Merritt v. J. A. Stafford Co.

• Decision Date: 27 May 1968
• Citation: 68 Cal.Rptr. 447,68 Cal.2d 619,440 P.2d 927
• Parties: , 440 P.2d 927 Dewey MERRITT, Plaintiff and Appellant, v. J. A. STAFFORD COMPANY et al., Defendants and Respondents, Stuyvesant Insurance Company, Surety and Respondent. L.A. 29545.
• Court: California Supreme Court

Page 447

68 Cal.Rptr. 447

68 Cal.2d 619, 440 P.2d 927

Dewey MERRITT, Plaintiff and Appellant, v. J. A. STAFFORD COMPANY et al., Defendants and Respondents Stuyvesant Insurance Company, Surety and Respondent.

L.A. 29545.

Supreme Court of California In Bank.

May 27, 1968.

Rehearing Denied June 26, 1968.

Wild, Christensen, Barnard & Wild, Fresno, Magana, Olney, Levy, Cathcart & Gelfand, Magana, Olney, Levy & Cathcart, and Ellis J. Horvitz, Los Angeles, for plaintiff and appellant.

Anderson, McPharlin & Conners, Peter R. Regal, Jr., and Henry F. Walker, Los Angeles, for surety and respondent.

No appearance for defendants and respondents.

PETERS, Justice.

Dewey Merritt has appealed from an order denying his motion for judgment on an appeal bond.

Merritt recovered judgment against the J. A. Stafford Company, a corporation, and one of its employees for $434,441.68 for personal injuries suffered in a truck accident, and Merritt's employer recovered judgment for $21,255.93 against Stafford and its employee for property damage. ¹

Stafford and its employee filed a notice of appeal, and on May 22, 1964, Stuyvesant Insurance Company filed an 'undertaking for Appeal Bond as provided by Section 942 C.C.P.' The document recites that Stuyvesant obligates itself 'under said statutory obligations' in the sum of $181,883.90. The judgment was affirmed, and the remittitur was filed on October 13, 1965.

Stuyvesant and Reserve Insurance Company filed an action for declaratory relief alleging that Reserve has issued to Stafford a liability insurance policy providing that the limit of liability for injury to any one person was $100,000 and that the company shall pay 'all costs and all interest accruing after entry of judgment until the company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon. * * *' It was also alleged that Stuyvesant was the reinsurer of Reserve, that on May 8, 1964, Reserve tendered to plaintiff $100,000, which tender was refused, that on September 21, 1965, Reserve tendered in writing $100,000 'plus costs and interest thereon,' that Merritt's attorneys previously indicated that the tender would be refused, that controversies existed as to the validity of the tenders, the amount of interest due, the validity of the appeal bond, and as to whether the liability on appeal bond, if valid, is in excess of the limits of the Reserve policy.

The trial court issued a temporary restraining order in the declaratory relief action enjoining Merritt from seeking an ex parte judgment against Stuyvesant but providing that upon notice Merritt could move for judgment on the appeal bond.

In January 1966, Merritt noticed a motion for judgment on the appeal bond, alleging that no part of the judgment in the personal injury action had been paid. Stuyvesant opposed the motion, and filed an affidavit by its attorney alleging that in September 1964 (which was after the filing of the appeal in the personal injury and property damage action but before affirmance) Merritt and Stafford entered into an agreement which recites that Stafford's insurance carrier had failed to post an appeal bond to stay execution in the amount required by section 942 of the Code of Civil Procedure, that Merritt intends to levy execution against Stafford to satisfy his judgment, that Stafford assigns any cause of action it might have against its insurer for bad faith, negligence, or breach of contract arising out of the truck accident, that Stafford will pay to Merritt $20,000, that the $20,000 shall not be credited against the judgment, and that Merritt will not levy execution against Stafford until the final termination of any assigned cause of action and the pending appeal in the personal injury and property damage action.

The motion for judgment on the appeal bond was denied, and this appeal followed.

Orders relating to enforcement of a judgment either by enforcing it or staying its execution are appealable as special orders made after final judgment. (Code Civ.Proc. § 963; Raff v. Raff, 61 Cal.2d 514, 517--519, 39 Cal.Rptr. 366, 393 P.2d 678; Baum v. Baum, 51 Cal.2d 610, 611 et seq., 335 P.2d 481.) In furtherance of this rule, an order quashing and recalling a writ of execution has been held appealable (Stegge v. Wilkerson, 189 Cal.App.2d 1, 4, 10 Cal.Rptr. 867); an order denying an application for an order charging a partner's interest has been held appealable (Baum v. Baum, supra, 51 Cal.2d 610, 611 et seq., 335 P.2d 481), and the judgment in a third party claim proceeding under section 689b of the Code of Civil Procedure has been held appealable (Embree Uranium Co. v. Liebel, 169 Cal.App.2d 256, 258, 337 P.2d 159). Like the aforementioned orders, an order denying a motion for judgment on an appeal bond relates directly to the enforcement of a judgment, and such an order was reviewed on appeal, without discussion, in Chas. F. Harper Co. v. DeWitt etc. Co., 10 Cal.2d 467, 75 P.2d 65.

