Aetna Casualty & Surety Co. v. Abbott

• Court: U.S. Court of Appeals — Fourth Circuit
• Writing for the Court: PARKER, SOPER, and DOBIE, Circuit
• Citation: Aetna Casualty & Surety Co. v. Abbott, 130 F.2d 40 (4th Cir. 1942)
• Decision Date: 18 August 1942
• Docket Number: No. 4942.,4942.
• Parties: AETNA CASUALTY & SURETY CO. v. ABBOTT.

130 F.2d 40 (1942)

AETNA CASUALTY & SURETY CO. v. ABBOTT.

No. 4942.

Circuit Court of Appeals, Fourth Circuit.

August 18, 1942.

Leonard J. Ganse, of Washington, D. C. (William D. Macmillan, of Baltimore, Md., Carl F. Bauersfeld, of Washington, D. C., and Semmes, Bowen & Semmes, of Baltimore, Md., on the brief), for appellant.

George M. Brady, of Baltimore, Md. (William C. Sullivan, of Washington, D. C., and Thomas H. Hedrick, of Baltimore, Md., on the brief), for appellee.

Before PARKER, SOPER, and DOBIE, Circuit Judges.

PARKER, Circuit Judge.

This is an appeal from a judgment for plaintiff entered on the pleadings in a suit to recover under a safe deposit liability policy. Plaintiff had recovered judgment in a Maryland state court against the Takoma Park Bank for the sum of $50,500, with interest and costs, for loss of $50,000 in gold certificates and $500 in other funds from a safety deposit box which he had rented from that bank. The judgment was affirmed by the Court of Appeals of Maryland. Takoma Park Bank v. Abbott, 179 Md. 249, 19 A.2d 169, certiorari denied 314 U.S. 672, 62 S.Ct. 134, 86 L.Ed. ___. The complaint alleged the recovery of the judgment, the insolvency of the bank, the return unsatisfied of a fi. fa. issued to enforce the judgment, the issuance by the defendant to the bank of a safe deposit liability policy under which the bank was liable to plaintiff for the judgment, and the defense by the defendant of the action in which the judgment was obtained.

The defendant admitted the execution of the safe deposit liability policy in the sum of $50,000, the defense of the action against the bank pursuant to the terms of the policy, the recovery of the judgment, the insolvency of the bank and the return of the fi. fa. unsatisfied. It denied liability on three grounds: (1) That the action was prematurely brought because application to the United States Supreme Court for writ of certiorari to review the Court of Appeals of Maryland had not been denied at the time action was instituted; (2) that the gold certificates included in the loss for which judgment was obtained against the bank were possessed by plaintiff contrary to the provisions of the Gold Hoarding Act of March 9, 1933, 12 U.S.C. A. ß 95a, and Executive Order No. 6260, ß 5, 12 U.S.C.A. ß 95 note, dated August 28, 1933; and (3) that the judgment was obtained by fraud and as the result of conspiracy between plaintiff and certain witnesses who testified in his behalf. When the trial judge indicated that he would grant the motion for judgment on the pleadings, defendant asked leave to file certain amendments to his answer, which was denied; and, from judgment for the plaintiff, entered on the pleadings and the admissions made in open court, for the amount of the policy with interest and costs, the defendant has appealed.

The pertinent provision of the policy sued on is as follows:

"E. No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the conditions hereof, nor until the amounts of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant, and the company, nor in either event unless suit is instituted within two years and one day after the date of such judgment or written agreement.

"Any person or his legal representative who has secured such judgment or written agreement shall thereafter be entitled to recover under the terms of this policy in the same manner and to the same extent as the insured. Nothing contained in this policy shall give any person or organization any right to join the company as a co-defendant in any action against the insured to determine the insured's liability.

"Bankruptcy or insolvency of the insured shall not relieve the company of any of its obligations hereunder."

Appellant's first point, that the action was prematurely brought because the United States Supreme Court had not passed on the application for certiorari, is wholly without merit. A final judgment had been obtained in the state court and this was all that the policy required. Pendency of the application for certiorari would have been ground to stay proceedings in the lower court, not to dismiss the action. Cf. Fidelity & Deposit Co. of Maryland v. Davis, 4 Cir., 127 F.2d 780. Certiorari was denied by the Supreme Court before the case was heard in the court below; and there can be no question that it was then proper to proceed with the hearing. Cf. Ouerbacker v. Henderson County, 4 Cir., 126 F.2d 309.

