Lyon v. U.S. Fidelity & Guaranty Co.

• Citation: 140 P. 86,48 Mont. 591
• Parties: LYON v. UNITED STATES FIDELITY & GUARANTY CO.
• Decision Date: 09 March 1914
• Court: United States State Supreme Court of Montana

140 P. 86

48 Mont. 591

LYON v. UNITED STATES FIDELITY & GUARANTY CO.

Supreme Court of Montana

March 9, 1914

Appeal from District Court, Jefferson County; J. B. Poindexter Judge.

Action by John W. Lyon against the United States Fidelity & Guaranty Company. From a judgment for plaintiff and an order denying a new trial, defendant appeals. Affirmed.

Gunn Rasch & Hall, of Helena, for appellant.

Ike E O. Pace, of Whitehall, for respondent.

SANNER J.

Action on a bond arising out of the following circumstances: One Perrine brought suit in the district court of Deer Lodge county against J. W. Lyon, the respondent on this appeal, alleging the existence of a copartnership between himself and Lyon in the business of contract grading and roadwork, and in the ownership of 23 head of horses and certain grading equipment, all of the value of $4,000, alleging that Lyon had applied all the receipts and profits of the business to his own use, and had refused to account for the same, alleging that Lyon was about to remove the property from Deer Lodge county, and that there was immediate danger of the property being removed beyond the jurisdiction of the court, and lost, materially injured, destroyed, and unlawfully disposed of, and praying for a dissolution of the partnership, for an accounting, and for the appointment of a receiver to take charge of the property, sell it, pay the liabilities of the firm, and divide the surplus. On August 18, 1908, an order ex parte was made by the court for the appointment of a receiver to take charge of and preserve said property. On August 22, 1908, one Calvert was clothed with that authority, but before he was permitted to take possession of the property, the court, on November 14, 1908, required Perrine to file the bond which forms the basis of the present action. This bond was executed by Perrine and the appellant, the United States Fidelity & Guaranty Company, for the sum of $3,000, and conditioned for the payment to Lyon of all damages he might sustain by reason of the appointment of the receiver and the entry by the receiver upon his duties, if such appointment was procured "wrongfully, maliciously or without sufficient cause." The receiver took possession of the property on December 1, 1908. Thereafter Lyon answered, in effect denying the partnership, or any ownership or interest of Perrine in the property. On May 26, 1910, the cause of Perrine v. Lyon, having been removed to the district court of Jefferson county, was called for trial, but Perrine did not appear, and was not represented, whereupon Lyon submitted evidence in support of his contentions, and judgment by the court was entered decreeing the sole ownership of the property to be in him, ordering the receiver to deliver the property to Lyon, he to hold it subject to the lien of the receiver for his fees, costs, and disbursements. On May 27, 1910, Lyon made demand upon the receiver for the property, and on June 1, 1910, the receiver, having had possession of the property about 18 months, delivered to Lyon 13 head of horses and part of the equipment.

The present action was commenced on July 8, 1911. The complaint, besides setting up the foregoing facts, alleges that the allegations of Perrine's complaint were willfully false and made maliciously and without sufficient cause; that Perrine procured the appointment of the receiver wrongfully, maliciously, and without sufficient cause; that in consequence of the appointment of the receiver, Lyon has been damaged as follows: $3,000, the value of the property not returned to him by the receiver; $3,000, the value of the use of the property while in the hands of the receiver, and $1,000 in money and time expended defending himself against the action of Perrine and the receivership therein, that the receiver has a claim against the property amounting to $3,600, and that demand was made upon Perrine and the appellant surety company to pay the penal sum of the bond, but this they have wholly failed and refused to do. A demurrer to the complaint was overruled, and the appellant answered, joining issue upon certain allegations of the complaint; the burden of the answer, however, is that on September 5, 1908, Lyon filed in the suit of Perrine v. Lynch a motion to vacate the order appointing the receiver, upon the ground of the insufficiency of the application therefor, and on the ground that no bond had been exacted, as required by section 953 of the Code of Civil Procedure (Rev. Codes, § 6701), which motion being denied and not appealed from, Lyon is estopped to now contend that the appointment of the receiver was procured wrongfully, maliciously, or without sufficient cause, and that Lyon by his pleading in Perrine v. Lyon denied that the value of the property was to exceed $1,500, and alleged the cost of the same to have been $1,400, by which denial and allegation, as well as by the judgment in Perrine v. Lyon, the latter is estopped to now contend that said property had any greater value than $1,500 when the receiver took possession of the same.

Upon the trial no attempt was made to establish the item of $1,000, damages for loss of time and money expended in the defense of Perrine's suit; but the cause was submitted upon the value of the property not returned, and upon the value of the use of all the property during the receiver's possession of it. The verdict awarded respondent $2,700 and judgment was entered accordingly. Motion for new trial was made and denied; hence these appeals.

Assignment is made of 11 alleged errors, by which it is sought to present three questions, viz.: Is this action maintainable upon the pleadings and the record? Was it permissible for the respondent to assert any value for the property in excess of $1,500? Was it error to receive evidence and to instruct the jury concerning the value of the property not returned by the receiver to the respondent?

1. It is contended that this action is not maintainable upon the face of the record, because it was necessary to allege and prove an adjudication in Perrine v. Lyon that the appointment of the receiver was procured wrongfully, maliciously, or without sufficient cause; and this, it is said, not only does not appear from the complaint, but is specifically negatived by the respondent's admission that he did move to vacate the appointment, that his motion was denied, and that he failed to take an appeal. The argument is that the receivership must be formally vacated in the primary suit, either upon motion in the court of original jurisdiction or upon appeal, that the order of the district court denying the motion to vacate was an adjudication in favor of the appointment, since no appeal was taken, and that the present attempt of the pespondent to charge the appointment to have been made wrongfully, maliciously, or without sufficient cause is a collateral attack.

The bond which forms the basis of this action was given pursuant to the provisions of section 6701 of the Revised Codes; it is conditioned, as that statute provides, for the payment of all damages sustained "in case the applicant shall have procured such appointment wrongfully, maliciously or without sufficient cause." We see nothing in this language to indicate that a specific finding in the primary suit against the propriety of the receivership is an essential prerequisite to an action upon the bond, and we look in vain for any intimation that such finding must be in the nature of an order upon motion to vacate. What the statute requires, and what the bond expresses as a condition of liability, is a fact, viz., that the appointment was procured wrongfully, maliciously, or without sufficient cause; and, assuming that, to state a cause of action of this kind, the complaint must show an adjudication of that fact in the primary suit, it does not follow that such adjudication must, in every case, occur in response to a motion to vacate, or that it cannot be implicit in the final judgment.

In the case of Pagett v. Brooks, 140 Ala. 257, 37 So. 263 relied on by appellant, the condition of the bond was that required by the statute of Alabama, viz., the obligees "shall pay or cause to be paid all damages which any person may suffer by the appointment of such receiver if such appointment be vacated." The cause in which the receiver...