Missouri, K. & T. Ry. Co. v. American Surety Co.

• Decision Date: 30 November 1921
• Docket Number: No. 21695.,21695.
• Citation: 236 S.W. 657,291 Mo. 92
• Court: Missouri Supreme Court
• Parties: MISSOURI, K. & T. RY. CO. v. AMERICAN SURETY CO. OF NEW YORK.

236 S.W. 657

291 Mo. 92

MISSOURI, K. & T. RY. CO. v. AMERICAN SURETY CO. OF NEW YORK.

No. 21695.

Supreme Court of Missouri, in Banc.

November 30, 1921.

Motion for Rehearing Denied December 30, 1921.

Appeal from St. Louis Circuit Court; J. Hugo Grimm, Judge.

Suit by the Missouri, Kansas & Texas Railway Company against the American Surety Company of New York. Judgment for plaintiff, and defendant appeals. Affirmed.

J. D. Johnson, of St. Louis, for appellant. J. W. Jamison, Henry D. Haas, and Carl S. Hoffman, all of St. Louis, for respondent.

WALKER, J.

This suit was brought by the Missouri, Kansas & Texas Railway Company against the American Surety Company in the circuit court of the city of St. Louis on a bond of indemnity given by the firm of Graham & Miller, as principal, and the defendant, the American Surety Company, as surety, to the plaintiff' in the sum of $10,000. Upon a trial to the court there was a judgment in favor the plaintiff, from which defendant appeals. The bond sued on was as follows:

"Know all men by these presents: That we, J. T. Miller and L. G. Graham, composing the firm of Graham & Miller, principals, and American Surety Company of New York, as surety, are indebted to the Missouri, Kansas & Texas Railway Company, hereinafter called the `railway company,' in the penal sum of $10,000, for the payment whereof well and truly to be made we hereby bind ourselves, our heirs and representatives, successors and assigns, jointly and severally, by these presents.

"The obligation of this bond is such that, whereas, the said Graham & Miller are general railroad tie contractors, engaged in the business of furnishing to railway companies cross-ties, switch ties, and lumber, in the state of Missouri; and whereas, the said. Graham & Miller for several years past have been selling ties and lumber to the railway company and desire to furnish ties and lumber to said railway company during the year 1899; and whereas the railway company is willing to continue Purchasing of said Graham & Miller ties and lumber, from time to time as it may want them, provided the same conform to specifications and requirements of the railway company and are accepted by its fully authorized agent after inspection, and provided, further, that said. Graham & Miller will hold it, the railway company, harmless by reason of any and all claims which may be made against it by laborers, materialmen, and others, to and on account of any ides and lumber furnished by them to the railway company, between January 1, 1898, and January 1, 1900:

"Now, therefore, if the said Graham & Miller shall well and truly protect and indemnify the railway company against all loss and damage costs, and attorney fees, by reason of any claims which may be made against the railway company on account of any ties and lumber which have been or may be furnished by them and accepted by the railway company, as aforesaid, by any person or persons whatsoever, and warrant and defend their title to all such ties and lumber, then this obligation to be void; otherwise, to be and remain in full force and effect."

Omitting the formal allegations of the petition as to the nature of the parties, the setting out of the bond according to its tenor, the breach of same, and defendant's liability thereon, the salient facts alleged are that during the year 1899 plaintiff purchased from Graham & Miller, and said firm furnished to plaintiff, a large number of railway ties at a specified price, which aggregated $21,207.10, and upon the acceptance by and the delivery to the plaintiff of these ties the latter paid Graham & Miller the aggregate amount due therefor in fully that after plaintiff had paid Graham & Miller the Bagnell Timber Company brought a suit in the circuit court of Pettis county against Graham & Miller and the Missouri, Kansas & Texas Railway Company, the plaintiff herein. Before a trial the timber company dismissed as to Graham & Miller and proceeded against the railway company alone. In this action it was claimed that there was a balance due the timber company from the firm of Graham & Miller and the railway company on account of the said ties which had been sold and delivered by said firm to the railway company and had been paid for by the latter. In this petition the timber company prayed that the judgment thus sought be declared a lien on the lines of the railway company; that upon the institution of that suit the railway company notified the American Surety Company, the defendant herein, of said action and that the railway company had already paid Graham & Miller the full amount due said firm for the ties furnished by them to the railway company for which the timber company was then demanding payment, and that the railway company would look to said surety company to protect it from any further payment on account of said ties; that said surety company, the defendant herein, failed and refused to pay or to cause said timber company to be paid the amount claimed by it, but requested the railway company to prosecute the suit to a final judgment, which it did; that the history of this litigation and the opinions of the Supreme Court in connection therewith are found in 180 Mo. 242, 242 Mo. 11, and 250 Mo. 514; that by the decision rendered in the case last cited a personal judgment was finally affirmed against the plaintiff railway company in favor of the timber company, and in satisfaction of said judgment plaintiff was compelled, in July, 1913, to pay the timber company the sum of $9,-963 and interest on account of the same ties for which plaintiff had theretofore paid Graham & Miller and $436.50 costs incurred in the litigation, to plaintiff's total damage in the sum of $12,400.13; wherefore Plaintiff prayed judgment for the penalty of said bond, to wit, the sum of $10,000.

