Melton v. American Surety Co.

• Decision Date: 29 March 1922
• Docket Number: (No. 6569.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 240 S.W. 574
• Parties: MELTON et al. v. AMERICAN SURETY CO. OF NEW YORK.
• Court: Texas Court of Appeals

240 S.W. 574

MELTON et al. v. AMERICAN SURETY CO. OF NEW YORK.

(No. 6569.)^*

Court of Civil Appeals of Texas. Austin.

March 29, 1922.

Rehearing Denied April 19, 1922.

Appeal from District Court, Travis County; Cooper Sansom, Judge.

Suit for interpleader by the American Surety Company of New York against C. R. Melton and others. From an order granting a temporary injunction, restraining defendants from attempting to enforce payment of judgments recovered against plaintiff, pending determination of the interpleader, defendants appeal. Affirmed.

E. E. Diggs, of Childress, for appellants.

Fiset & Shelley, of Austin, for appellee.

BRADY, J.

Appellee brought this suit as an interpleader suit, impleading appellants and a large number of other parties, who were alleged to be Texas policy holders and creditors of the Interstate Automobile Insurance Company, organized under the laws of the state of Iowa.

The court granted a temporary injunction, restraining the defendants from enforcing or attempting to enforce the collection or payment of any judgments which may have been recovered, or which may thereafter be rendered against appellee as surety on the bond or bonds of such insurance company, pending the further orders of the court. Upon motion to dissolve, a hearing was had on the sworn pleadings of appellants and appellee. The court refused to dissolve the injunction; from which this appeal has resulted.

As grounds for interpleader and injunction, appellee alleged substantially the following facts: That the insurance company had been granted a permit to transact in Texas a fire and theft insurance business, covering automobiles, for the years ending February 28, 1920, 1921 and 1922; that as required by law, the insurance company executed and filed with the department of insurance three annual bonds in the sum of $10,000 each, with appellee as surety thereon, conditioned for the payment of all the lawful obligations of the principal to citizens of the state of Texas, arising out of policies or contracts issued by it during said respective years; that, on July 15, 1921, the insurance company ceased to do business in Texas, and its permit was canceled; and that, at the time of filing the suit, it was insolvent and was in the hands of a receiver in the state of Iowa. It was further alleged that a large number of citizens of Texas have asserted claims against the insurance company since its withdrawal, and those asserted on policies issued during the year ending February 28, 1921, including the claims of appellants, aggregated over $22,000; that suits on some of these claims were being simultaneously prosecuted in twelve different courts scattered over the state of Texas; that many other claims were being asserted in various counties of the state, upon which, as far as appellee was advised, suits have not yet been filed. Similar allegations were made with reference to the other years covered by the surety bonds. It was also alleged that there were various other claimants in different counties asserting claims against the insurance company on returned or unearned premiums, or other indebtedness, the nature of which was not known to appellee.

Appellee further alleged that it was in doubt as to the proper construction of the bonds in question, under the terms of the statute, and could not safely determine what the rights of the respective claimants were, particularly with reference to whether the judgment creditors were entitled to preference by reason of priority in time of filing suits or securing judgments, and as to what the rights of other creditors were. It was alleged that, as far as appellee knew, all the claims asserted were valid claims against the insurance company; and that it had no interest in the subject-matter of the litigation, except to occupy the position of an impartial stakeholder, tendering into court the fund subject to the adjudication of the doubtful questions involved, and to secure protection against the possibility of having to pay claims or judgments in excess of the amounts of such bonds.

Specifically with relation to the prayer for injunction, appellee alleged that, unless creditors having judgments, or who might thereafter procure judgments were restrained, the result would be that plaintiff would be subject to harassing and expensive litigation, owing to the simultaneous pendency of such various suits and claims in many courts and counties of the state, and would be subject to the rendition against it of final judgments largely in excess of its liability, and would be further harassed by the levy of executions and attempted collection of such judgments; which hazards it should not be made to suffer, since it was willing to pay the fund into court for the benefit of those entitled to it. Irreparable injury, for which there was no adequate remedy at law, was alleged.

