National Bank of Commerce in St. Louis v. Maryland Casualty Co.

• Citation: 270 S.W. 691,307 Mo. 417
• Decision Date: 19 March 1925
• Docket Number: 23939,23940
• Parties: NATIONAL BANK OF COMMERCE IN ST. LOUIS, Appellant, v. MARYLAND CASUALTY COMPANY; NATIONAL BANK OF COMMERCE IN ST. LOUIS, v. MARYLAND CASUALTY COMPANY, Appellant
• Court: Missouri Supreme Court

270 S.W. 691

307 Mo. 417

NATIONAL BANK OF COMMERCE IN ST. LOUIS, Appellant, v. MARYLAND CASUALTY COMPANY; NATIONAL BANK OF COMMERCE IN ST. LOUIS, v. MARYLAND CASUALTY COMPANY, Appellant

Nos. 23939, 23940

Supreme Court of Missouri

March 19, 1925

Appeals from St. Louis City Circuit Court; Hon. H. A Hamilton, Judge.

Judgment in plaintiff's appeal affirmed. Judgment in defendant's appeal reversed.

Edw. J White and Geo. L. Edwards for plaintiff.

(1) It was the duty of Pierce, since at least the judgment obtained by the bank against him in the circuit court for $ 700,000 was affirmed in this court, to have paid this judgment, and the duty of the casualty company to have paid the balance remaining due upon this judgment, at least from the date of the bond sued upon, June 8, 1920. It is equally obvious that at least after this judgment was affirmed by this court, if not since the date it was rendered by the circuit court, neither Pierce nor the casualty company could challenge its validity, either by claiming to have defenses thereto or counterclaims against the bank which would reduce the amount thereof in whole or in part. All such defenses and claims were foreclosed by the judgment. It was the plain duty, therefore, of the trial court to strike out the defenses and counterclaims sought to be interposed to the collection of this judgment by the original and amended answer of the casualty company. Bank v. Pierce, 280 Mo. 614; Pierce v. Bank, 268 F. 487; Pierce v. Bank, 282 F. 100; Beloit v. Morgan, 74 U.S. 619; Allen v. City of Davenport, 132 F. 209; Miller v. Belzy Oil Co., 248 F. 83; Spratt v. Early, 199 Mo. 491; Mallory v. Patterson, 174 Mo.App. 605; City of St. Louis v. United Railways Co., 263 Mo. 387. (2) By the plain terms of their bond Pierce and the Casualty Company agreed to pay to the bank all damages sustained by it in procuring a dissolution of the supersedeas granted by the United States Circuit Court of Appeals. Attorneys' fees are universally considered a part of such damages, and it is undisputed upon the record that for this purpose the bank paid or contracted to pay its attorneys $ 25,000, and for their expenses $ 377.09. The court should have directed a judgment for this amount in favor of the bank. Elliot v. M. K. & T. Ry. Co., 77 Mo.App. 652; M. K. T. Ry. Co. v. Smith, 154 Mo. 300. (3) The bond sued upon is clearly not a bond filed in the Federal court, nor under the order of such court or the laws of the United States. This appears from the face of the bond. It also appears from the stipulation of the parties waiving the bond provided to be given by the order of the Federal court. Tullock v. Mulvane, 184 U.S. 497; American Surety Co. v. Schultz, 237 U.S. 150; Elliott v. M. K. & T. Ry. Co., 77 Mo.App. 652; M. K. & T. Ry. Co. v. Smith, 154 Mo. 300. (4) It is settled law in this State that the casualty company is (a) an insurance company within the meaning of Sec. 6337, R. S. 1919, and (b) the bond sued upon a policy of insurance within the meaning of that section. State ex rel. Peach Co. v. Bonding & Surety Co., 279 Mo. 535. (5) The evidence is overwhelming and undisputed and establishes beyond even a reasonable doubt that the casualty company at least vexatiously refused to pay the balance due upon the State judgment, if it did not also vexatiously refuse to pay the damages sustained by the bank in procuring a dissolution of the supersedeas injunction granted by the United States Circuit Court of Appeals. Pierce v. Bank, 268 F. 487; Pierce v. Bank, 282 Fed 100; Stix v. Indemnity Co., 175 Mo.App. 171; Jaggi v. Prudential Ins. Co., 191 Mo.App. 384; Glover v. Ins. Co., 193 Mo.App. 489; Hicks v. Life Ins. Co., 196 Mo.App. 162; Todd v. Ins. Co., 203 Mo.App. 474; Brown v. Railway Passenger Ins. Co., 45 Mo. 221; Keller v. Home Ins. Co., 198 Mo. 440; Young v. Ins. Co., 269 Mo. 1; Fay v. Ins. Co., 268 Mo. 373.

Boyle & Priest, Fordyce, Holliday & White, Judson, Green & Henry and Holland, Rutledge & Lashly for defendant.

