Hartford Accident & Indemnity Co. v. Clegg

• Citation: 135 P.2d 919,103 Utah 414
• Decision Date: 07 April 1943
• Docket Number: 6508
• Parties: HARTFORD ACCIDENT & INDEMNITY CO v. CLEGG
• Court: Utah Supreme Court

135 P.2d 919

103 Utah 414

HARTFORD ACCIDENT & INDEMNITY CO v. CLEGG

No. 6508

Supreme Court of Utah

April 7, 1943

Appeal from District Court, Third District,Tooele County; J. A Crockett, Judge.

Action on contracts by Hartford Accident & Indemnity Company against Peter v. Clegg. Judgment for plaintiff, and defendant appeals.

Judgment modified, and as modified affirmed.

E LeRoy Shields and A. H. Hougaard, both of Salt Lake City, for appellant.

Elias L. Day and Arthur E. Morton, both of Salt Lake City, for respondent.

WOLFE Chief Justice. LARSON, McDONOUGH, and MOFFAT, JJ., WADE Justice, concurring.

OPINION

WOLFE, Chief Justice.

This action, brought by plaintiff Hartford Accident and Indemnity Company against defendant Peter v. Clegg, was founded upon two written contracts. By each contract defendant Clegg agreed, in consideration of the execution of an official bond by plaintiff, to pay plaintiff "any and all loss, costs, charges, suits, damages, counsel fees, and expenses of whatever kind or nature which said company shall or may for any cause at any time, sustain or incur, or be put to, for or by reason or in consequence of said company having entered into or executed said bond; * * *" Defendant Clegg also agreed that the voucher or other evidence of payment, compromise or settlement of any loss, costs, charges, suits, etc., should be prima facie evidence of the fact and the extent of his liability therefor to the plaintiff.

The plaintiff, contending that it sustained and incurred certain losses and expenses by virtue of its undertakings on the bonds executed for and on behalf of the defendant, brings this suit to recover the sums alleged to have been lost and expended by it. From judgment for the plaintiff, defendant appeals.

The essential facts out of which this controversy arose are not in dispute. On January 7, 1929, the defendant was appointed Treasurer of the Board of Education of Tooele County for a two year term. Defendant's bond, which was fixed at $ 20,000, was furnished by the plaintiff at his request. At the end of this two year term the defendant was reappointed to succeed himself as treasurer for another two years beginning January 7, 1931. His bond for this term was fixed at $ 10,000 and it was also furnished by the plaintiff.

During his first term as treasurer of the Board, the defendant received checks for $ 120,000 and $ 30,000 from the Tooele County Treasurer. These checks were deposited by the defendant in the Tooele County State Bank on December 24, 1930 to the credit of the Board of Education. Another deposit of $ 33,448.86 was made to the credit of the Board on January 7, 1931, the first day of defendant's second term as treasurer.

To secure these deposits the defendant required the bank to procure two surety bonds, one for $ 10,000 and the other for $ 5,000. These bonds constituted the only depository protection the defendant required the bank to provide. The evidence further shows that he was the assistant cashier of this bank and that his father was the president of the bank during all the periods involved in this suit. The selection of the bank as a depository was made by the defendant in conjunction with the Board of Education.

On January 14, 1931, one week after the commencement of the second term, the bank closed its doors and failed. At that time there was on deposit in the bank to the credit of the Board a total of $ 141,315.85, all of which had been deposited by the defendant in his capacity as treasurer. Thereafter, the Board brought various court actions in an attempt to save itself from a complete loss of this money. In one suit, brought against the Bank Commissioners, it succeeded in procuring a court decree establishing a trust fund to the extent of $ 71,985.14. The balance of the deposit was allowed as a common claim against the remaining funds in the hands of the Bank. The Board also recovered a total of $ 15,000 on the two aforementioned depository bonds which defendant had required the bank to procure.

In another suit the Board sought to recover from Hartford Accident and Indemnity Company, plaintiff herein, on the $ 10,000 and the $ 20,000 bonds executed by plaintiff for and on behalf of defendant Clegg. While this suit was pending in the Federal District Court, a compromise settlement was reached by the Board and the Hartford Accident and Indemnity Co. whereby the Board accepted a total of $ 14,500 in full settlement of its rights under the said bonds. Defendant Clegg was not a party to that suit nor does it appear that he agreed to the compromise and settlement made. However, he was given written notice by registered mail that the suit was pending and requested to join in the defense of the matter. He failed to reply to the letter or to aid in the defense of the suit.

