Bankers' Sur. Co. v. Town of Holly

• Decision Date: 04 January 1915
• Docket Number: 4085.
• Citation: 219 F. 96
• Parties: BANKERS' SURETY CO. v. TOWN OF HOLLY. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

219 F. 96

BANKERS' SURETY CO. v. TOWN OF HOLLY. ^[1]

No. 4085.

United States Court of Appeals, Eighth Circuit.

January 4, 1915

W. E Clark, of Denver, Colo., for plaintiff in error.

John H Fry, of Denver, Colo. (Pershing & Titsworth and Caldwell Martin, all of Denver, Colo., on the brief), for defendant in error.

Before CARLAND, Circuit Judge, and T. C. MUNGER and YOUMANS District judges.

CARLAND Circuit Judge.

The town of Holly, Colo., brought suit against the Bankers' Surety Company, an Ohio corporation, and recovered a judgment therein in the sum of $10,000 upon a bond executed and delivered to the town November 15, 1909, to secure the faithful performance of a contract made and entered into between the town and the W. K. Palmer Company, engineers, July 24, 1909, covering certain engineering work in connection with the installation of a sewer system for said town. The surety company claims that the trial court never obtained jurisdiction over it to render such judgment, for the reason that the summons and complaint issued in said action was never served upon it.

We will first consider the record for the purpose of ascertaining what the surety company did in the trial court in the way of raising the question of jurisdiction. The action was commenced in the district court of Prowers county, Colo., September 30, 1910. October 27, 1910, the surety company filed the following motion in the state court:

'Comes now the defendant, the Bankers' Surety Company, by W. E. Clark, its attorney, and appearing especially for the purpose of this motion, and for no other purpose, moves the court to quash the service of the summons herein, for the reason that said defendant is not doing, nor is it authorized to do, any business within the state of Colorado, nor has it been at any time during the year A.D. 1910.

W. E. Clark,

'Attorney for Defendant, the Bankers' Surety Company.'

This motion was never ruled upon, and need not be further considered. November 16, 1910, the cause was removed by the surety company to the United States Circuit Court for the District of Colorado. August 28, 1911, counsel for the surety company filed in the Circuit Court the following motion:

'Comes now the defendant, The Bankers' Surety Company, by W. E. Clark, its attorney, and appearing specially for the purpose of this motion and for no other purpose, moves the court to quash the service of summons herein for the reason that the same is not valid nor authorized.

'W. E. Clark,

'Attorney for the Defendant, the Bankers' Surety Company.'

November 17, 1911, this motion was denied and the surety company ordered to either demur within 10 or answer within 20 days. November 27, 1911, the surety company under protest filed a general demurrer to the complaint. December 21, 1911, the demurrer was overruled, and the surety company ordered to answer within 15 days. January 13, 1912, the surety company answered under protest. The answer alleged that the surety company had done no business in Colorado since October 23, 1909, and set forth the correspondence had between the surety company and the commissioner of insurance of Colorado, which it was claimed had the effect of excluding the surety company from the state on the date mentioned.

When the case came on for hearing February 12, 1913, 2 years and 4 months after its commencement, counsel for the surety company read a formal protest against being compelled to go to trial, first, because the summons and complaint was served upon the deputy commissioner of insurance, instead of the commissioner himself; second, because the surety company had withdrawn from doing business in the state of Colorado prior to the execution of the bond in suit. The protest was overruled and exception allowed. The town of Holly introduced its evidence in support of the complaint, the surety company taking no part in the trial of the merits, but at the close of the plaintiff's evidence introduced evidence which showed that the commissioner of insurance of Colorado accepted the withdrawal of the surety company from that state October 23, 1909; that A. W. Grant, deputy commissioner of insurance received a copy of the summons issued in the action September 30, 1910, and on the same day mailed said copy, together with a copy of the complaint in the action, also served upon him, to the Bankers' Surety Company, Cleveland, Ohio; and that the surety company acknowledged the receipt of the letter. Counsel for the surety company then moved to dismiss the action for want of jurisdiction. The motion was overruled and exception allowed.