(1) The affirmative defenses which the defendant sought to interpose by its answer and its amended answer, and which were stricken out by the court, were valid defenses. Where an action is brought upon a contract the defendant may present any defenses that arise out of the contract or transaction set forth in the petition, or connected with the subject of the action, and also in an action arising on contract any other cause of action arising also upon contract and existing at the time of the commencement of the action. And the law is also equally well settled that if any two or more persons are mutually indebted in any manner and one of them commences an action against the other, one debt may be set off against the other, although such debts are of different nature. R. S. 1919, secs. 1232, 1233, 1292; Green v. Conrad, 114 Mo. 651; Himrod v. Baugh, 85 Ill. 435; Empire Transportation Co. v. Boggiano, 52 Mo. 294; Parle v. Ensign, 66 Kan. 50; Wyman v. Robbins, 51 Ohio St. 98; Robinson v. Shelton, 4 Ky. L. R. 996; Jarrett v. Martin, 70 N.C. 59; Seldner v. Smith, 40 Md. 602; Meyer v. Stockley, 3 Ill.App. 336. Equity regards as done that which ought to be done. 21 C. J. 200; Martin v. Martin, 250 Mo. 539; Pierce v. Bank, 268 F. 487. The claim made by plaintiff that the claims set up by the defendant in its said answers had become res adjudicata in the conversion suit in the state court is without foundation, for the following reasons: (a) In the present case no plea of res adjudicata was made by the plaintiff. (b) The record shows nothing that ever occurred in connection with the conversion suit that would constitute ground for a claim of res adjudicata as to said defendant. (c) Outside of the record there are no facts that would show or tend to show that the matters involved in said defenses had ever been presented or attempted to be presented in the conversion suit, and nothing to show that the facts constituting said defenses existed at said time, or were known to the defendant. (d) Because defenses that arise out of and are based upon an independent cause of action are never adjudicated unless they are actually presented in a given cause. Pierce v. Bank, 268 F. 487; Harrison v. Remington, 140 F. 385; Russell v. Place, 95 U.S. 606; Aetna Life v. Board of Com., 117 F. 82; Cromwell v. County of Sac, 94 U.S. 351; Nesbitt v. Independent District, 144 U.S. 610; Belleville Ry v. Leathe, 84 F. 103. (2) The lower court did not err in refusing to allow plaintiff any recovery for alleged services and expenses of attorneys in connection with the interim injunction entered by the U.S. Circuit Court of Appeals in the case of Pierce v. Bank. Where an injunction bond is given in connection with or relative to an injunction proceeding in a Federal court, and provides for the payment of all damages and costs resulting by reason of such injunction, the word "damages" does not include or embrace attorneys' fees or attorneys' expenses, and there can be no recovery therefor under such a bond. Oelriches & May v. Williams, 15 Wall. 211, 21 L.Ed. 43; Tulloch v. Mulvane, 184 U.S. 516, 46 L.Ed. 657; M. K. & T. Railway Co. v. Elliott, 184 U.S. 530, 46 L.Ed. 673. (3) Plaintiff was not entitled to recover any damages or attorneys' fees in the present action on account of alleged vexatious refusal to pay. Because R. S. 1919, Sec. 6337, has no application to a bond of the character sued on herein. Said statute is penal in its nature, and must be strictly construed, and does not include or embrace injunction bonds or appeal bonds. Mining Company v. Casualty Co., 162 Mo.App. 178; Grover v. Aetna Ins. Co., 200 S.W. 441.

OPINION

David E. Blair, J.

These cases are cross-appeals in the same case below. They were argued and submitted together. To avoid confusion, we will refer to the parties as "bank" and "casualty company."

The present case is a continuation of long-drawn-out litigation between the bank and Henry Clay Pierce. Facts, other than those necessary to be stated to understand the issues here involved, may be found in the following cases: National Bank of Commerce v. Pierce, 280 Mo. 614; Pierce v. National Bank of Commerce, 268 F. 487; Pierce v. National Bank of Commerce, 282 F. 100. Each of the three cases involved different phases of such litigation. Our writs of mandamus and in prohibition were also sought in connection with the present case. No opinions were filed by Court in Banc when such writs were denied.

The present case is an aftermath of the case of Bank v. Pierce, 280 Mo. 614. In that case the bank recovered a judgment against Pierce for $ 700,000 for the conversion by Pierce of $ 1,000,000 par value of the stock of Nashville Terminal Company, alleged to have been deposited with the bank by the Tennessee Construction Company, as collateral security upon three notes of said company, aggregating $ 700,000. Upon appeal said judgment was affirmed by this court (280 Mo. 614). Pierce, as principal, and the casualty company, as surety, executed an appeal bond in that case in the sum of $ 900,000.

After that judgment was affirmed by this court, Pierce filed suit against the bank in the United States District Court at St. Louis, seeking an accounting and a discovery and marshalling of securities held by the bank and an application thereof to the payment of the $ 700,000 notes of the Tennessee Construction Company, held by the bank. He prayed for an injunction to prevent the bank from suing out an execution to collect its $ 700,000 judgment against him and from bringing suit upon the appeal bond and for other relief. The federal district court denied such injunction and dismissed the bill filed by Pierce. He appealed to the United States Circuit Court of Appeals for the Eighth Circuit.

Pierce then applied to said ...