Spruks v. United States Fidelity & Guaranty Co., 8102.

• Decision Date: 17 November 1943
• Docket Number: No. 8102.,8102.
• Citation: 138 F.2d 812
• Parties: SPRUKS v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: U.S. Court of Appeals — Third Circuit

138 F.2d 812 (1943)

SPRUKS v. UNITED STATES FIDELITY & GUARANTY CO.

No. 8102.

Circuit Court of Appeals, Third Circuit.

Argued January 4, 1943.

Decided November 17, 1943.

Howard H. Rapp, of Philadelphia, Pa. (W. J. Fitzgerald, of Scranton, Pa., and John N. Schaeffer, Jr. and Morgan, Lewis & Bockius, all of Philadelphia, Pa., on the brief), for appellant.

Ralph W. Rymer and Ralph T. Lynch, both of Scranton, Pa., for appellee.

Before BIGGS, JONES, and GOODRICH, Circuit Judges.

JONES, Circuit Judge.

The unsuccessful claimants to a fund in the registry of the District Court appealed from the decree of the court below in bankruptcy adjudicating the ownership of the fund. The appellants filed a supersedeas bond in the sum of $5,000 as they were required to do by the order of this court granting them leave to appeal. The present defendant was the surety in the bond. This court affirmed the decree of the District Court (In re Northumberland Min. Co., D.C., 16 F.Supp. 63, affirmed Thomas et al. v. Spruks, 3 Cir., 89 F.2d 998). Certiorari was applied for and denied. Philadelphia & Reading Coal & Iron Co. v. Spruks, 302 U.S. 718, 58 S.Ct. 38, 82 L.Ed. 554. The instant appeal grows out of an action in assumpsit brought by the appellee in the first appeal against the surety on the supersedeas bond to recover interest on the fund as an element of damage due to the delay in payment of the fund to the plaintiff because of the appeal by the unsuccessful claimants. The District Court entered judgment for the plaintiff from which the defendant surety appeals.

It is unnecessary for present purposes to recite in detail the circumstances attending the production of the fund. They fully appear in the opinion of this court cited supra. It is sufficient to say that the fund represented the proceeds derived from the sale of a large pile of coal located on property of the Northumberland Mining Company, a debtor in bankruptcy. The coal, whereof the plaintiff, Spruks, claimed to be the owner, had been the subject of a distraint issued by the landlords of the debtor several days prior to the filing of the debtor's petition for reorganization.

The question as to the ownership of the coal came before the District Court on the petition of one Thomas, the constable who had made the distraint in execution of the landlords' warrant. In his petition Thomas averred Spruks' ownership of the particular coal and the operating tenant's nonownership thereof, and prayed the bankruptcy court to lift its injunction, relative to property in the possession of the debtor, so as to allow a sale of the coal pursuant to the levy. Spruks intervened, averred his ownership of the coal and asserted that, because of a recognized trade practice which permits mined coal to remain in the possession of an operating tenant for various periods of time, the coal in controversy was exempt from distraint upon a landlords' warrant issued against the tenant. The court entered a preliminary order, to which counsel for all parties in interest consented and agreed, including counsel for the constable and the landlords. Under the order, Spruks was authorized to sell the coal and directed to render periodic accountings to the court of his sales and to pay the net proceeds therefrom (after payment of royalties due thereon) into the registry of the court until the fund equalled the landlords' claim ($63,446.07), plus poundage thereon (one per cent), the fund in the registry of the court to be subject to liens and claims of ownership to the same extent as the coal had been. Spruks complied with the order of court and paid the entire amount contemplated by the order into the registry of the court. Thereafter the court found Spruks to be the owner of the coal, held that it was not subject to levy and sale by the constable under the landlords' warrant against the tenant debtor and ordered that the fund in the amount certain ($63,446.07) be paid to Spruks. It was from that decree that the constable and the landlords took the first appeal to which we have already referred and wherein they gave the surety bond which is involved in the present controversy.