The defense that the gold certificates were possessed by plaintiff in violation of law was asserted and fully passed on in the suit against the Takoma Park Bank, in which the judgment sued on was obtained, and which was admittedly defended by defendant under its policy. It is too well settled to admit of discussion that on such a question the defendant is concluded by the judgment. The defendant, by defending the action, bound itself by the judgment to the same extent as though a party to the record. E. I. Du Pont De Nemours & Co. v. Sylvania I. Corporation, 4 Cir., 122 F.2d 400, 404; Lovejoy v. Murray, 3 Wall. 1, 18 L.Ed. 129. And as said by this court in National Bondholders Corp. v. Seaboard Citizens Nat. Bank, 4 Cir., 110 F.2d 138, 143: "It is well settled that a fact or question which was actually and directly in issue in a former suit, and was there judicially determined by a court of competent jurisdiction, is conclusively settled by the judgment therein so far as concerns the parties to that action and persons in privity with them, and cannot be again litigated in any future action between the parties or privies in the same or any other court upon either the same or a different cause of action. State of Oklahoma v. State of Texas, 256 U.S. 70, 41 S.Ct. 420, 65 L.Ed. 831; Postal Telegraph Cable Co. v. City of Newport, 247 U.S. 464, 38 S.Ct. 566, 62 L.Ed. 1215; Hart Steel Co. v. Railroad Supply Co., 244 U.S. 294, 37 S. Ct. 506, 61 L.Ed. 1148; Richmond v. Davis, 135 Va. 319, 116 S.E. 492; Douglas Land Co. v. T. W. Thayer Co., 113 Va. 239, 74 S.E. 215; 34 Corpus Juris, 868." (Italics supplied.) See also City of Wheeling v. John F. Casey Co., 4 Cir. 89 F.2d 308; Parr v. State to Use of Cockey, 71 Md. 220, 17 A. 1020; Parsons v. Urie, 104 Md. 238, 64 A. 927, 8 L.R.A.,N.S., 559, 10 Ann. Cas. 278; Bernstein, Cohen & Co. v. Stansbury, 119 Md. 316, 86 A. 349.

It is said, however, that the defendant is not bound by the judgment obtained by plaintiff against the Takoma Park Bank, because the coverage of the policy here sued on was not involved in that action. The answer is that the facts upon which coverage depends were involved in that action, and the facts asserted here as a defense with respect to coverage were asserted there as a defense to a recovery against the bank. Even though there be a difference of issues, defendant is bound as to facts actually litigated and determined. National Bondholders Corp. v. Seaboard Citizens Nat. Bank, supra.

What was in issue in the state court is clearly set forth by the following quotation from the opinion of the Court of Appeals of Maryland 179 Md. 249, 19 A.2d 174:

"The second plea was a special plea reciting that plaintiff had no interest, legal or equitable in the fifty $1,000 gold certificates of the United States of America because he held them in violation of Section 5(b) of the Act of Congress of October 6, 1917, as amended by Section 2 of the Act of Congress of March 9, 1933, * * * and the Executive Order No. 6260, ß 5, * * * dated August 28, 1933, and is not legally entitled to maintain his action to recover damages, interest, and profits for the alleged loss thereof. To this second plea the plaintiff demurred and the demurrer was sustained.

"Was the court correct in sustaining this demurrer? Section 5 of the Executive Order No. 6260 above referred to provides that after thirty days from August 28, 1933, no person shall hold or retain any interest, legal or equitable, in any gold coin, gold bullion, or gold certificates situated in the United States and owned by any person subject to the jurisdiction of the United States, except under license therefor issued pursuant to this Executive Order. The special plea did not state that the plaintiff did not have a license. `To constitute a good plea in bar, the matter pleaded, must, if true, afford a full and complete answer to the action and show that there is no right of recovery.' Glenn v. Williams, 60 Md. 93; Carroll v. Bowen, 113 Md. 150, at page 154, 77 A. 128. Section 3 of the Act of March 9, 1933, supra, 12 U.S.C.A. ß 248(m), also directs that the Secretary of the Treasury shall pay therefor an equivalent amount of any other form of coin or currency issued under the laws of the United States, and although the gold certificates in this case were held after thirty days from August 28, 1933, in order for confiscation to take place, it appears that intent to violate the act must be shown. United States v. 98 $20 United States Gold Coins et al., D.C. E. D.Pa., August 17, 1937, 20 F.Supp. 354. The case of Schmidt v. Twin City State Bank, April 6, 1940, 151 Kan. 667, 100...