Bankers Surety Co. v. Wyman

Evans, C. J. —

On the face of it, this case is very complicated in its facts and legal questions. A condensed statement of the pleadings alone covers seventy-five printed pages in the abstract, and the case'is submitted to us upon briefs covering more than three hundred and fifty pages. At the heart of it, however, there is less complication. It involves the question whether a surety on a new executor’s bond, ordered by the court for the stated purpose of discharging the original bond because of 'the death of the surety thereon and the pendency of his estate in probate, may nevertheless require contribution from the estate .of the surety on the first bond; and, if so, whether such contribution may be worked out after the closing of such first surety’s estate through the beneficiaries thereof, such beneficiaries being also the obligees and beneficiaries of the bond of the last surety. It involves the question, also, whether a supersedeas bond, filed by the executor on appeal to the Supreme Court, from the judgment of the lower court fixing his liability, is primarily liable for the amount of the judgment upon affirmance; and, if so, whether the surety on the new executor’s bond has any interest as such in enjoining the surety on the supersedeas bond from paying the judgment, it being made to appear that such surety on the supersedeas bond holds an indemnifying bond, executed by the complainant surety; such indemnifying bond having been executed by the complainant surety in order to enable the executor, its principal, to stay proceedings on appeal to the Supreme Court, and before any payment had been made by the surety itself, and before any judgment had been rendered against it. To put the question in another way, if the complainant surety must answer the call of its indemnifying bond to the surety on the supersedeas bond, can it enforce contribution against the surety on the original executor’s bond ?

On or about May, 1883, one Lewis was appointed by the district court of Polk County as executor of the estate of L. S. Wyman. He executed a bond for $5,000, with John Wyman, surviving husband of L. S. Wyman, as his surety. Mrs. Wyman left as the beneficiaries of her estate an infant son, Arthur Wyman, and two daughters, Anna and Nettie, who will be referred to in this opinion as the Wyman heirs. The estate was kept open and pending until the youngest child should become of age, which majority occurred shortly prior to May, 1904. In the meantime, in May, 1903, John Wyman died testate, in Polk County, leaving surviving him his widow, Bina M., and the three children of L. S. Wyman, already named, and Mabel Wyman, a daughter of the second marriage, all of which were left as beneficiaries of his estate. Defendant Bowen was appointed by the district court of Polk County as executor of his will soon after his death. In pursuance of section 3268 of the Code, the clerk of the district court, in January, 1904, noted his disapproval of the executor’s bond in the L. S. Wyman estate, because of the death of the surety and because his estate was being administered, and placed the “matter upon the calendar of the court at the next term for a proper order.” On June 25, 1904, in response to the disapproval of the clerk, the executor filed a report. On the same day the court entered an order “that a new bond be given by the executor in the’sum of seven*thousand dollars, to be approved by the clerk of this court. And upon the filing of such bond the old bond is released and discharged.” In pursuance of said order^ the executor procured a new bond for $7,000 with the Bankers’ Surety Company, complainant herein, as his surety, and the same was then and there filed and approved by the clerk. On November 9, 1904, the executor filed a purported final report. On December 2, 1904, exceptions were filed to it by the AVyman heirs. December 16, 1904, the executor filed an amended report. December 30, 1904, further exceptions were filed by the heirs. This was the beginning of a controversy between the Wyman heirs and the executor, Lewis, as to the amount with which he should be charged as such executor. This controversy culminated in a judgment entered by' the court on September 10, 1906, holding the executor liable in the sum of about $6,000. From this judgment an appeal was perfected by the executor Lewis to the Supreme Court on October 5, 1906, no supersedeas bond being then filed. In the meantime the estate of John Wyman had been fully administered upon and was closed in due form, and the executor discharged on Hay 25, 1905. Gn De-' cember 28, 1906, the AVyman heirs filed an application for judgment on the bond against the complainant surety company, in pursuance of section 3361. On January 25, 1907, the complainant surety filed its petition in equity in the ease at bar, asking that the Wyman heirs be enjoined from prosecuting their summary proceeding under-section 3361. The contention urged was that John Wyman was a co-surety with the complainant and liable to contribution, and that the AVyman heirs had received all of his estate, and that they had therefore been fully indemnified by reason of his suretyship, and that they were not entitled to recover again from the complainant surety; but if such contention be not sustained, then that the complainant surety was entitled to contribution from the estate of John Wyman, and that such contribution should be charged against the Wyman heirs as the beneficiaries of his estate. Substantially the same matters were set up in defense to the application of the Wyman heirs for a summary judgment.

