Stull Brothers v. Beddeo

• Decision Date: 10 May 1907
• Citation: 112 N.W. 315,78 Neb. 119
• Parties: STULL BROTHERS, APPELLANTS, v. WALTER R. BEDDEO ET AL., APPELLEES
• Court: Nebraska Supreme Court

112 N.W. 315

78 Neb. 119

STULL BROTHERS, APPELLANTS, v. WALTER R. BEDDEO ET AL., APPELLEES

Supreme Court of Nebraska

May 10, 1907

REVERSED.

ALBERT C. DUFFIE and JACKSON, CC., concur.

OPINION

ALBERT, C.

An opinion was filed in this case at the present term, which is reported ante, p. 114, where the facts are set out at length.The cause, coming on for hearing on a motion to vacate the judgment of affirmance entered by this court, and to enter a judgment of reversal, was reargued at length.

On the reargument the defendants renewed their contention that Beddeo's discharge in bankruptcy operated as a release of his codefendant.We do not think this contention can be sustained.This is not a suit to enforce the judgment against which the injunction was leveled, but an action on the injunction bond, which the defendant Means signed as surety for Beddeo.It constitutes a new contractual obligation, wholly independent of the judgment, save to the extent that the judgment affects the question of damages, which we shall notice presently.Section 16 of the bankruptcy act (U. S. Comp. St., vol. 3, ch. 3), provides: "The liability of a person who is a codebtor with, or guarantor or in any manner a surety for, a bankrupt shall not be altered by the discharge of such bankrupt. " The language "in any manner a surety for a bankrupt" is certainly broad enough to include a surety on an injunction bond.We have not overlooked the numerous cases cited by counsel, wherein sureties have been held to be released from liability by the discharge of their principals in bankruptcy.In each of those cases, however, it is clear that, in consequence of the discharge in bankruptcy, the contingency upon which the liability of the sureties had been dependent could never happen.Wolf v. Stix, 99 U.S. 1, 25 L.Ed. 309, which is included among the citations referred to, furnishes an apt illustration of that class of bonds.There the court said: "The cases are numerous in which it has been held, and we think correctly, that if one is bound as surety for another to pay any judgment that may be rendered in a specified action, if the judgment is defeated by the bankruptcy of the person for whom the obligation is assumed, the surety will be released.The obvious reason is that the event has not happened on which the liability of the surety was made to depend."But in the case at bar the condition of the bond is that "plaintiff shall pay to the defendants all damages which they may sustain by reason of said injunction, if it be finally decided that the injunction ought not to have been granted."The contingency upon which the liability of the surety was made to depend by the condition of this bond was a final decision that the injunction ought not to have been granted.That contingency happened, and the liability of the surety on the bond became fixed on the 6th day of June, 1904, when the injunction was dissolved and the suit in which it had issued was dismissed.Gibson v. Reed, 54 Neb. 309, 75 N.W. 1085;Gyger v. Courtney, 59 Neb. 555, 81 N.W. 437.

But it is argued that the condition of the bond is to pay the damages sustained by the plaintiffs when those damages are ascertained against the principal, and, as they cannot now be thus ascertained on account of the discharge in bankruptcy of the principal, the contingency upon which the liability of the surety depends can never happen.This argument, pushed to its logical conclusion, would render section 16 of the bankruptcy act above quoted almost, if not entirely, nugatory, because it is hard to conceive of a contract of suretyship to which it would not apply with as much force as to the one under consideration.The obligation is to pay the damage on the happening of a certain event.That event has happened.Section 16, supra, is to the effect that the discharge of the principal in bankruptcy does not release the surety from his liability to pay such damages.Before he can pay them they must be ascertained, that is, the parties must agree upon the amount or it must be established in an action on the bond.A statute which preserves a surety's liability, notwithstanding the discharge of the principal, but which at the same time forbids the taking of a step essential to enforce the liability against the surety, would be a mockery.

On the reargument the soundness of our conclusion in the former opinion that the amount of the judgment against which the injunction was directed is a proper element of damage in an action on the injunction bond, on the facts stated, is challenged.It is argued with much plausibility that the bankruptcy proceedings, and not the injunction, made it ultimately impossible to enforce the judgment.This argument appears to prove...