Central Banking & Security Co. v. U.S. Fidelity & Guaranty Co.

• Decision Date: 11 November 1913
• Citation: 80 S.E. 121,73 W.Va. 197
• Parties: CENTRAL BANKING & SECURITY CO. v. UNITED STATES FIDELITY & GUARANTY CO. ET AL.
• Court: West Virginia Supreme Court

80 S.E. 121

73 W.Va. 197

CENTRAL BANKING & SECURITY CO. v. UNITED STATES FIDELITY & GUARANTY CO. ET AL.

Supreme Court of Appeals of West Virginia.

November 11, 1913

Submitted January 11, 1912.

Syllabus by the Court.

A bond of a personal representative, taken by an officer without authority and voluntarily given, is valid as a common-law obligation and enforceable as such, in the absence of a statutory prohibition of such construction.

Bonds given by a personal representative before the clerk of a county court in the vacation of the court as new bonds, after he had previously qualified and given bond, are not substitutes for the original bond, but are valid and enforceable as additional ones and as further security; and in case of necessity for contribution among the sureties, the proportion of contribution is determinable by the penalties of the several bonds.

A recital in such a subsequent bond of the tender thereof in lieu of the preceding one, in compliance with a desire on the part of the principal therein to release the surety in it from further liability, is not a stipulation or covenant for indemnity of the surety in the preceding bond.

A decree, in a suit by the distributees of the estate for the benefit of which such bonds were given against the principal and sureties in all of them, dismissing the bill as to the sureties in the subsequent ones, on their separate demurrers thereto, does not conclude the surety in the original bond in a subsequent suit against the sureties in the others for contribution, under the principles of res judicata, after payment and satisfaction of the liability to the estate by the surety in such first bond.

The cause of action in such subsequent suit is separate and distinct from that involved in the first, and is not therefore merged in the decision therein. In such case, the decree in the first suit does not bar the second, unless the question of liability involved in the second was actually put in issue by proper pleadings and decided in the first.

Additional Syllabus by Editorial Staff.

"Contribution" and "subrogation" are separate and distinct things the latter being in equity a broader right and including the former.

Appeal from Circuit Court, Wood County.

Action by the Central Banking & Security Company against the United States Fidelity & Guaranty Company and others. From judgment for defendants, plaintiff appeals. Affirmed.

Williams J., dissenting.

Merrick & Smith, of Parkersburg, for appellant.

Van Winkle & Ambler, of Parkersburg, and J. M. Hamilton, of Grantsville, for appellees.

POFFENBARGER P.

