American Surety Co. of New York v. Franciscus, No. 12152.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtGARDNER, THOMAS, and RIDDICK, Circuit
Citation127 F.2d 810
Docket NumberNo. 12152.
Decision Date05 June 1942
PartiesAMERICAN SURETY CO. OF NEW YORK v. FRANCISCUS et al.

127 F.2d 810 (1942)

AMERICAN SURETY CO. OF NEW YORK
v.
FRANCISCUS et al.

No. 12152.

Circuit Court of Appeals, Eighth Circuit.

May 6, 1942.

Rehearing Denied June 5, 1942.


127 F.2d 811
COPYRIGHT MATERIAL OMITTED
127 F.2d 812
Henry Davis, of St. Louis, Mo. (Bryan, Williams, Cave & McPheeters, of St. Louis, Mo., on the brief), for appellant

Roland F. O'Bryen, of St. Louis, Mo. (Fred L. Williams, Fred L. English, and Richard S. Jones, all of St. Louis, Mo., on the brief), for appellees.

Before GARDNER, THOMAS, and RIDDICK, Circuit Judges.

THOMAS, Circuit Judge.

This is an appeal from a judgment in favor of the statutory trustees for the Franciscus Realty Company, plaintiffs below, against the American Surety Company of New York, defendant below, for damages in the sum of $17,378.11 with interest, and for an attorney's fee for plaintiffs' attorneys in the sum of $1,500, with costs.

The suit in which the judgment complained of was rendered was brought to recover damages for the alleged breach of a mechanics' lien bond issued by the defendant to the Franciscus Realty Company on August 19, 1927. The defendant denied liability. A jury was waived and the case was tried to the court upon an agreed statement of facts supplemented by certain exhibits introduced at the trial. The court made findings of fact and stated conclusions of law upon which the judgment is predicated.

Upon this appeal the American Surety Company contends (1) that the court should have dismissed plaintiffs' petition for failure to state a claim upon which relief can be granted; (2) that the court erred in its findings of fact; (3) that the court erred in excluding testimony offered by the surety company; and (4) that allowance of an attorney's fee for plaintiffs' attorneys is error.

The first contention was raised by a motion to dismiss interposed and overruled before answer was filed. The motion and the arguments in its support are based upon an erroneous construction of plaintiffs' theory of the case as alleged in their petition. Plaintiffs' cause of action is for damages for breach of the bond. To recover upon this claim it was incumbent upon plaintiffs to allege and prove (1) the execution of the bond, (2) the loan of $17,500 secured by a deed of trust upon the premises described in the bond, (3) the subsequent establishment of a mechanics' lien as prior to the trust deed, (4) the loss of the security by reason of the mechanics' lien and the failure of the defendant to "hold harmless the said Franciscus Realty Company", and (5) the amount of the damages sustained.

The Franciscus Realty Company appears to have been a corporation engaged in loaning money secured by deeds of trust or mortgages on real estate which it in turn sold to its clients. In 1933 the corporation was dissolved by an order of the state court and the plaintiffs were declared statutory trustees with all the powers and responsibilities of the corporation.

The circumstances giving rise to the execution of the bond in suit are recited in the bond itself. The bond reads:

"American Surety Company of New York "Capital $5,000,000 "Company's Home Office "100 Broadway, New York

"Know All Men By These Presents, That we, Lewis C. Hosack of Overland, Missouri, as Principal, and the American Surety Company of New York, a New York Corporation, as Surety, are held and firmly bound unto Franciscus Realty Company, a Missouri Corporation, of St. Louis, Mo., in the sum of Seventeen Thousand Five Hundred ($17,500.00) Dollars, for the payment of which, well and truly to be made, we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.

"Signed, Sealed And Delivered this 19th day of August, 1927.

