Monte Rico Mill. & Min. Co. v. United States Fid. & Guar. Co.

• Decision Date: 31 December 1930
• Docket Number: No. 3485.,3485.
• Citation: 5 P.2d 195,35 N.M. 616
• Parties: MONTE RICO MILL. & MIN. CO. et al.v.UNITED STATES FIDELITY & GUARANTY CO.
• Court: New Mexico Supreme Court

35 N.M. 616

5 P.2d 195

MONTE RICO MILL. & MIN. CO. et al.

v.UNITED STATES FIDELITY & GUARANTY CO.

No. 3485.

Supreme Court of New Mexico.

Dec. 31, 1930.Rehearing Denied Dec. 4, 1931.

Syllabus by the Court.

Unambiguous language in bond will be given its ordinary meaning; surety has right to stand on very letter of his contract as written.

Under the general rule for the interpretation of bonds of suretyship and the determination of a surety's liability where the language and the conditions of the bond are clear, definite, and unambiguous, the language used will be given its plain and ordinary meaning, and the liability of the surety will not be extended beyond or altered from that clearly expressed in the language used. A surety has the right to stand upon the very letter of his contract as written.

Surety's liability on bond given pursuant to statute for public or quasi public purpose will be determined by conditions and obligations prescribed by statute under principles of public policy; conditions and obligations prescribed by statute, will be read into surety bond by force of statutory provision.

Exceptions to the general rule arise when (1) bonds are given pursuant to statute for a public or quasi public purpose; or (2) when by special provision of statute the conditions and obligations prescribed in the statute requiring the bond must be read into the bond whether contained therein or not. In such cases the liability of a surety will be determined by the conditions and obligations prescribed in the statute, in the first instance, on principles of public policy, and, the second, by force of the statutory provision.

Surety held not liable on injunction bond given under federal statute to secure payment adjudged against principals if temporary injunction should be dissolved, where no judgment was obtained against principals, but case was dismissed for lack of jurisdiction (Clayton Act § 18 [28 USCA § 382]).

Where the bond in question does not fall within either of the classes to which the exceptions noted apply, the general rule first stated controls the determination of the surety's liability.

Appeal from District Court, Bernalillo County.

Action by Monte Rico Milling & Mining Company and others against the United States Fidelity & Guaranty Company and others. From an adverse judgment, named defendant appeals. The judgment was reversed and remanded, with directions, and thereafter plaintiff filed motion for rehearing, containing request for final judgment dismissing complaint, to enable plaintiff to have case speedily reviewed by United States Supreme Court, if Court did not agree with argument in plaintiff's brief.

Motion for rehearing denied, with final judgment of dismissal.

Exceptions to the general rule arise when (1) bonds are given pursuant to statute for a public or quasi public purpose; or (2) when by special provision of statute the conditions and obligations prescribed in the statute requiring the bond must be read into the bond whether contained therein or not. In such cases the liability of a surety will be determined by the conditions and obligations prescribed in the statute, in the first instance, on principles of public policy, and, the second, by force of the statutory provision.

Fletcher Catron, of Santa Fé, for appellant.

Marron & Wodd, of Albuquerque, for appellees.

PARKER, J.

On June 11, 1917, in the District Court of the United States in and for the District of New Mexico, in a suit in equity therein pending, wherein Thurston W. Fleming, S. Ray Holbert, J. H. Willoughby, E. W. Harrold, and N. V. Smith were complainants, and Monte Rico Mining & Milling Company, a corporation, and Lawrence R. Boyd, Daisy E. Boyd, W. Howard Boyd, John M. Jones, John P. Hunt, H. J. McGrath, and T. W. Holland were defendants, the said court authorized and directed the issuance of a preliminary injunction against the said defendants upon the filing of an injunction bond by the complainants in the sum of $9,000, the pertinent provisions of said order being as follows:

“It is further Ordered by the court that upon the plaintiffs filing with the clerk of this court a good and sufficient bond to the defendants in the sum of nine thousand ($9,000.00) dollars, the same to be approved by the said clerk, indemnifying the said defendants and each of them against all loss and damage sustained by them by reason of this order, that the defendant, the Monte Rico Mining and Milling Co., its officers, agents and servants be and they are hereby enjoined and restrained from transacting any corporate business of said company, or selling or disposing of any of the capital stock of said company until further order of this court, and that the said company and its officers cause to be deposited with the clerk of this court within twenty days from the date of this order all books, papers, and records of said mining company in its possession or under its control, the same to be open to the inspection of either and all of the parties hereto;

“It is further ordered by the court that Daisy E. Boyd, be and she hereby is enjoined and restrained from selling or otherwise disposing of or assigning or hypothecating any and all of the stock of said Monte Rico Mining and Milling Co. standing in her name of record upon the books of said company until further order of this court.