The suit was brought to recover this $ 14,500 together with other expenses such as attorney fees and costs incurred in the compromise and settlement of the plaintiff's liability on the $ 10,000 and $ 20,000 bond. The original complaint was held bad on demurrer and amended complaint filed. In it the plaintiff alleged the contract which was contained in the application for the $ 20,000 bond. It further alleged that defendant Clegg wrongfully deposited over $ 140,000 of the Board's money in the bank without requiring sufficient depository protection; that the bank failed making plaintiff liable to the Board on its $ 20,000 bond; that the Board previously had brought suit against plaintiff to recover on both the $ 20,000 and the $ 10,000 bonds; and that in compromise and settlement of that suit plaintiff paid to the Board $ 14,500 and incurred other specifically pleaded expenses. It is important to an understanding of defendant's contentions to note that neither the original nor first amended complaint alleged the execution of the $ 10,000 bond or any other facts concerning it except the allegation that plaintiff paid $ 14,500 in settlement of its liability on both the $ 10,000 and the $ 20,000 bonds.

The defendant joined issue on this first amended complaint and denied that the plaintiff was under any obligation on either bond to make any payment to the Board of Education because of the fact that defendant Clegg had complied strictly with all his duties. In further answer defendant alleged that if any default had occurred on his part, it occurred while only the $ 10,000 bond was in effect. He also alleged the execution of this $ 10,000 bond. After trial the judge made a minute entry as follows:

"The within entitled matter having been by the court taken under advisement, the court now renders its decision that judgment be entered against the plaintiff and in favor of the defendant."

Thereafter, plaintiff made motion to amend its complaint, which motion, over defendant's objection, was granted by the trial court. A second amended complaint was filed and a demurrer to it was sustained. Demurrers to the third amended complaint which was filed were also sustained. The fourth amended complaint, which was filed, sought recovery of $ 14,500 on theory of equitable subrogation and also alleged the contract contained in the application for both the $ 10,000 and the $ 20,000 bonds. After trial the court held that there was no liability on principles of equitable subrogation or on the $ 20,000 bond but allowed recovery on the $ 10,000 bond on the theory that the defendant's default occurred during the life of this bond. It also allowed recovery of all expenses incurred in the compromise and settlement effected by plaintiff with the Board of Education.

In assailing this judgment defendant makes 23 assignments of error. He urges first that the minute order entered by the trial judge constituted a final judgment in favor of the plaintiff and that it was error to permit an amendment without first setting this judgment aside. However, there was no error in this regard for the minute order was not a final judgment. It did not purport to finally adjudicate the rights of the parties. It was neither a judgment of dismissal nor a judgment on the merits for the defendant. No provision was made for awarding of costs and it is obvious that something more was contemplated by the court. It was not supported by findings of fact and conclusions of law as we have consistently held that it must be to constitute a final judgment on the merits. Wayland v. Woolley, 61 Utah 287, 213 P. 200; Emerson-Brantingham Imp. Co. v. Stringfellow, 57 Utah 284, 194 P. 340. It must appear that that "which is offered as the record of a judgment is really such and not an order for a judgment or a mere memorandum from which the judgment was to be drawn." 33 C. J. 1190. This rule is in accord with the holding of this court in Lukich v. Utah Construction CO., 46 Utah 317, 150 P. 298. See also Day v. Mills, 213 Mass. 585, 100 N.E. 1113, where the court held that a docket entry or an order for such entry was not a final decree.

The defendant's second contention is that the issue of his liability under the contract for subrogation contained in his application for the $ 10,000 bond is a matter which should have ben litigated in the trial which resulted in the entry of the minute order and hence must be considered foreclosed on the principles of res adjudicata. Our holding that the minute order did not constitute a final judgment disposes of this contention. This conclusion is inevitable, for since no final judgment had been entered in regards to any of these matters when the fourth amended complaint was filed, the issues therein raised had not been adjudicated and could not be considered res adjudicata.

The third contention, that the court erroneously allowed plaintiff to amend to state an entirely new cause of action raises a more...