"The Conditions of the Foregoing Obligation Are such, That,

"Whereas, the said Franciscus Realty Company is about to make a loan of Seventeen Thousand Five Hundred ($17,500.00) secured by a first deed of trust on the following described property, situated in the City of St. Louis, Missouri, and owned by Fred W. Mieger and Eva Mieger, his Wife, to-wit:

"Lots No. 27 and No. 28 in Block 4 of Mount St. Edward and in Block No. 5254 of City of St. Louis, Mo., together fronting 49 feet, 6½ inches on the south line of Powers Ave., by a depth southwardly of

127 F.2d 813
108 feet to an alley bounded east by Burd Ave., known as 2711-15 Burd Avenue

"Whereas Lewis C. Hosack is about to erect for Fred W. Mieger and Eva Mieger, his wife, an eight (8) family apartment building on the above described property and the said Franciscus Realty Company desires to be protected against any Mechanics Lien or Liens which may be lawfully established against the said real estate and improvements hereinbefore mentioned and which may become a prior lien to said loan.

"Now, Therefore, if the said Lewis C. Hosack shall well and truly hold harmless the said Franciscus Realty Company against any and all loss which the said Franciscus Realty Company shall suffer by reason of any Mechanics Lien or Liens being lawfully established against the real estate and improvements hereinabove mentioned, then this obligation shall be null and void, otherwise to remain in full force and effect.

"(Signed) Lewis C. Hosack "American Surety Company of New York "By O. L. Kincheloe, "Resident Vice President."

The petition alleged the execution of the bond, that the defendant surety company failed to comply with its provisions, and that as a result thereof plaintiffs have been damaged in the sum of $17,378.11 with interest.

The circumstances constituting the breach of the bond and showing the amount of the damages claimed to have resulted therefrom were alleged in detail. In brief these circumstances are as follows:

On November 3, 1927, the Franciscus Realty Company (sometimes referred to hereinafter as the realty company) sold the deed of trust executed by Mieger and his wife upon the property described in the bond to Catherine C. Uhrig, L. H. Cowdery, Anna Steiner, and Lizzie Hesse for $17,780, guaranteeing to the purchasers that the deed of trust was a first lien on the property.

On April 25, 1928, the realty company was served with a petition filed in the Circuit Court of the City of St. Louis, Missouri, wherein the Boeckeler Lumber Company was plaintiff and L. C. Hosack, principal on the bond, and others were defendants. In that petition the lumber company claimed that it had a mechanics' lien on the property described in the bond for lumber and material furnished by it and used in the construction of the building erected on the premises. The petition was forwarded to the surety company, and attention was called to the bond of August 19, 1927, the purpose of which, it was stated, "is to save harmless the Franciscus Realty Company from any loss by reason of liens against the above property." On May 3, 1928, the surety company wrote to the realty company referring to the Boeckeler Lumber Company case and saying, "This is to advise you that this matter is receiving our attention."

Judgment was rendered in the Boeckeler Lumber Company case, establishing the mechanics' lien as prior to the deed of trust, and the property was sold on execution April 24, 1934, and a sheriff's deed issued to the Archwill Realty Company.

Meanwhile on October 20, 1933, the trust deed was foreclosed by Uhrig et al. for default in payment. Thereafter, in 1935, Uhrig et al. brought suit in the state court to set aside the sheriff's deed to the Archwill Realty Company; a decree was entered for the plaintiffs in that suit, but upon appeal to the Supreme Court of Missouri the decision was reversed, and it was decreed that title was vested in the Archwill Realty Company. See Uhrig et al. v. Hill-Behan Lbr. Co., 341 Mo. 851, 110 S.W.2d 412.

In 1935, after the decision of the Supreme Court of Missouri in the Hill-Behan Lbr. Co. case, supra, was rendered, Uhrig et al., purchasers and holders of the deed of trust, filed suit in the state court against the plaintiffs as statutory trustees for the Franciscus Realty Company for damages on the ground that at the time the deed of trust was purchased the realty company had represented the deed of trust to be a first lien upon the property; that such representation was false in that a mechanics' lien was subsequently established upon the property; that the property had been sold on execution to Archwill Realty Company; and that the security was thereby lost. Judgment was eventually rendered...