“That the defendants, Lawrence R. Boyd and W. Howard Boyd, be and they are each enjoined and restrained from selling or otherwise disposing of, or assigning or hypothecating any mortgage or mortgages given to them respectively by the Monte Rico Mining and Milling Co., and they are further enjoined and restrained from foreclosure or attempting to foreclose any such mortgage, until further order of this court;

“It is further ordered by the court that the said Monte Rico Mining and Milling Co., be and hereby is enjoined and restrained from employing any officer or person near Lordsburg, New Mexico, at a compensation not to exceed Fifty ($50.00), Dollars per month until further order of this court.”

Thereupon on June 13, 1917, there was filed in and approved by the clerk of the said court an injunction bond in the sum of $9,000, executed by the said complainants Fleming, Holbert, Willoughby, Harrold, and Smith, as principals, and the United States Fidelity & Guaranty Company, hereinafter designated as U. S. F. & G. Co., as surety, the condition set out in said bond being as follows: “The condition of the above obligation is such that whereas the above named principals having filed their petition in the United States District Court for the District of New Mexico against the above named defendants, and having obtained an allowance of an injunction as prayed for in said bill from said court, if said plaintiffs shall abide by the decision of said Court and pay all moneys and costs which shall be adjudged against them in case the said injunction shall be dissolved, then these presents shall be void; otherwise, to remain in full force and effect.”

Thereafter on February 7, 1921, the said cause was finally dismissed by said federal court upon motion of said Lawrence R. Boyd, judgment against plaintiffs being awarded merely for costs. Thereafter on June 8, 1922, the said federal court, upon the application to assess damages upon the said injunction bond and upon a motion of the U. S. F. & G. Co. to dismiss the said application to assess damages on the said bond, held and adjudged that ever since February 7, 1921, when it finally dismissed the cause, it had had no jurisdiction of the parties or subject-matter, and denied such application to assess damages, and sustained said motion to dismiss the same.

This was the state of affairs when on January 26, 1927, the complaint in the present action was filed in the district court of the second judicial district of New Mexico, sitting in and for the county of Bernalillo. The complaint purports to set out a cause of action for damages alleged to have been sustained by the defendants in a suit in the federal court, plaintiffs in this action, by reason of the injunction, and names the U. S. F. & G. Co. as the sole defendant. Thereafter on February 16, 1927, there was filed by the U. S. F. & G. Co. in said cause a demurrer to the complaint setting up that the complaint failed to state facts sufficient to constitute a cause of action against the U. S. F. & G. Co. for the reason, among others, that it failed to allege that the plaintiffs in the suit in the federal court had ever been adjudged to pay any damages suffered by reason of the said order of injunction. This demurrer was never acted upon by the district court. However, on November 9, 1927, plaintiffs herein filed a motion for leave to amend their complaint by adding as parties defendant the principals upon the bond in question, stating as ground therefor: “That this action is upon the bond given in injunction proceedings by the above named parties against the plaintiffs herein and upon which bond United States Fidelity and Guaranty Company, a corporation, is surety; that upon hearing the general demurrer herein the court has intimated the view that it would be better if the principals on the bond were made parties defendant, with which view the plaintiffs are willing to comply.”

The district court on June 20, 1928, entered an order granting plaintiffs leave to amend as prayed, and directing that supplemental summons issue to bring in the additional defendants. On the same date, plaintiffs filed their amended complaint having simply added the principals on the bond in question as defendants. The court directed supplemental summons issue to bring in the additional defendants. A summons directed to the new defendants was issued on the same day, and on the same day the sheriff of Bernalillo county made return thereto to the effect that he had made diligent search within his jurisdiction for the defendants in question, and that he was unable to find them....