After the Central Banking & Security Company, surety in one of the bonds of Amnon Taylor, administrator of Tasriel Taylor, had paid the decrees pronounced against it, as corrected and affirmed by this court, in Taylor v. Taylor, 66 W.Va. 238, 66 S.E. 690, 19 Ann. Cas. 414, it brought this suit, primarily for indemnity and secondarily for contribution, against the United States Fidelity & Guaranty Company, of Baltimore, Md., and the Citizens' Trust & Guaranty Company, of Parkersburg, W. Va., sureties in the two subsequent bonds given by Taylor as administrator of the same estate. The prayer of the bill is in the alternative. The plaintiff claims the subsequent bonds operate in law as full and complete indemnity, requiring the sureties therein, or one of them, to reimburse it to the extent of the whole amount it was compelled to pay as Taylor's surety. It had become the surety in a $6,000 bond given in February, 1903. In July, 1904, the United States Fidelity & Guaranty Company gave, before the clerk of the county court of Calhoun county, another bond in the same penalty, and in July, 1905, the Citizens' Trust & Guaranty Company became surety in a third bond in the same penalty and given in the same way. Each of these subsequent bonds contains a recital of desire on the part of the principal therein to release the surety in the preceding one from further liability, and of tender thereof in lieu of the preceding one. The claim for complete indemnity and full reimbursement is predicated upon this recital. In the case of Taylor v. Taylor, the distributees of the Taylor estate sued the principal and sureties in all three of the bonds, and the trial court sustained the demurrers of the United States Fidelity & Guaranty Company and the Citizens' Trust & Guaranty Company, and dismissed the bill as to them. It held the Central Banking & Security Company liable as surety in the first bond, and it appealed from the decrees. The sureties in the other two did not appeal, and the dismissal as to them remains unreversed. As the bill in this cause exhibits the printed record of the former one, showing all the proceedings had therein, as well as the mandate and opinion of this court in it, the defendants herein, in their separate demurrers thereto, relied principally upon said dismissal of the former bill as an adjudication in their favor, not only against the plaintiff in the former suit, but as against the alleged cosurety, the plaintiff here. The demurrer of the United States Fidelity & Guaranty Company to this bill was unqualifiedly overruled, and that of the other defendant partially sustained, but the bill was not dismissed as to it; the court deeming it a proper party, but not subject to direct liability. Thereafter the United States Fidelity & Guaranty Company filed its answer, and answer in the nature of a cross-bill, praying affirmative relief against the Central Banking & Security Company, the Citizens' Trust & Guaranty Company, and the administrator and heirs of Taylor, the purpose of which was, in the main, to demand indemnity from the Citizens' Trust & Guaranty Company, its successor in the bond as surety, or rather the surety in the last of the three bonds. The Citizens' Trust & Guaranty Company filed its answer to the original bill and also to the cross-bill, and upon these pleadings and general replications of the plaintiff to the answers and a stipulation as to the facts, the court held the parties to be cosureties, and required each of the two defendants to pay to the plaintiff one-third of the amount it had been compelled to pay at the suit of the distributees of the Taylor estate. From this decree, the Central Banking & Security Company has appealed, complaining of the disallowance of full indemnity against the other companies, and also of the denial of contribution as to the costs and expense incident to its defense in the cause of Taylor v. Taylor. Denying liability for contribution or indemnity, the two defendants cross-assign error in the enforcement thereof, and resist the further claims of the appellant.

In the cross-assignments of error, the validity of the two subsequent bonds is denied on account of lack of authority in the clerk of the county court of Calhoun county to take them. As is shown by the report of the decision in Taylor v. Taylor, these two bonds were taken by the clerk in the vacation of the court, and he had no authority, under the statute, to take them as substitute bonds; each releasing the preceding one. The contention in that cause was that they were such bonds, and that there was no liability except upon the last one, the one in which the Citizens' Trust & Guaranty Company was the surety. In the rejection of this claim and contention, the question of the validity of the two subsequent bonds as additional ones was left open and undecided. As the statute nowhere confers upon the clerk authority to take a new bond from a personal representative or other fiduciary, and makes it his duty to report to the court the necessity thereof, it may well be conceded he had no authority to take either of the two substitute bonds, but their absolute invalidity and worthlessness does not necessarily follow. Every bond taken without authority in the officer who took it is not void. Such bonds are often held good as common-law obligations. Numerous authorities holding them void are cited in support of the cross-assignments of error, but the bonds in those cases were, for the most part, held void because the taking thereof contravened a principle of public policy. Most of them were recognizances under which officers had discharged prisoners. One of them, involved in Benedict v. Bray, 2 Cal. 251, 56 Am. Dec. 332, was a void attachment bond, but the opinion is unsatisfactory. It assumes, contrary to almost uniform authority, that all bonds, taken by officers not authorized to take them, are void. The law on this subject was summarized by Judge Green in Porter's Ex'r v. Daniels, 11 W.Va. 250, in the following terms: "The mere fact that a bond not authorized by law has been taken by an officer does not render such bond invalid at common law. Such bonds have been frequently held void at common law, but wherever so held, it has been not simply because taken by an officer without authority, but for other and sufficient reasons appearing in each particular case--such as that they were not voluntarily executed; that they were given to the officer, to induce him to violate his duty as such officer; or to induce him to perform a duty he was bound to perform without the giving of such bond; that the taking of the bond was oppressive, and it was given without consideration; that the obligee in the bond had no interest in the subject-matter; that the taking of the bond was a violation of public policy, or was executed under circumstances, or contained provisions, which would have rendered a private bond void at law." These bonds were voluntarily given for consideration paid to the sureties, and neither the acceptance nor the giving of the same contravenes any principle of public policy. Hence they are clearly good as common-law obligations.

That they were not...