On February 16, 1907, the executor, Lewis, filed a supersedeas bond in his appeal to the Supreme Court, and thereby stayed all proceedings pending the appeal. Thereupon the Wyman heirs dismissed without prejudice their application for summary judgment, and all proceedings in the lower court slept for the time being. On May 8, 1907, the judgment of the lower court was affirmed on appeal, the appellant having failed to file an abstract within the statutory time, and judgment was then entered against the United States Fidelity & Guaranty Company, the surety on the supersedeas bond. Upon this judgment execution issued. Thereupon, on May 11, 1907, the complainant, Bankers’ Surety Company, paid in to the clerk of the district court the amount -adjudged against the supersedeas bond in the Supreme Court, and at the same time filed an amendment to its petition, making the clerk of the district court and the sheriff of Polk County, and the clerk of the Supreme Court, all parties defendant, and asking for a temporary injunction to restrain the collection of the judgment of tire Supreme Court upon the supersedeas bond, and to restrain the clerk of the district court from paying out to the Wyman heirs -the money which the complainant had itself páid in. ■ It obtained a temporary injunction to this effect, which was continued in force until the hearing of the case upon its final merits. In this amendment the complainant Bankers’ Surety Com-. pany also alleged an interest in restraining the collection of the judgment against the United States Fidelity & Guaranty Company as surety on the supersedeas bond, in that it had executed an indemnifying bond to the said United States Fidelity Company to protect it against such payment. It should have been stated earlier in this narrative that the complainant became a surety on the executor’s bond for hire, and that the cost of such surety-ship was charged and allowed against the estate, and therefore borne by the Wyman heirs, its beneficiaries. This will suffice for the present as a brief statement of the controlling facts in the case.

1. Estates of DECEDENTSl sureties: > contribution: new bond: primary liability. I. The appellee challenges the regularity of the procedure adopted by the complainant, in that it has resorted to most extraordinary remedies. We will pass that question for the present. It is undoubtedly true that the giving of an additional bond by an executor does not ordinarily, in and of itself, release a prior bond. It is also true that, where successive bonds remain in full force and effect the sureties thereon may be deemed as co-sureties and be liable to each other for contribution in proportion to their respective liabilities on their respective bonds. It does not follow, however, that a surety on a new bond may not undertake a primary liability, and we think that is the position of the complainant surety in this case. The circumstances which called for the new bond are somewhat out of the ordinary. The surety on the original bond was dead. Ilis estate was about to be distributed and closed. The beneficiaries and obligees of the original bond were also beneficiaries and distributees of the John Wyman estate. If there should be any default on the part of the executor, the estate of John Wyman would be liable for it, and the amount of such liability would of course reduce the amount to be distributed to its beneficiaries. In a sense, therefore, the Wyman heirs, as beneficiaries of their father’s estate, were sureties to themselves as beneficiaries of their mother’s estate. The real net result of such a situation was that they were left without a surety on the executor’s bond. This was the situation observed by the clerk while acting under the provisions of section 8268 of the Code. This was the situation which confronted the district court when it was called upon under this section of the statute to make a “proper order.”

2 Same: new bond application by heirs. 3. Same: discharge of old bond. The fact that the Wyman heirs did not personally appear in the proceedings, nor make any application in their own behalf, is to our minds quite immaterial. The estate was pending and unsettled, and, while s0 pending and unsettled, they were the -wards of the court. The executor was presumably notified and was in court. The order made was directed to him. It required that he file a new bond to the amount of $7,000 to be approved by the clerk. It further ordered then and there that upon the filing of such bond the old bond be released and discharged. The executor took no exception to this order. The beneficiaries themselves have never complained of it. In compliance with this order, the executor executed a new bond and hired the complainant to become surety thereon. At the time the complainant became such surety, the order of the court releasing and discharging the old bond was a matter of record in the case. The presentation of the new bond in compliance with such order of the court must be deemed as a consent tó the conditions of such order. It was entirely voluntary on the part of the complainant surety. It fixed its premium in accord with the liability incurred. ' The obligees of its bond were the beneficiaries of the L. S. Wyman estate; the undertaking was entered into expressly for their benefit. The cost of it was borne by them. In reliance upon this bond, the executor was permitted to continue in charge of the estate, and the John Wyman estate proceeded to its final distribution. To say now, as the appellant, does, that these Wyman heirs should be deemed to have continued as their own sureties by reason of their interest in their father’s estate, and that they should be deemed to have been fully indemnified by reason of having received their father’s estate, is a most inconsistent position. If this position be correct, it was an idle and expensive ceremony for the court to require a new surety at all. The position contended for is contradictory to the very terms of the bond, in that the bond by its terms purports to be made for the benefit of the very persons who are now claiming thereunder. If they have -no right to do so now, then the bond was nugatory from the beginning. The interest and ownership of these beneficiaries in the John Wyman estate existed at the time this bond was executed. If this fact is a defense to the bond now, it was a defense to it when it was made.