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12 practice notes
  • United States v. Russell Electric Co.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • November 15, 1965
    ...mitigate arises. Watts v. Camors, 115 U.S. 353, 6 S.Ct. 91, 29 L.Ed. 406 (1885); American Surety Co. of N. Y. v. Franciscus, 8 Cir., 1942, 127 F.2d 810; J. L. Metz Furniture Co., Inc. v. Thane Lumber Co., 8 Cir., 1924, 298 F. 91; Kentucky Distilleries & Warehouse Co. v. Lillard, 6 Cir.,......
  • Little v. Rose, No. 34
    • United States
    • North Carolina United States State Supreme Court of North Carolina
    • October 10, 1974
    ...791, 64 [285 N.C. 729] S.Ct. 207, 88 L.Ed. 477, reh. den., 320 U.S. 815, 64 S.Ct. 368, 88 L.Ed. 492; American Surety Co. v. Franciscus, 127 F.2d 810 (8th Cir.); Norfolk and W.R.R. v. Amicon, Fruit Co., 269 F. 559 (4th Cir.); Kentucky Distilleries & Warehouse Co. v. Lillard, 160 F. 34 (6......
  • A.G. Edwards & Sons, Inc. v. Drew, No. 72707
    • United States
    • Missouri Court of Appeals
    • July 31, 1998
    ...been breached. Richardson v. Collier Bldg. Corp., 793 S.W.2d 366, 375 (Mo.App.1990)(citing American Surety Co. of New York v. Franciscus, 127 F.2d 810, 816 (8th Cir. (Mo.) D & H's proffered evidence related to conduct of AGE that occurred before AGE had any knowledge of D & H's brea......
  • Moran Foods v. Mid-Atlantic Market Development, No. 05-3656.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • February 5, 2007
    ...S.W.2d 103, 116-17 (Mo.App.1997); Mansfield v. Trailways, Inc., 732 S.W.2d 547, 552-53 (Mo.App.1987); American Surety Co. v. Franciscus, 127 F.2d 810, 815 (8th Cir.1942) (Missouri law); USA Group Loan Services, Inc. v. Riley, 82 F.3d 708, 712 (7th Cir.1996); Restatement (Second) of Contract......
  • Request a trial to view additional results
12 cases
  • United States v. Russell Electric Co.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • November 15, 1965
    ...mitigate arises. Watts v. Camors, 115 U.S. 353, 6 S.Ct. 91, 29 L.Ed. 406 (1885); American Surety Co. of N. Y. v. Franciscus, 8 Cir., 1942, 127 F.2d 810; J. L. Metz Furniture Co., Inc. v. Thane Lumber Co., 8 Cir., 1924, 298 F. 91; Kentucky Distilleries & Warehouse Co. v. Lillard, 6 Cir.,......
  • Little v. Rose, No. 34
    • United States
    • North Carolina United States State Supreme Court of North Carolina
    • October 10, 1974
    ...791, 64 [285 N.C. 729] S.Ct. 207, 88 L.Ed. 477, reh. den., 320 U.S. 815, 64 S.Ct. 368, 88 L.Ed. 492; American Surety Co. v. Franciscus, 127 F.2d 810 (8th Cir.); Norfolk and W.R.R. v. Amicon, Fruit Co., 269 F. 559 (4th Cir.); Kentucky Distilleries & Warehouse Co. v. Lillard, 160 F. 34 (6......
  • A.G. Edwards & Sons, Inc. v. Drew, No. 72707
    • United States
    • Missouri Court of Appeals
    • July 31, 1998
    ...been breached. Richardson v. Collier Bldg. Corp., 793 S.W.2d 366, 375 (Mo.App.1990)(citing American Surety Co. of New York v. Franciscus, 127 F.2d 810, 816 (8th Cir. (Mo.) D & H's proffered evidence related to conduct of AGE that occurred before AGE had any knowledge of D & H's brea......
  • Moran Foods v. Mid-Atlantic Market Development, No. 05-3656.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • February 5, 2007
    ...S.W.2d 103, 116-17 (Mo.App.1997); Mansfield v. Trailways, Inc., 732 S.W.2d 547, 552-53 (Mo.App.1987); American Surety Co. v. Franciscus, 127 F.2d 810, 815 (8th Cir.1942) (Missouri law); USA Group Loan Services, Inc. v. Riley, 82 F.3d 708, 712 (7th Cir.1996); Restatement (Second) of Contract......
  • Request a trial to view additional results

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