General Ins. Co. of America v. Deen

• Decision Date: 07 April 1966
• Docket Number: No. 2,CA-CIV,2
• Citation: 412 P.2d 869,3 Ariz.App. 187
• Parties: GENERAL INSURANCE COMPANY OF AMERICA, Defendant Bonding Company, Appellant, v. M. V. DEEN, Appellee. 98.
• Court: Arizona Court of Appeals

Page 869

412 P.2d 869

3 Ariz.App. 187

GENERAL INSURANCE COMPANY OF AMERICA, Defendant Bonding Company, Appellant, v. M. V. DEEN, Appellee.

No. 2 CA-CIV 98.

Court of Appeals of Arizona.

April 7, 1966.

Rehearing Denied May 4, 1966.

Review Denied June 7, 1966.

William L. McClain, Phoenix, Anne Kappes, Phoenix, of counsel, for appellant.

V. L. Hash, Phoenix, for appellee.

MOLLOY, Judge.

This is an appeal by General Insurance Company of America from a judgment rendered against it, as surety on a replevin bond, in favor of M. V. Deen, an intervenor-defendant in an action originally brought by Ralph Blackburn and Everett Blackburn doing business as Midwest Securities Company, plaintiffs, against one Tommy Deen, defendant. Appellant bonding company was not a named party to the action below and it contends that the statute which provides for judgment against a surety in a replevin action without notice is unconstitutional as a violation of due process of law, and further that M. V. Deen, the intervenor, was not a defendant in the action and hence cannot be a beneficiary of the bond.

Tommy Deen, son of the intervenor, executed a promissory note, secured by a chattel mortgage on specified personal property, to one Scott Kellog, which note and mortgage were subsequently transferred to Midwest Securities Company. Tommy Deen defaulted in his payments on the note and Midwest filed an action to collect on the note and foreclose the mortgage. Midwest secured a writ of replevin for the mortgage chattels, (one 1959 Allis-Chalmers Tractor, one bulldozer attachment, one 1956 Allis-Chalmers Tractor, and one 1955 Allis-Chalmers Tractor with front-end loader) and the chattels were replevied from the possession of M. V. Deen by the sheriff in the presence of one of the plaintiffs. Bond was filed in favor of 'said defendants' (Tommy Deen and Jane Doe Deen, his wife; John Doe, Richard Roe, First Corporation and Second Corporation) with appellant General Insurance Company as surety on the bond.

M. V. Deen moved to intervene, claiming to be the owner of the replevied property. The following minute entry was subsequently entered:

'IT IS ORDERED that the Motion to Intervene as Defendant filed in the above entitled cause be and the same is hereby granted.'

M. V. Deen filed an amended answer in which he claimed ownership of the replevied property, and prayed for damages. At the trial the plaintiffs and the intervenor appeared; Tommy Deen did not. Judgment was rendered against the defendant Tommy Deen, and the appellant-surety for $8,510.00, $5,000.00 of which was for the value at the time of trial of the equipment replevied and the balance for loss of use of the equipment between the date of replevy and the time of trial.

General Insurance Company of America, appellant herein, was not a named party to the action below and it is therefore necessary to determine whether it is entitled to appeal from the judgment rendered. In Christian v. Cotten, 1 Ariz.App. 421, 403 P.2d 825 (1965), this court held that in order for a person to be entitled to appeal it must be both (1) a party to the action and (2) one 'aggrieved' by the judgment or order appealed from. 16 A.R.S. Rule 73(a), Rules of Civil Procedure. Although the appellant was not a named party to the action, it did execute the bond required by law (A.R.S. § 12--1303), which bond was before the court. It has frequently been held that the surety on a replevin bond is to all intents and purposes a party to the replevin proceeding, and that judgment may properly be rendered against him in such proceeding. 77 C.J.S. Replevin § 242; Hargraves v. Hamilton National Bank, 27 Tenn.App. 655, 184 S.W.2d 397 (1944); Speight Box & Panel Co. v. Ipock, 217 N.C. 375, 8 S.E.2d 243 (1940); Moore v. Humphrey, 247 N.C. 423, 101 S.E.2d 460 (1958); Evans v. Kloeppel, 72 Fla. 267, 73 So. 180 (1916); Cabell v. Floyd, 21 Tex.Civ.App. 135, 50 S.W. 478 (1899); Glenn v. Porter, 68 Ark. 320, 57 S.W. 1109 (1900); Moore v. Kepner, 7 Neb. 291 (1878); Pratt v. Donovan, 10 Wis. 378 (1860). Further, there can be no question but that one against whom judgment has been rendered is 'aggrieved.' We therefore hold that the test set forth in Christian v. Cotten, supra, has been satisfied and that the appellant-surety is entitled to prosecute this appeal.