It is true that it has been held that a judgment on an appeal bond may not be appealed by the surety. (E.g., Hood v. Verdugo Lumber Co., 219 Cal. 558, 560, 27 P.2d 897.) This is not because the matter does not relate to the enforcement of a judgment, but, as pointed out in Hood, is because the judgment against the surety is a consent judgment. The order appealed from in the instant case, of course, was not entered by consent. We are satisfied that an order denying a motion for judgment on an appeal bond is an appealable order.

Section 942 of the Code of Civil Procedure provides in part that an appeal from a money judgment does not stay execution unless an adequate undertaking is filed and that a surety bond by an authorized corporation for a stay pending appeal of a judgment directing the payment of money shall be one and one-half times the amount named in the judgment or order appealed. Although the section provides for enforcement of an adequate undertaking after affirmance, it contains no provision as to the enforceability, after affirmance, of a corporate surety bond which is for an amount less than one and one-half times the amount named in the judgment appealed. ²

In Chas. F. Harper Co. v. De Witt etc. Co., supra, 10 Cal.2d 467, 469--470, 75 P.2d 65, 66, the court discussed the position of the sureties upon an appeal bond after affirmance as follows:

'Although sureties upon such a bond became parties to the original action, Hawley 437; Hogan v. Locke-Paddon, 91 Cal.App. 437; Hogan v. Locke-Paddon, 91Cal.App. 606, 267 P. 392, their position is not the same as that of the defendants. When the judgment becomes final it cannot be executed against them without further proceedings. They are not entitled to notice of subsequent steps in the proceedings and have no right to participate in them. By signing an undertaking upon appeal, a surety consents that judgment may be entered against him on motion for the amount of the judgment as affirmed, Gray v. Cotton et al., 174 Cal. 256, 162 P. 1019, and he becomes a party to the action for the limited purpose of giving the court jurisdiction to render and enforce a judgment against him, Meredith v. Santa Clara Mining Ass'n of Baltimore, 60 Cal. 617. In effect, the bond is a stipulation for judgment upon a certain contingency. * * *

'The obligation of the sureties is upon the undertaking, an instrument in writing, not upon the judgment.'

It was held that liability upon the undertaking accrues from the affirming of the judgment. (Chas. F. Harper Co. v. De Witt etc. Co., supra, 10 Cal.2d at p. 470, 75 P.2d 65.)

It has been held that undertakings may be enforced although not in exact conformity with the statute, that the defect may be waived, that the obligor is in no position to complain that his obligation is less onerous than that provided for by statute, and that, where the appellant has the benefit of the bond, the obligor may not rely upon the fact that the respondent could but did not object to the sufficiency of the bond. (Murdock v. Brooks, 38 Cal. 596, 602--603; Hathaway v. Davis, 33 Cal. 161, 169--170; Dore v. Covey, 13 Cal. 502, 508 et seq.; see Moffat v. Greenwalt, 90 Cal. 368, 371, 27 P. 296; Hammond v. United States Fidelity & Guaranty Co., 29 Cal.App. 464, 468--469, 155 P. 1023.)

'The sureties generally are held liable on a supersedeas or appeal bond, although it was legally insufficient to effect a stay of proceedings, where as a matter of fact there was in effect a stay, no execution being issued, nor any attempt made to collect an execution if issued, or to enforce the judgment.' (Annot. 120 A.L.R. 1062). The above annotation cites more than 50 cases for the above statement and points out that receipt by the obligors of the contemplated benefits of the bond furnishes a sufficient consideration for enforcement. (120 A.L.R. at p. 1065.)

Cases cited by Stuyvesant such as Estate of Kennedy, 129 Cal. 384, 62 P. 64, Reay v. Butler, 118 Cal. 113, 50 P. 375, and Powers v. Chabot, 93 Cal. 266, 28 P. 1070, which held appeal bonds wholly void and unenforceable after affirmance on appeal, are distinguishable. Those cases involve judgments which were stayed by operation of law without necessity of a bond, orders which were not subject to execution or other immediate enforcement against the appellant, or a judgment for a sale of perishables as to which it would be against public policy to permit a stay pending appeal. As to the first two kinds of judgments and orders, the respondent could not forego any rights in reliance on the bonds, and there was no consideration. As to the third, the public policy involved serves to distinguish it.

There is nothing in section 942 of the Code of Civil Procedure or the other sections dealing with stay bonds which indicates that an appellant should not be able to get together with his judgment creditor and agree that execution should be stayed if the appellant will post a bond...