Cohen v. Maryland Casualty Co.

• Decision Date: 19 March 1925
• Citation: 4 F.2d 564
• Court: U.S. District Court — District of South Carolina
• Parties: COHEN v. MARYLAND CASUALTY CO. OF BALTIMORE, MD.

4 F.2d 564 (1925)

COHEN v. MARYLAND CASUALTY CO. OF BALTIMORE, MD.

District Court, E. D. South Carolina.

March 19, 1925.

Wolfe & Berry, of Orangeburg, S. C., for plaintiff.

R. B. Herbert, of Columbia, S. C., for defendant on motion to dismiss.

Marion & Finley, of York, S. C., for petitioner on motion to intervene.

ERNEST F. COCHRAN, District Judge.

The plaintiff, a citizen of South Carolina, residing in the Eastern district of South Carolina, has brought this suit against the Maryland Casualty Company alone as defendant. The Casualty Company is a citizen of Maryland, but maintains offices and transacts business in both the Eastern and Western districts of South Carolina. The complaint alleges in substance that the Casualty Company became surety on the official bond of one Fred. E. Quinn, as sheriff of York county, and that Quinn, acting as sheriff, unlawfully assaulted the plaintiff and wounded him, and thereby Quinn's official bond was breached, and the Casualty Company made liable for the damages. The sheriff is a citizen of South Carolina, but resides in the county of York, in the Western district. In the application made by the sheriff for the execution of the bond on the part of the Casualty Company, there was an agreement that the sheriff would indemnify the Casualty Company against all damages it might sustain in consequence of having executed the bond.

After this suit was instituted, the Casualty Company notified the sheriff of the suit and demanded that he appear and defend and save it harmless in pursuance of his contract of indemnity. The Casualty Company has made a motion to dismiss the case, on the ground that the sheriff is an indispensable party to the suit, and, both the plaintiff and the sheriff being citizens of South Carolina, this court would have no jurisdiction. The sheriff has presented a petition asking to be allowed to be made a party defendant, with the right to set up any defense that he may have. The sheriff and the Casualty Company both contend that the sheriff should be made a party, and that then the jurisdiction of the court would be ousted for the reasons stated.

There can be no doubt of the rule in the federal courts that, if the issue arises that parties who are indispensable have not been made, or it should appear during the trial, the court would either dismiss the case or hold it until they are made parties, and if to make them parties would destroy the diversity of citizenship, and thereby oust the jurisdiction of the court, then the court cannot entertain jurisdiction of that case, and should dismiss at once. Barney v. Baltimore, 6 Wall. 280, 18 L. Ed. 825; Shields v. Barrow, 17 How. 142, 15 L. Ed. 161; Simkins, Fed. Prac. 495, and cases cited.

The precise question in this case is whether the sheriff is an indispensable party. The question is a novel one, and the parties concede that there is no case directly in point. There are certain general principles, however, governing the jurisdiction of federal courts, which enable me to reach a satisfactory conclusion.

The statutes of South Carolina require the sheriff to execute a bond and prescribe the form. Sections 736 and 2027, vol. 3, Code of Laws of South Carolina 1922. In the form prescribed in the statute are the following words: "To the payment of which, well and truly to be made, we bind ourselves, and each and every of us." It is conceded that the bond in the instant case conforms to the form prescribed by the statute. The bond, therefore, is a joint and several bond, and an action thereon is a joint and several action.

The South Carolina Code of Civil Procedure provides: "Persons severally liable upon the same obligation or instrument, including the parties to bills of exchange and promissory notes may all, or any of them, be included in the same action, at the option of the plaintiff." Section 363, Code Civil Procedure of South Carolina 1922.

Where the liability on a bond is joint and several, all who are liable may be joined, or one or more or any number less than all may be sued, at the option of the plaintiff. An action may be maintained against the sureties, or one or more of them without, joining the principal, or against the principal alone, as well as against the principal in conjunction with any of the sureties, at arbitrary selection. Hatfield v. Kennedy, 1 Bay (S. C.) 501; State v. Williams, 19 S. C. 62, 65; State v. Fidelity & Deposit Co., 114 S. C. 511, 516, 104 S. E. 182; 15 En. Pl. & Pr. 116; 9 C. J. 91; 29 Cyc. 1464; 4 R. C. L. 58.

In an action on a joint contract, one of the several joint contractors is not an indispensable party defendant in such suit, and under section 50 of the Judicial Code (Comp. St. § 1032) this court may proceed against one of such joint contractors, where the other is not an inhabitant of this district. Camp v. Gress, 250 U. S. 308, 316, 39 S. Ct. 478, 63 L. Ed. 997; Clearwater v. Meredith, 21 How. 489, 16 L. Ed. 201.

From these principles there can be no doubt that the plaintiff was entitled to sue the Casualty Company alone in this district, and this court would have jurisdiction. The Casualty Company and the sheriff concede that such is the law, but their contention is that, although ordinarily the suit may be maintained against the surety alone on a sheriff's official bond, when it is made to appear to the court, as has been done in this case, that the surety has indemnity from the sheriff, and has given him notice to appear and defend the suit, the sheriff then becomes liable upon any judgment which may be rendered in the suit and is therefore an indispensable party. For the purposes of the decision on this motion it may be conceded that, if a party is obliged to defend against the action of another against whom he has a remedy over, and defends solely and exclusively the action of such other party, and is compelled to defend no misfeasance of his own, he may notify such party of the pendency of the suit and may call upon him to defend it, and if he fails to defend it, then he is liable not only for the amount of damages recovered, but for all reasonable and necessary expenses incurred in such defense, and a judgment rendered against the party secondarily liable, the two not being in pari delicto, is conclusive on the one primarily responsible. 31 C. J. 452, 460, 461; Westfield v. Mayo, 122 Mass. 100, 23 Am. Rep. 292; Sweet v. Atkinson, 191 Iowa, 645, 182 N. W. 793.

From the premises contained in the foregoing concession, the argument is made that, since the sheriff after notice will be bound by the judgment rendered, he is therefore an indispensable party, and consequently the jurisdiction would be ousted, and upon this point, as I have stated, counsel on both sides concede that there is no case directly in point. If such a doctrine be established, the effect upon the jurisdiction of the federal courts would be far-reaching, and the constitutional right to invoke their jurisdiction on the ground of diversity of citizenship would be seriously impaired. It needs but little reflection to reach the conclusion that there are numerous cases in which the doctrine could be invoked to utterly defeat the jurisdiction. For example, a citizen of one state may sue a citizen of another state to recover possession of land, and the defendant could vouch his grantor under his warranty, and if the grantor should be a citizen of the same state as the plaintiff, the jurisdiction would be ousted, and the plaintiff's right to sue in the federal court defeated.

A citizen of one state, traveling through another, may have an automobile collision, and sue for his damages in the federal court. The defendant may have indemnity insurance from a corporation chartered by the state of which plaintiff is a citizen, and if the theory of the law contended for by the Casualty Company in the case at bar is correct, the defendant may compel the plaintiff to abandon his suit in the federal court and sue in the state court. Every contractor, every tort-feasor, indeed, every person subject to any kind of liability, if he has indemnity (either by express contract or by operation of law), could call in his indemnitor, and, if such indemnitor is a citizen of the same state as the plaintiff, the plaintiff must abandon his...