4 Same notice. True, the appellant charged fraud. But the evidence does not furnish the slightest support for this charge. It is quite apparent from the record that the heirs had no apprehension or ground of apprehension of any future difficulty between them and the executor, nor do we think that -the executor had any apprehension of any such difficulty. It is not claimed by either side that the executor was guilty of any fraud. He was confessedly without property, -and so stated in his application to the appellant. Complainant’s alleged ignorance of the state of the record can not be considered; it had no right to be ignorant in that respect, nor did the obligees of the bond have any knowledge of its ignorance. We hold, therefore, upon this branch of the case, that the complainant surety must be held to have undertaken a primary liability, and that it can not contradict the terms of its bond by claiming contribution from the obligees thereof, and, as to it, the original bond must be deemed discharged. And this is so, regardless of whether the, action of the court in ordering such, discharge was regular or not. Nor the purpose of this case, such action of the court must be deemecl a “proper order” within the meaning of section 3268. Wilborne v. Commonwealth, 5 J. J. Marsh. (Ky.) 617.

5. Sureties contribution laches. We may say, further, that we see no equitable circumstances proved' in this case which would justify the opening up of the John Wyman estate for the purpose of enabling the plaintiff to prove a claim for contribution against it. If it had a right to contribution, it lost it by its own neglect. The report of the executor was challenged by the heirs by written exceptions filed six months prior to the closing of the John Wyman estate. The beneficiaries of that estate owed no affirmative duty, as argued by counsel, to protect appellant against the contingency of liability for contribution. It devolved upon the defendant itself to guard its right of contribiftion, if it had any. Fidelity Co. v. Bowen, 123 Iowa, 356; Ellyson v. Lord, 121 Iowa, 125.

6. Supersedeasbond: injunction11** II. If we should assume that the appellant surety company had a right of contribution against,the John Wyman estate, has it any right as such surety to enjoin the collection of the judgment against the exeeutor from the United States Nidelity ComPan7j surety on. the supersedeas bond? It is clear to us that it has no ground to stand upon at this point. The supersedeas bond, to all legal intent, w7as filed by the executor to stay proceedings pending the appeal. By its very terms the surety thereon undertook to perform such judgment as the Supreme Court should order. The liability of the surety on the supersedeas bond is primary, and operates to the benefit of the surety on the executor’s bond. If the judgment can be collected, either .from the executor or from his surety on the supersedeas bond, it will relieve the surety on the executor’s bond of all liability; nor can contribution be demanded from it by a supersedeas surety. Fidelity Co. v. Bowen, 123 Iowa, 356. It is manifest, therefore, that, as a mere surety upon the executor’s bond, the appellant has no interest to subserve by enjoining the collection of the judgment from the surety on the supersedeas bond.

7. Suretyship: substitution: contribution. It appears, however, that, before the surety of the supersedeas bond entered into its undertaking, the appellant entered into an undertaking with it, agreeing to indemnify it against loss. It is its liability on this bond which creates an interest in the appellant adverse to the collection of the bond from the United States Fidelity Company. But this undertaking is entirely distinct from the executor’s bond, signed by it July 25, 1904. If the John Wyman estate had been liable to contribution as a co-surety, it had a right, nevertheless, to rely upon the supersedeas bond filed by the executor. If the appellant entered into a new undertaking and undertook a new obligation^ the John Wyman estate was not bound by that undertaking.

8. Same. Appellant’s argument is that it was i-ts duty to use its utmost efforts to reverse the judgment obtained against the executor, and that it executed the indemnifying bond in pursuance of such duty. If that argument should be deemed sound, it would be quite fatal to the plaintiff in this case. If it owed the duty to use its best efforts to secure a reversal of the judgment against the executor, it signally failed in that duty. It failed to file an abstract within the time allowed for that purpose, so that no review of the case was possible here. But the argument' is not well taken. As between it and the co-surety, it could not change the nature of its liability and still maintain its right of contribution. While it is true that the right to contribution between sureties is not dependent upon privity or knowledge, nor need they be signers upon the same instruments, it is essential for the purpose of contribution that the sureties be bound for the same principal and for the performance of the same duty.

No judgment has been entered in this case against the appellant, nór are the beneficiaries of the bond pressing any proceedings against it. For the present they choose to rely upon the supersedeas bond. True, the appellant did of its own accord pay in to the clerk of the district court the alleged amount necessary to discharge the liability of the executor, but it immediately tied it there with a temporary injunction. That injunction having been dissolved by the decree of the lower court, and the judgment against the United States Fidelity Company being still in forcé in this court, the appellant urges that the beneficiaries will reap a double satisfaction of their judgment. We shall have little trouble in protecting the appellant by proper order against a double payment.

The Wyman heirs are not now proceeding against the appellant surety company. The real question before us is whether the plaintiff may maintain its manifold injunctions against the various officers of the district court and of this court, and whether it can restrain the collection of the judgment entered in this court against the surety on the supersedeas bond. We hold that it can not.

The trial court rightly dissolved all the injunctions and dismissed plaintiff’s petition. Its decree is therefore affirmed.