The one substantial question here involved is whether the appellee on the former appeal (the present plaintiff) may have recovery against the surety in the supersedeas bond for damages by way of interest on the award for the time payment thereof was postponed because of the appeal. The appellant also raises several other questions which we shall treat with before coming to the principal question.

The appellant contends that the District Court passed on the question of ownership of the coal without notice to or hearing of the landlords. We think the record fully discloses both their knowledge of and participation in that proceeding. The constable, whose petition for relief from the bankruptcy court's injunction had brought the matter before the court, was acting as agent of the landlords pursuant to their warrant; and they and the constable were the joint appellants from the District Court's decree. Any complaint as to a want of hearing or representation in the court below, if such there was, was cognizable on the appeal but no such question was raised.

We also think that the appellant's further contention that the District Court was without jurisdiction of the question as to ownership of the coal is equally lacking in merit. The undisputed facts as to the debtor's possession of the res in controversy leave no doubt as to the jurisdiction of the bankruptcy court to hear and determine the question as to the ownership of the property so found in the possession of the bankrupt at the time of bankruptcy. Chauncey v. Dyke Bros., 8 Cir., 119 F. 1, 3. As already stated, it was the constable who, acting for the landlords, brought the matter before the bankruptcy court by his petition which averred Spruks' ownership and the debtor's non-ownership of the coal levied upon. Spruks himself voluntarily submitted to the bankruptcy court's jurisdiction for the determination of his claim to ownership. Moreover both the constable and the landlords by their attorney had consented and agreed in writing to the entry of the order for the sale of the coal, wherein the questions of ownership and the constable's right to proceed, despite the ownership of the coal, were expressly reserved for the court's determination. The bankruptcy court had jurisdiction both of the subject matter and of all necessary parties.

Upon the affirmance of the District Court's award with costs to the appellee and the due issuance of this court's mandate, Spruks filed a bill of costs in the court below and included therein an item of $4,335.47 for interest on the award from the date thereof to the time that it was paid to the plaintiff immediately following the District Court's receipt of the mandate. The clerk allowed the claim to interest as a part of the costs. On exceptions thereto by the defendants, the District Court approved the costs as taxed. On appeal, this court held that interest is not includible as part of the costs and reversed the allowance thereof by the court below. See Thomas et al. v. Spruks, 100 F.2d 198.

The appellant contends that the decision in the case last above cited is res judicata of the claim here involved. With that, we cannot agree. The causes of action were not the same. The sole question on the appeal reported in 100 F.2d 198 was whether interest on a judgment or a decree is recoverable as a part of the taxable costs. In the instant case the question is whether the supersedeas bond given on the former appeal supports a claim to interest on the judgment appealed from pending disposition of the appeal. There is lacking therefore, as between the two cases, the identity of cause of action which is one of the requisites of res judicata. Lyon v. Perin & Gaff Manufacturing Company, 125 U.S. 698, 700, 8 S.Ct. 1024, 31 L.Ed. 839.

We come then to the principal question presented by the pending appeal. The condition of the supersedeas bond is that the appellants (the constable and the landlords) "shall prosecute said appeal to effect, or answer to all damages and costs if they fail to make their appeal good * * *." However, it is not the wording of the supersedeas bond alone which identifies the matters thereby secured. The judgment or decree appealed from as ultimately affected by the appeal is the factor which finally measures the scope of the liability under the bond. The surety is liable within the relevant terms of the bond for what the court orders or decrees in respect of the matter appealed from. Rosenstein v. Tarr, C. C. D. Mass. 1892, 51 F. 368, 370, affirmed per curiam in Tarr v. Rosenstein, 1 Cir., 53 F. 112, for the reasons stated in the opinion below. In the Tarr case the Circuit Court had said (51 F. at page 370) that "It is elementary that, in a suit on a supersedeas bond, neither the principals nor the sureties can be mulcted beyond what the courts have adjudged as the result of the appeal to which the bond was incident. *...