10,000. The Illinois Surety Company filed a bond with the United States Fidelity Guaranty Company as surety. A suit was brought in the Federal Court in this State upon a contract upon which the Illinois Surety Company as surety. A suit was brought in the obtained against the company. The company appealed, first to the Circuit Court of Appeals (Illinois Surety Co. v.United States, 215 Fed. 334, 131 C.C.A. 476) and then to the Supreme Court of the United States (240 U.S. 214,36 Sup. Ct. 321, 60 L.Ed. 609). The company lost in both appeals. In both appeals the plaintiff herein signed the appeal bonds. The Illinois Surety Company became insolvent, and the plaintiff was required to pay the judgment. The statutes provide that the bonds and securities filed with the insurance commissioner shall be a fund out of which repayment may be had. The plaintiff took an assignment of the interest of the judgment creditors, and brought this suit against the Illinois Surety Company and United States Fidelity Guaranty Company. United States Fidelity Guaranty Company demurred to the complaint, on the ground, among other grounds of demurrer, that the complaint did not state facts sufficient to constitute a cause of action, in that it appears as a matter of law that the plaintiff was substituted as surety for United States Fidelity Guaranty Company, and that this company was no longer liable. The demurrer was overruled, and on appeal to this Court the order overruling the demurrer was sustained. The judgment of this Court is found in 108 S.C. at page 371,et seq., 94 S.E. 882.

The case was remanded for trial. The appellants answered. On the trial of the case the plaintiff proved the facts alleged in the complaint without objection. The defendant offered no evidence. Both plaintiff and defendant moved for a direction of verdict in their favor. The presiding Judge directed a verdict in favor of the plaintiff and the defendant appealed on three exceptions.

1. The first exception merely states that his Honor erred in directing a verdict for the plaintiff and not for the defendant. A verdict for the defendant could not have been directed, as it had been conclusively held that the complaint stated a cause of action, and the plaintiff had offered evidence to prove every essential fact alleged.

2. The second exception complains that his Honor erred in not holding that the plaintiff was primarily liable and the defendant only secondarily liable, and that the plaintiff was liable to the exclusion of the defendant. If this proposition is true, then the complaint does not state facts sufficient to constitute a cause of action. The former opinion held to the contrary. It is res adjudicata.

3. "Because his Honor, the presiding Judge, erred in not holding that the plaintiff and said defendant were at most cosecurities on the bonds in question, and in not directing a verdict accordingly." This exception cannot be sustained. Mr. Justice Watts, delivering the opinion in the former case. said:

"Payment by the surety subrogated the surety to all the rights and privileges of such plaintiff in a judgment or decree against the principal debtor, and to all the securities, equities, rights, remedies, and priorities held by such creditor. Code of 1912, sec. 3942; Brandt on Suretyship (2d Ed.), sec. 309; Muller v. Wadlington, 5 S.C. 345; Garvin v. Garvin,27 S.C. 472, 4 S.E. 148.

"Whatever rights the creditors in judgment had against the bonds filed with the insurance commissioner were, by virtue of the statutory laws of this State, transferred to the plaintiff upon payment by it of the judgment. The judgment creditors formally and duly assigned to the plaintiff all of their rights, equities, and interests under the judgment to plaintiff."

This is also res adjudicata.

The judgment appealed from is affirmed.

MESSRS. JUSTICES HYDRICK and GAGE concur.

MR. CHIEF JUSTICE GARY and MR. JUSTICE WATTS did not sit.