The second matter for determination is whether the appellee M. V. Deen may be allowed to recover on the bond issued by the appellant.

16 A.R.S. Rule 24, Rules of Civil Procedure, provides:

'24(a) Intervention of right. Upon timely application anyone shall be permitted to intervene in an action:

'3. When the applicant is so situated as to be adversely affected by a distribution or other disposition of property which is in the custody or subject to the control or disposition of the court or of an officer thereof.'

Clearly the provisions of 16 A.R.S. Rule 24(a)(3), Rules of Civil Procedure, apply to the appellee M. V. Deen. See 2 Barron and Holtzoff, Federal Practice and Procedure, § 598, pp. 382--86. M. V. Deen was therefore entitled to intervene as a matter of right in this action. Appellant insists, however, that in spite of M. V. Deen's right to intervene, judgment in favor of M. V. Deen on the surety bond was improper since M. V. Deen was not a named beneficiary of its bond.

A.R.S. § 12--1308 provides:

'A. If the defendant alleges that he is the owner of the property, is entitled to its possession and demands its return, and if on the trial it is found that he is its owner and that he was at the time the action was brought entitled to its possession, then on the trial the value of the property replevied shall be found, together with any damage the defendant has suffered for the wrongful seizure of the property, and judgment shall be against the plaintiff claimant And the sureties on the replevin bond for the value of the property, the damages and costs of the action. The judgment shall also be for the return of the property to the adverse party at a time and place specified.

'B. The Defendant shall elect whether he will take the property itself or the amount found as the value of the property. The election shall be made in order to permit the plaintiff a reasonable time before the time specified in the judgment for delivery of the property. The election may be made in open court, or by an instrument in writing filed in the action.' (Emphasis added)

The weight of authority, where decisions are based on the existence of a statute similar to A.R.S. § 12--1308, is adequately stated in 46 Am.Jur. Replevin § 168:

'* * * where, by statute, in an action for the return of personal property, a person, although not a party to the action, having an interest in the subject matter thereof, may be made a party upon proper application to the court, the surety is bound to take notice of such statute when the bond is executed. The undertaking obligates the surety to return the property involved to the defendants if the return is adjudged, that is, To those who are defendants at the time the judgment is rendered. This interpretation does not change or enlarge the liability of the surety, although it may change the beneficiary.' (Emphasis added)

See also 77 C.J.S. Replevin § 332. The leading case advocating the proposition just stated is Becovitz v. Sapperstein, 46 Ind.App. 339, 92 N.E. 551 (1910). In Becovitz, the court reasoned further:

'The suit was instituted to determine the rights of the parties in the property in question, and such right could only be settled by the adjudication. But one bond is contemplated for the return of property in one action, and that is for the benefit of any party to the suit when the return is adjudged.'

92 N.E. at 551--552.

In Union Trust Co. v. Shoemaker, 258 Ill. 564, 101 N.E. 1050 (1913), it was said:

'The bond was given in contemplation of the ordinary course of judicial proceedings, in which the court may permit amendments changing the parties or otherwise amending the proceedings, providing no new cause of action is introduced. The object of the bond was to indemnify the party actually interested at the time judgment should be rendered against the wrongful prosecution of that supposed cause of action, and the possible exercise of the power of amendment and substitution of parties must be regarded as within the contemplation of the obligors when it was executed.'

101 N.E. at 1052.

See also Grimes v. Payne, 116 Okl. 295, 244 P. 753 (1925); Annot., Ann.Cas.1913D, 1104; McLaughlin, J., dissenting in First Commercial Bank of Pontiac v. Valentine, 155 App.Div. 91, 139 N.Y.S. 1037, 1041.

We are accordingly of the opinion that one entitled as a matter of right to intervene in a replevin action may become a party defendant to the action and upon so doing becomes a beneficiary under the surety bond required by law for the protection of those whose interests in the subject property may be jeopardized by the principal's action.

The relationship between principal and surety must be borne in mind and coupled with the legislative intent embodied in A.R.S. § 12--1308. In 77 C.J.S. Replevin § 320, p. 230, it is stated:

'The general rule as to the conclusiveness on the surety on a bond given in the course of legal proceedings, of a judgment against the principal, as considered in Principal and Surety § 261, applies to a surety on a replevin bond so that he is conclusively bound by the judgment against this principal as to all matters which were, and, in some jurisdictions, which might have been litigated in the replevin action, although he was not served with process and did not appear and defend, * * *.'

In the early case of Pratt v. Donovan, 10 Wis. 378 (1860), it was said:

'By their undertaking they (the surety) are bound for 'the prosecution of the action,' and by entering into it and thus connecting themselves with the suit, they consent to all the consequences to which such connection by law subjected them. By their very undertaking, their right...