Appellants, on motion to dissolve, invoked the jurisdiction of the district court of Childress county, where they had obtained their judgments, and challenged the jurisdiction of the district court of Travis county to issue an injunction, or to do more than order the writ returned to the district court of Childress county. They also alleged a misjoinder of causes, parties, and actions, and urged the claim that they were citizens of Childress county, and entitled to be sued there. They also alleged that appellee had adequate remedies at law, and that no interpleader could justly lie, under the facts of the case.

There are several questions raised in appellants' brief which we do not deem it necessary or proper to decide in this interlocutory proceeding; for instance, the question whether appellee might properly recover attorney's fees in this suit; the ultimate proper interpretation of the statute under which the surety bond was given as to the relative rights of creditors, and certain other questions suggested.

For the purposes of this appeal, we think there are two controlling questions: First. Were the allegations of appellee's sworn petition sufficient to show a proper case of interpleader? Second. Had the district court of Travis county jurisdiction to issue and hold in effect, the temporary injunction pending a decision on the merits?

We think the first question must be answered in the affirmative, under the principles announced in the following cases: Williams v. Wright, 20 Tex. 500; Nixon v. Ins. Co., 100 Tex. 251, 98 S. W. 380, 99 S. W. 403; Bolin v. Ry. Co. (Tex. Civ. App.) 61 S. W. 444; Nixon v. Malone (Tex. Civ. App.) 95 S. W. 577; Williams v. Simons (Tex. Civ. App.) 235 S. W. 257. In the Nixon Case, 100 Tex. 251, 98 S. W. 380, 99 S. W. 403, the Supreme Court recognized the rule that, while the circumstances of the case must be such as to place the stakeholder in some real doubt or hazard to entitle him to the remedy of interpleader, yet the remedy is so beneficial and just that any reasonable doubt as to his right to an interpleader will be resolved in his favor.

The allegations in the bill in this case show all the essentials of a disinterested stakeholder, holding a fund and owing a duty which he is willing to submit to the judgment of the court, as between conflicting claimants. The averments are sufficient to show such a reasonable doubt, on the facts and the law, as to who is entitled to the fund, and as to the relative rights of creditors, that the plaintiff is entitled to the protection of a court of equity.

We have indicated that we do not think it necessary to place a final interpretation upon the statute under which the surety bond was given in this interlocutory proceeding. It is sufficient at this juncture of the case to determine whether the statute is so ambiguous, or is so susceptible of different interpretations as reasonably left appellee in doubt as to the obligations of its contract, and as to the hazards to which it might be subjected, by reason of pending suits and of claims of judgment creditors seeking preference over other creditors. A careful reading of the statute convinces us that the view most favorable to appellants is that the statute is of doubtful construction, and that appellee is entitled to the protection of a court of equity to prevent possible conflicts of decision in the trial courts in different jurisdictions, and because of the great difficulty of procuring relief by the pursuit of other remedies. It is true that injunction will not ordinarily lie where there is an adequate remedy at law; but it is not enough that there be some remedy at law — such remedy must be practicable and adequate. We think appellee has made a sufficient showing for equitable relief, both by interpleader and injunction preserving the statu quo, especially as it makes no attack upon any judgment or claim of any creditor. The action, as brought, inures not only to the benefit of appellee, but to all parties interested in the fund in question, whose rights and interest can be most justly co-ordinated, classified, and protected in an interpleader suit, where all creditors can present their claims and secure the protection to which they are respectively entitled, as well as to fully protect the surety company.

As to the second question, we think that also should be answered in the affirmative. It is true that article 4653, Revised Statutes, provides that writs of injunction granted to stay proceedings in a suit, or execution on a judgment, shall be returnable to and tried in the court where such suit is pending, or such judgment was rendered. But it is not believed that this statute is applicable to a case such as this. The plaintiff has properly invoked the remedy of interpleader, in a court of competent jurisdiction and proper...