The contract to secure the performance of which the bond was given contained this language:

'The company shall give a bond, acceptable to the town, running to the town of Holly, Colorado, in the sum of ten thousand dollars ($10,000.00), for the faithful performance of this agreement, and guaranteeing that the sewer systems when completed shall be practical, efficient sewer systems in every respect. Said bond to be given by a surety company regularly incorporated, and authorized to operate in Colorado.'

The bond itself contained the following recital:

'Whereas, said principals have entered into a certain written contract, a copy of which is hereto attached and made a part hereof, bearing date the 24th day of July, 1909, covering certain engineering work in connection with the installation of a sewer system in the town of Holly, Colorado, and supervising the work of construction.'

Palmer, of the W. K. Palmer Company, delivered the bond to the town of Holly, and it was accepted by said town. The proof of service of the summons and complaint was as follows: 'State of Colorado, City and County of Denver-- ss.:

'Myles P. Tallmadge, being first duly sworn, deposes and says that he is over the age of twenty-one years and is not interested in or a party to the within entitled action; that he received the within summons, together with a copy of the complaint in the within stated action, on the 30th day of September, A.D. 1910, and personally served the same upon William L. Clayton, commissioner of insurance of the state of Colorado, by leaving with Alexander W. Grant, deputy commissioner of insurance of said state, and chief clerk of said commissioner of insurance, personally, in the office of said commissioner of insurance in the capitol building of said state of Colorado, between the hours of three and four o'clock in the afternoon of said last-mentioned day, a true copy of the within summons, together with a copy of the complaint in the action therein mentioned, thereto attached; and deponent further says that he knows the person served as aforesaid to be the duly authorized agent of the Bankers' Surety Company, a corporation of the state of Ohio, for the purpose of service of process on said surety company, the person mentioned and described in said summons as one of the defendants in the action therein mentioned.

Myles P. Tallmadge.

'Subscribed and sworn before me this 30th day of September, A.D. 1910. My commission expires February 26, A.D. 1913.

'(Seal.)

Alexander C. Hitzler, Notary Public.' Section 22, Session Laws of Colorado of 1907, page 447, reads as follows:

'Sec. 22. (Appointing Commissioner-- Attorney.) No foreign insurance company shall, directly or indirectly, issue policies, take risks or transact business in this state, until it shall have first appointed, in writing, the commissioner of insurance to be the true and lawful attorney of such company in and for this state, upon whom all lawful processes in any action or proceeding against the company may be served with the same effect as if the company existed in this state. Said power of attorney shall stipulate and agree, upon the part of the company, that any lawful process against the company which is served on said attorney shall be of the same legal force and validity as if served on the company, and that the authority shall continue in force so long as any liability remains outstanding against the company in this state. A certificate of such appointment, duly certified and authenticated, shall be filed in the office of the commissioner, and copies certified by him shall be deemed sufficient evidence, and service upon such attorney shall be deemed sufficient service upon the principal.'

The appointment by the surety company of the superintendent of insurance of the state of Colorado as a person upon whom service of process in suits against it might be served, reads as follows:

'Know all men by these presents, that the Bankers' Surety Company, a corporation created by and organized under the laws of the state of Ohio, and thereby authorized to transact the business of fidelity and guaranty insurance, desiring to transact such business within the state of Colorado, pursuant to the laws thereof, does by these presents irrevocably consent that actions may be commenced against said company in the proper court of any county in the state of Colorado in which the cause of action shall arise, or in which the plaintiff may reside, by service of process upon the superintendent of insurance of the state of Colorado; and the said the Bankers' Surety Company does hereby, in consideration of the privilege of doing business in the state of Colorado as aforesaid, stipulate and agree that such service of process shall be taken and held in all courts to be as valid and binding as if due service had been made upon said company according to the laws of said state of Colorado, or of any other state. And that the authority shall continue so long as any liability remains outstanding against the company in the state of Colorado.

'In witness whereof, the said company, in accordance with a resolution of its board of directors, duly

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