National Surety Corporation of New York v. Ellison, 10730.
Decision Date | 06 March 1937 |
Docket Number | No. 10730.,10730. |
Citation | 88 F.2d 399 |
Parties | NATIONAL SURETY CORPORATION OF NEW YORK v. ELLISON. |
Court | U.S. Court of Appeals — Eighth Circuit |
M. J. Doherty, of St. Paul, Minn. (Doherty, Rumble & Butler, of St. Paul, Minn., on the brief), for appellant.
O. A. Lende, of Granite Falls, Minn. (George C. Stiles, of Minneapolis, Minn., on the brief), for appellee.
Before GARDNER, THOMAS, and FARIS, Circuit Judges.
This is an appeal from a judgment of the District Court of Minnesota entered in favor of the appellee, plaintiff below, against the appellant, defendant below, upon an order for judgment upon the pleadings. Both parties having moved for judgment, after issues were joined, plaintiff's motion was sustained and defendant's denied. The rulings of the court upon the motions and the entry of judgment are assigned as errors.
The action arose out of the administration of the estate of Andrew J. Olin, deceased, in the probate court of Minnesota.
The facts admitted in the pleadings disclose that on September 11, 1923, Flora Olin was appointed administratrix of said estate and filed a bond in the penal sum of $10,000 executed by the National Surety Company, as surety. The condition of the bond is that the administratrix "shall well and faithfully discharge all the duties of his trust as representative of said estate according to law."
In April, 1935, Flora Olin petitioned the probate court for an order allowing her final account and discharging and releasing her and her sureties on her bond. The appellee having been appointed and qualified as administrator de bonis non of the estate appeared in opposition to the prayer of her petition. A hearing upon the issues thus joined was had before the probate court, beginning on the 22d day of April, 1935, and on July 12, 1935, the court entered his findings of fact and conclusions of law, and order. The probate court, in so far as material here, found:
That the deceased left heirs surviving him; that creditors filed claims in the total sum of $28,143.46; "all of which were allowed by this court April 24, 1924, and May 16, 1924; that no part of said claims have been paid;" that he left real estate and personal property; that the value of the real estate was $18,790.61 over and above the liens and incumbrances thereon; that the administratrix did not sell any of the real estate to pay the claims of creditors; and that a reasonable time in which she should have applied for a license and sold the real estate expired May 16, 1934.
The probate court further found that the administratrix purchased a certain note and mortgage, referred to as the Lovesee note, with her own money, which note was owned by the estate; that she made a profit on the transaction in the amount of $5,230 for which she failed to account as a result of which the estate sustained a loss of said amount. In this connection, the court found specifically:
"Said Flora Olin, as such administratrix, has in her possession the sum of $5,230 of the funds belonging to the estate of said Andrew J. Olin, which sum is not accounted for by her, as such administratrix."
As conclusions of law, the probate court found that the account of the administratrix is chargeable (1) with $18,790.61 damages sustained by the estate by reason of her neglect and failure to sell the real estate, and (2) with the sum of $5,230, being the profit realized by her on the Lovesee note and mortgage.
And the probate court then:
On April 29, 1933, the National Surety Company, surety on the bond of the administratrix, by the superintendent of insurance of the state of New York, as rehabilitator, entered into an agreement with the appellant, National Surety Corporation, in which the parties are referred to as the "Old Company" and the "New Corporation" respectively; which agreement, after reciting that by an order of the Supreme Court the superintendent of insurance had taken over the old company for rehabilitation, provided:
The bond in suit is a "fiduciary court bond."
Acting pursuant to the instructions of the probate court in the order set out above, the appellee brought suit upon the assumption agreement to recover the penalty of the bond in the amount of $10,000 and interest. The complaint alleged the foregoing facts, making the findings of fact and conclusions of law, and order, of the probate court and the agreement a part of the complaint. The appellant answered admitting all the allegations of the complaint except paragraphs 4, 5, 9, and 15, which were denied except as qualified in the answer. As an affirmative defense, the appellant alleged that any losses which the estate may have sustained occurred prior to May 1, 1933, and that such losses arose from and were caused by acts of the administratrix committed prior to said date and not otherwise; that Flora Olin was and is insolvent; and that if there is any liability on the part of the administratrix to the estate, it is not such in respect of which the appellant assumed liability under said contract.
The judgment was for the sum of $10,491.51 and costs.
Upon this state of the record counsel for appellant submit that two questions are presented for determination: First, Did the court err in ordering judgment on the pleadings for the plaintiff? and, Second, Did the court err in denying judgment for the defendant?
We shall follow the example set by counsel in the briefs and discuss the two questions together.
The contentions of the appellant may be summarized as follows: (1) The denials and allegations of the answer raise an issue of fact as to when the loss, if any, occurred precluding judgment in favor of plaintiff on the pleadings; (2) the losses, if any, complained of by appellee occurred prior to May 1, 1933, and were not assumed by appellant; (3) the findings of the probate court give rise to no estoppel and do not constitute an adjudication binding upon appellant.
The first contention is without merit, because the answer raises no issue of fact. The denials in the answer apply only to legal conclusions of the pleader in the complaint. It is true, of course, that a summary judgment on the pleadings is precluded where an issue of fact is raised, Consolidated Indemnity & Ins. Co. v. Alliance Cas. Co. (C.C.A.2) 68 F.(2d) 21, and that the judgment must be sustained by undisputed facts appearing in the pleadings, Klink v. Chicago, R. I. & P. Ry. Co. (C.C.A.8) 219 F. 457; Kimber v. Gunnell Gold Mining & Milling Co. (C.C.A.8) 126 F. 137. But the legal effect of a contract is a matter of law to be determined by the court. Bell Lumber Co. v. Seaman, 136 Minn. 106, 161 N.W. 383; Lucas v. Ganley Bros., Inc., 166 Minn. 7, 206 N.W. 934.
As indicated above, the answer specifically admits the allegations of the complaint, omitting from such admission paragraphs 4, 5, 9, and 15 thereof. Paragraph 4 alleges that the bond in question has at all times since its execution "and still is in full force and effect." The answer admits that the bond was in full force and effect until the effective date of the resignation of the administratrix. Since the admission covers the period when the alleged liability arose, no issue of fact arises out of the allegations of paragraph 4 of the complaint and the denials in the answer.
Paragraph 5 of the complaint alleges the organization of the appellant corporation, the execution of the assumption agreement upon which the suit is brought, and that appellant by the terms of the contract assumed all the liabilities of the National Surety Company as surety upon the...
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