St. Paul Fire & Marine Insurance Co. v. United States
Decision Date | 05 January 1967 |
Docket Number | No. 22266.,22266. |
Citation | 370 F.2d 870 |
Parties | ST. PAUL FIRE & MARINE INSURANCE COMPANY, Appellant, v. UNITED STATES of America et al., Appellees. |
Court | U.S. Court of Appeals — Fifth Circuit |
Harold L. Ward, Miami, Fla., Fowler, White, Gillen, Humkey & Trenam, of counsel, Miami, Fla., for appellant.
Starr W. Horton, Alfred E. Sapp, Asst. U. S. Atty., Miami, Fla., Stephen R. Booher, Fort Lauderdale, Fla., Mallory H. Horton, Miami, Fla., William A. Meadows, Jr., U. S. Atty., S. D. Florida, for appellee.
Dale & Stevens, Fort Lauderdale, Fla., of counsel, for appellee Rose Cement Supply, Inc.
Before TUTTLE, Chief Judge, WISDOM, Circuit Judge, and FISHER, District Judge.
This is an appeal from a judgment in favor of the United States against St. Paul Fire & Marine Insurance Company, which judgment denied recovery by St. Paul Fire & Marine Insurance Company against either of the third-party defendants, Stephen Messana and Rose Cement Supplies, Inc.
Rose Cement Supply, a partnership composed of Arthur J. Rose and Stephen Messana, employed Pedro Zugasti as a customs broker to import cement which was sold by the partnership to its customers.
Pedro Zugasti was principal and St. Paul Fire & Marine Insurance Company was surety on a bond required by the United States guaranteeing payment of duty imposed on the imported cement.
Nine consumption entries were filed by Zugasti with the government reflecting importation of cement by the partnership Rose Cement Supply. The government liquidated the consumption entries in 1962 and in respect thereof assessed additional import duties of $8,556.07, for which it brought suit in 1963 against both Zugasti and St. Paul.
Zugasti, although a party defendant, was never served with process. St. Paul with leave of the court, joined as third-party defendants Messana and the corporation, Rose Cement Supplies, Inc., which concern in 1961 purchased the assets and business of the partnership, Rose Cement Supply. Neither Rose nor Messana were share holders or officers of the corporation. The partner, Arthur Rose, died in 1962.
The third-party action brought by St. Paul against Messana and the corporation was based on the subrogation theory that if the government recovered against St. Paul then St. Paul in turn could recover from Messana the surviving partner of Rose Cement Supply and/or the corporation, Rose Cement Supplies, Inc.
St. Paul alleges four assignments of error:
1. The court erred in ruling that a surety is not subrogated to any rights of the principal connected with the claim sued upon.
2. The court erred in ruling that the government had no claim against the partnership to which St. Paul would be subrogated.
3. The court erred in finding from the evidence that all notices required by law to be mailed to Zugasti were in fact duly and properly mailed.
4. The court erred in finding from the evidence that Zugasti, St. Paul's principal, executed the consumption entries in question.
We next consider the contention of the appellant that the trial court erred in not permitting St. Paul a recovery against third-party defendants. The question presented is whether or not St. Paul is subrogated to the rights and remedies of the government creditor on the one hand and also the principal Zugasti debtor on the other hand as against third-party defendant Stephen Messana, surviving partner of the partnership of Rose Supply and/or Rose Cement Supplies, Inc. We answer the question in the affirmative.
Maryland Casualty Co. v. United States, 1940, 32 F.Supp. 746, 754, 91 Ct.Cl. 203, holds:
"The right of subrogation extends not only to the rights and remedies of the creditor but also to those of the principal on the bond."
Considering first whether St. Paul may be subrogated to the rights of the principal Zugasti and thus be permitted to recover against the third-party defendant Messana; the trial court denied St. Paul this right on the theory that Zugasti was a customs broker rather than an agent and employee of the partnership, Rose Supply Company, and for that reason held that St. Paul could not go beyond Zugasti.1
The evidence discloses that Zugasti was an employee of the partnership and was also acting in behalf of the partnership as a customs broker. It would appear that all equitable principles would dictate that Zugasti should be given the opportunity to make himself whole, since the partnership received the financial benefits from the sale of cement to its domestic market. Pearlman v. Reliance Ins. Company, (1962) 371 U.S. 132, 83 S.Ct. 232, 9 L.Ed.2d 190; Compania Anonima Venezolana de Navegacion v. A. J. Perez Export Co., (C.A. 5th 1962) 303 F.2d 692, cert. den. 371 U.S....
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