Defendant, answering, admitted the execution of the bond the former litigation pleaded the result of same, the costs accrued, the subsequent suit by the timber company, the judgment rendered in favor of that company against the railway company, and the payment of such judgment by the latter, followed by a general denial. Further answering, the defendant sought to set up as res adjudicata the litigation in the circuit court of Pettis county wherein the timber company was plaintiff and the railway company and Graham & Miller were defendants. On motion this part of the answer was stricken Out, and the defendant filed a term bill of exceptions. At the trial, however, this defense was permitted to be interposed, subject to such objections as might be made thereto.

By consent, a plea of the statute of limitations theretofore stricken out of defendant's answer was reinstated, and plaintiff filed a reply alleging that it contested the suit brought by the timber company at the special instance and request of the surety company, the defendant herein, and with the understanding that upon the termination of that litigation, if the same resulted unfavorably to the railway company, the rights and liabilities as between this plaintiff and this defendant in the bond suit would then be determined. A jury having been waived, the case was heard by the court sitting as a jury in February, 1919, in the division presided over by Hon. Hugo Grimm. At the April term, 1919, the court found the issues joined in favor of the plaintiff and assessed its damages at $10,000, the full penalty of the bond. From this judgment, as stated, the defendant has appealed.

I. Appellate Court's Province as to Review of Evidence.—This is an action at law. It was tried by the court sitting as a jury. When a case of the character at bar is thus tried, the province of the Supreme Court extends no further than to ascertain if the judgment is supported by any substantial testimony. When this has been determined, the findings of pertinent facts by the trial court are as conclusive as if their verity had been formally conceded. So firmly embedded is this rule in our appellate procedure that it is scarcely necessary, except as a matter of form, to cite precedents to sustain it. Some of the later cases reasserting this doctrine are State ex rel. Bank v. Sturgis, 276 Mo. 559, 208 S. W. 458; In re Lankford's Estate, 272 Mo. 1, 197 S. W. 147; Woods v. Johnson, 264 Mo. loc. cit. 293, 174 S. W. 375; Hatton v. St. Louis, 264 Mo. 634, 175 S. W 888; Cousins v. White, 246 Mo. loc. cit. 309, 151 S. W. 737.

II. Rule as to Bonds of Surety Companies.—The findings of the trial court, while based upon all of the evidence, have more particular reference to the testimony upon which the defendant relies to sustain its contentions. In the consideration of these contentions it should be kept in mind that the general rule that sureties are the favorites of the law and that contracts made by them should be construed most strongly in their favor has no application here. The defendant is a corporation organized and empowered to act as surety for a price. Its obligations are akin to those of an insurance company; its operations are purely commercial and are exercised solely for profit and bear no resemblance to the relation sustained by a personal surety to his principal. The alleged justification for the application of the rule to personal sureties is that their contracts are held to be in the nature of favors to the parties, and are therefore founded upon considerations not moving to themselves but to the principals in the contracts for which they become sponsors. Here the consideration moves to the defendant. Its obligations are therefore to be construed like other contracts, in accordance with the reasonable intent of the parties as plainly indicated by their terms. So. R. & F. Co. v. Bankers' Surety Co., 184 S. W. loc. cit. 1033; Lackland v. Surety Co., 256 Mo. loc. cit. 140, 165 S. W. 314; Guaranty Co. v. Bank, 183 U. S. 402, 22 Sup. Ct. 124, 46 L. Ed. 253; Am. Surety Co. v. Pauly, 170 U. S. 133, 18 Sup. Ct. 552, 42 L. Ed. 977. This rule of...