Hunn v. Lewis

• Decision Date: 17 March 1928
• Docket Number: No. 7763.,7763.
• Citation: 25 F.2d 271
• Parties: HUNN et al. v. LEWIS et al.
• Court: U.S. Court of Appeals — Eighth Circuit

25 F.2d 271 (1928)

HUNN et al. v. LEWIS et al.^*

No. 7763.

Circuit Court of Appeals, Eighth Circuit.

March 17, 1928.

H. S. Hunn, of Des Moines, Iowa (C. E. Hunn, of Des Moines, Iowa, on the brief), for appellants.

Robert J. Bannister, of Des Moines, Iowa (H. H. Stipp, E. D. Perry, Vincent Starzinger, and Fred A. Little, all of Des Moines, Iowa, on the brief), for appellees.

Before KENYON and BOOTH, Circuit Judges, and MUNGER, District Judge.

BOOTH, Circuit Judge.

This is a suit in equity for contribution, brought by an indorser on a promissory note against the solvent coindorsers. Jurisdiction is based upon diversity of citizenship and the requisite amount involved. Appellee Lewis, the plaintiff, obtained a decree for various amounts against several of the defendants. They appealed.

At the outset we are met by a motion to dismiss the appeal, on the ground that no citation was issued and served during the term of the Circuit Court of Appeals which was pending at the time when the appeal was perfected, or during the next ensuing term; and that at the close of the latter term the appeal became inoperative and no citation could validly issue thereafter.

The appeal was allowed July 1, 1926. The May, 1926, term of this court was then pending. The next ensuing term began September 6, 1926, and ended not later than December 6, 1926 — the opening date of the December, 1926, term. The citation was issued January 7, 1927, and served January 12, 1927.

The rule contended for by appellee finds support in the following cases: Jacobs v. George, 150 U. S. 415, 14 S. Ct. 159, 37 L. Ed. 1127; Altenberg v. Grant (C. C. A.) 83 F. 980; Railroad Equipment Co. v. Southern Ry. Co. (C. C. A.) 92 F. 541; Gray v. Grand Forks Mercantile Co., 138 F. 344 (C. C. A. 8); Hart v. Wiltsee (C. C. A.) 16 F.(2d) 838.

The appellants meet this motion to dismiss with the statement that the appeal was allowed in open court during the judgment term, and therefore no citation was necessary, citing Jacobs v. George, supra. Whatever may have been the fact, the record does not affirmatively show that the appeal was allowed in open court. Appellants further contend that any failure to serve the citation in time was waived by appellee (1) by accepting service of the citation; (2) by entering a general appearance in the appellate court without reserving any objection to the service of the citation. We think this contention should be sustained. The issuance and service of a citation is not jurisdictional (In re T. E. Hill Co. C. C. A. 148 F. 832; Nome & Sinook Co. v. Ames Co. C. C. A. 187 F. 928); and the citation may be waived by general appearance or by acceptance of service of a defective citation (Bigler v. Waller, 12 Wall. 142, 20 L. Ed. 260; Tripp v. Santa Rosa Street R. R., 144 U. S. 126, 129, 12 S. Ct. 655, 36 L. Ed. 371). See Goodwin v. Fox, 120 U. S. 775, 7 S. Ct. 779, 30 L. Ed. 815. We think that by acceptance of service of the citation and by general appearance there was a waiver in the case at bar. The motion to dismiss is denied.

