First State Bank of Mountain Lake v. C.E. Stevens Land Company

• Decision Date: 25 October 1912
• Docket Number: 17,643 - (24)
• Citation: 137 N.W. 1101,119 Minn. 209
• Parties: FIRST STATE BANK OF MOUNTAIN LAKE v. C.E. STEVENS LAND COMPANY and Another
• Court: Minnesota Supreme Court

137 N.W. 1101

119 Minn. 209

FIRST STATE BANK OF MOUNTAIN LAKE v. C.E. STEVENS LAND COMPANY and Another

Nos. 17,643 - (24)

Supreme Court of Minnesota

October 25, 1912

Action in the district court for Cottonwood county against the C.E Stevens Land Company and the Title Guaranty & Trust Company to recover $3,264.79 upon a bond. The facts are stated in the opinion.

The amended complaint, among other matters, alleged that through mistake in drafting the bond and in the execution thereof, in each of the places where the date of the bond and execution thereof appeared, the word "November" was used instead of the word "December;" that the instrument was in fact executed December 3, 1904; that the agreement entered into before the delivery of the bond and in consideration therefor was that Hiebert, assignor of plaintiff, was to refrain from entering judgment in the district court in his favor, as had been ordered by the district court in its order, during the pendency of the appeal, and in consideration of said bond being executed and delivered he did refrain from entering said judgment in the district court until after the appeal was determined in the supreme court. The amended complaint also set up that the defendant land company was solvent at the date of the execution of the bond, but since that date became and remained insolvent and had no property from which the judgment could be collected.

The answer to the amended complaint denied the bond was executed on December 3, 1904, or at any other time than the date thereof, and denied specifically the allegations in the complaint set out above.

The case was tried before Nelson, J., who made findings and as conclusion of law ordered judgment in favor of defendant. From the judgment entered pursuant to the order, plaintiff appealed. Reversed and new trial granted.

SYLLABUS

Principal and surety -- release of surety.

A stipulation for an affirmance of an order or judgment appealed from, made in good faith, does not release the surety on the appeal bond.

Appeal bond -- construction.

In an action, findings were made directing judgment to be entered in favor of the plaintiff therein, the stay allowed had expired, and plaintiff threatened to enter judgment, whereupon the defendant promised that if plaintiff would refrain from entering judgment in the intended appeal, defendant would gave a satisfactory bond to pay all judgments and costs that might be entered in the action. If it be proven that such an agreement was made and kept by plaintiff, and pursuant thereto an appeal bond was executed, the bond is a valid common-law obligation and binding in all its terms.

Indefinite findings -- reversal.

In order to determine the prejudicial effect of errors properly assigned, the whole record may be examined, and if, in the light thereof, the findings appear indefinite and uncertain on a vital issue, the judgment should not be allowed to stand.

Statute of frauds.

The bond in this case considered as a common-law obligation is not void under the statute of frauds for failure to state the consideration, namely, the alleged agreement in full.

Effect of amended complaint.

An order sustaining a demurrer to a complaint is of no effect as determining the law of the case after the service of an amended complaint.

Wilson Borst and J. G. Redding, for appellant.

James E. Markham and Benjamin Calmenson, for respondent.

OPINION

HOLT, J.

The action is to recover on an appeal bond. Judgment was rendered for the defendant, the surety, and plaintiff appeals therefrom.

Plaintiff's assignor, one J. C. Hiebert, in an action pending in the district court against C.E. Stevens Land Company, was successful, and findings directing judgment to be entered in his favor for $5,050 were duly made and filed September 22, 1904. A stay of proceedings for twenty days was granted the next day, but none other. A motion for a new trial was denied November 26, and December 5, 1904, a notice of appeal was served. On that day the attorney for the Land Company delivered to the attorney for said Hiebert the bond in suit for $6,000, executed by said Land Company, as principal, and this respondent as surety. After stating that an appeal from the order denying a new trial had been taken, the bond reads:

"Now, therefore, if the said The C.E. Stevens Land Company aforesaid, shall pay all costs that may be awarded against it and all damages sustained by the respondent in consequence of said appeal, and abide and satisfy the judgment or order which the appellate court may give therein, and pay all judgments and costs which may be rendered against it in said action, then this obligation shall be void, otherwise to remain in full force."

The order appealed from was affirmed and upon remittitur to the district court judgment was entered upon the findings. Plaintiff now seeks to recover of the defendant, the surety on the bond, the balance unpaid on the judgment. The surety pleaded and the court found that the affirmance of the order appealed from by the C.E. Stevens Land Company in this court was pursuant to a stipulation between the parties. Plaintiff herein saved exception to the reception of the stipulation in evidence, and also assails the finding upon that issue as immaterial. The defendant contends that this finding is not only material, but conclusive that no liability exists on the bond.

There are authorities to the effect that an affirmance of an appeal by active consent of the litigants releases the surety, or precludes the happening of the implied condition precedent to liability on the bond, namely, that the appeal shall be heard on its merits; that, by stipulating for affirmance of the appeal, a condition not contemplated is added to the contract of the surety and he is released; and that the surety in assuming the contract has a right to rely on the chance that he will be relieved from liability if the appellate court considers the appeal on the merits, therefore, when the litigants, by agreement, take away this chance, he is not to be holden. Johnson v. Flint, 34 Ala. 673, where, however, the stipulation disposing of the appeal without a hearing was for the entry of a different judgment than the one appealed from.

Long v. American, 146 N.Y. 251, is also relied on by defendant. In that case the stipulation in the court of appeals was for a judgment reversing the decision of the supreme court and reinstating the judgment of the trial court; the circumstances of the stipulation savored of fraud upon the surety. However, the court does not place its conclusion on that ground, but on the ground that the affirmance of the original judgment was not an affirmance within the true meaning of the bond. The court makes use of this language: "The question of fraud or collusion is not presented. But it seems difficult to escape the conviction that the purpose of the arrangement was to subject the defendant to liability on its undertaking. None of the cases on the construction of bonds indemnifying against suits or judgments, or upon appeal bonds, which have come to our attention, presents the peculiar feature of this case, of a consent by a party who has succeeded on the appeal taken by him to a reversal of the judgment in his favor and to a restoration of the original judgment against him." While the facts may thus differentiate this case cited from the case at bar, the principal announced sustains the defendant's contention. See also Large v. Steer, 121 Pa. St. 30; Baker v. Frellsen, 32 La. An. 822; Andre v. Fitzhugh, 18 Mich. 93.

We are however, not inclined to the views taken in the foregoing decisions. The surety on an appeal bond has no voice in the conduct of the litigation, nor any interest in the matters involved. It is understood that the appeal is for the sole benefit of the principal in the bond. He alone has the right to carry on or terminate the appeal in the manner he chooses, if not prevented by his adversary or ...