Maryland Cas. Co. v. Walsh

• Decision Date: 02 February 1945
• Docket Number: 8542.
• Citation: 155 P.2d 759,116 Mont. 559
• Parties: MARYLAND CASUALTY CO. v. WALSH et al.
• Court: Montana Supreme Court

155 P.2d 759

116 Mont. 559

MARYLAND CASUALTY CO. v. WALSH et al.

No. 8542.

Supreme Court of Montana

February 2, 1945

Appeal from District Court, Second District, Silver Bow County; T E. Downey, Judge.

Proceeding by Maryland Casualty Company against Mary Walsh, as administratrix of the estate of John A. Shelton, deceased and others, to determine ownership and interest of all parties in the property of Margaret M. Sullivan, deceased. From a judgment of dismissal, plaintiff appeals.

Judgment affirmed.

Poore & Poore and R. F. Gaines, all of Butte, for appellant.

W. D Kyle, Frank L. Riley, and Alf C. Kremer, all of Butte, and Ralph J. Anderson, of Helena, for respondents.

JOHNSON Chief Justice.

Margaret M. Sullivan died testate in 1924. Her will was admitted to probate in 1925 and letters testamentary issued to James C Sullivan and Jane S. Higgins, her son and daughter, who were named therein as executor and executrix. The will gave each of them specific devises and residual devises and bequests; certain others, defendants herein, were named as beneficiaries, but the nature of their devises or bequests does not appear in the record.

The plaintiff Maryland Casualty Company became surety upon the bond of each in the sum of $3,000. Each principal in the application for the bond agreed "to indemnify and keep indemnified the said Company from 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, to be put to or become liable for under this bond." That agreement becomes material only if it entitles the surety to indemnity without the surety's first satisfying any part of the principal obligation. For the statute provides that "if a surety satisfies the principal obligation, or any part thereof, whether with or without legal proceedings, the principal is bound to reimburse what he has disbursed, including necessary costs and expenses." Section 8205, Rev.Codes; Bielenberg v. Higgins, 85 Mont. 69, 277 P. 636; American Surety Co. of New York v. De Carle, 9 Cir., 25 F.2d 18. However, we need not determine the effect of the agreement in that respect for reasons which will later appear.

Executor Sullivan died in 1927 and executrix Higgins in 1935. In its order of settlement of the accounts of their administration the district court found that by virtue of their conduct of the estate James C. Sullivan was indebted to the estate in the sum of $476.67 and Jane S. Higgins in the sum of $4321.77. That order was before us and was declared final in In re Sullivan's Estate, 112 Mont. 496, 118 P.2d 137. It is binding also upon the surety. Kenck v. Parchen, 22 Mont. 519, 57 P. 94, 74 Am.St.Rep. 625; Swanberg v. National Surety Co., 86 Mont. 340, 283 P. 761; Janes v. Fidelity & Deposit Co., 112 Mont. 580, 119 P.2d 39. No part of the indebtedness has been paid by principal or surety. Thus it is clear that the plaintiff, and also the estates of the respective fiduciaries, are liable in the respective amounts above named. It is clear, also, that the administratrix of the Margaret M. Sullivan estate, upon making any distribution to the estates of James C. Sullivan and Jane S. Higgins, must withhold from each the amount of its respective indebtedness, or so much thereof as the respective distributive shares will cover, since otherwise the surety will be exonerated to that extent. For section 8203, Revised Codes, provides:

"A surety may require his creditor to proceed against the principal, or to pursue any other remedy in his power which the surety cannot himself pursue, and which would lighten his burden; and if in such case the creditor neglects to do so, the surety is exonerated to the extent to which he is thereby prejudiced."

However, here the surety seeks something further; namely, without satisfying any part of the principal obligation, it seeks to be exonerated to the extent of costs and attorney's fees, in some unstated amount in excess of $4,000 alleged to have been incurred in several actions and other proceedings instituted against it and its principals in connection with the defaults. This exoneration it seeks on the theory that the agreement constituted an equitable assignment of each principal's respective distributive shares in the Margaret M. Sullivan estate to the extent necessary to cover the expenses.

Thus deeming itself the holder of equitable assignments of its principals' interest in their mother's estate plaintiff has proceeded under the chapter of the probate code relating to the determination of heirship and interest in estates. Sections 10324, 10325 and 10326, Rev.Codes. Under the first section plaintiff filed a petition asking the court to ascertain and determine the heirship, ownership and interest of all parties in and to the...