We turn to the merits. The salient facts are as follows: The Chequest Stone Corporation, organized under the laws of Iowa, on December 23, 1919, borrowed $25,000 from the People's Savings Bank of Des Moines, Iowa, and gave its promissory note therefor to the bank, payable on or before ninety days from date. The note was indorsed by eleven officers or stockholders of the maker corporation, including appellee Lewis. Interest was thereafter paid on the note to January 1, 1921. The principal remaining unpaid, eight of the indorsers made payments on the principal in May and June, 1921, amounting to $17,500. The bank then brought suit for the balance against the corporation and the remaining three indorsers, including Lewis. February 7, 1923, judgment was obtained against each defendant in the sum of $6,686.32, together with attorney's fees and costs. This judgment was assigned by the bank the next day to Frank L. Townsend, who took the assignment as trustee for the benefit of the indorsers who had contributed toward the payment of the note. The full amount due on the judgment was paid for the assignment. Thereafter execution on said judgment was taken out and levy made upon certain land in which Lewis, one of the judgment debtors, had an interest. On August 2, 1924, sale was made at public auction by the sheriff of Lewis' interest in the land to Frank L. Townsend for the amount of the judgment and interest, viz. $7,629.35; and a sheriff's certificate was issued to Townsend. In making the purchase, Townsend was still acting as trustee. The debt represented by the $25,000 note was thus finally liquidated.

Thereafter, on December 31, 1924, Lewis brought the present suit for contribution against seven of the coindorsers, alleging that he had been compelled to pay more than his share of the note upon which they were all equally liable. The three remaining indorsers and the corporation, Chequest Stone Corporation, were not made parties. It was alleged and proven that these three indorsers or their estates were insolvent. Later, under an amendment to the bill, it was proven that defendant Kenneth J. Maine was insolvent.

Most of the foregoing facts were set up either in the bill or in the answer, and all were practically undisputed.

The answer denied any liability for contribution, and alleged that the interest of Lewis in the land at the time of the sale was incumbered by various liens. The answer also included a cross-bill (in which Lewis, the corporation, and one James A. Howe were named defendants), which set up that the cross-complainants (defendants in the bill) and Lewis in 1920 bought of Howe a stone quarry for $110,000 and the assumption of a mortgage; that $25,000 was paid in cash, it being procured on the promissory note for that amount mentioned in the bill; that the deed to the quarry was taken in the name of Chequest Stone Corporation for and on behalf of the cross-complainants and Lewis; that the corporation issued its stock in the amount of $450,000 to the cross-complainants and Lewis, who in turn assigned it to Howe as collateral security for the payment of the balance of the purchase price; that payments had been made upon the balance of the purchase price; that cross-complainants did not know the amount still due to Howe, but that cross-complainants and Lewis were liable therefor; that cross-complainants were entitled to a bill of discovery and an accounting in relation to the trust with which Howe was clothed. The prayer of the cross-bill was that Howe and the corporation be held to an accounting; that a determination be had of the amounts due each of the cross-complainants from each of the defendants; that contribution be had between the various parties.

Motion was made by Lewis to dismiss the cross-bill, on the ground that the matters set up and the relief demanded were not germane to the cause of action set up in the bill, and that the cross-bill stated no cause of action in equity. Eventually the cross-bill was dismissed by the court.

It appears from the record that the whole cause was referred to a special master; that evidence was taken by him, and a report made; that exceptions were taken by defendants to the report. However, the record does not contain either the report or the findings of the special master, or the exceptions taken thereto. Nor is there any certificate of the special master stating what evidence was before him. Orderly procedure required these matters to be contained in the record. See Barber Asphalt Paving Co. v. Standard Asphalt & Rubber Co., 48 S. Ct. 183, 72 L. Ed. ___, opinion filed January 3, 1928. The importance of having the findings of the special master incorporated in the record becomes apparent when the decree of the court below is considered in connection with the assignments of error. The decree contains the following:

"The court further finds that the findings of fact and each of them in said report of the special master herein are correct, and they are adopted, confirmed, and found as the facts by the court, and the exceptions and each of them of the defendants to the report of the special master should be and they are overruled."

The third and fourth assignments of error are as follows:

"The court erred: * * * (3) In finding that the facts found in the report of the special master are correct.

"(4) In adopting, confirming, and finding as facts by the court, the facts found by the special master and in overruling the exceptions of the defendants filed to the report of the special master."

In view of the state of the record, such assignments of error are futile.

There are several questions, however, which may properly be considered upon the present record: First, was it necessary to plead and prove that the Chequest Stone Corporation, the maker of the note, was insolvent, in order to maintain the suit for contribution?

The general rule seems to be — although there are exceptions — that, if a surety brings a suit in equity against his cosureties for contribution, he should allege...