Sw. Sur. Ins. Co. v. Farriss

• Decision Date: 02 February 1926
• Docket Number: Case Number: 13749
• Citation: Sw. Sur. Ins. Co. v. Farriss, 1926 OK 103, 247 P. 392, 118 Okla. 188 (Okla. 1926)
• Parties: SOUTHWESTERN SURETY INS. CO. et al. v. FARRISS et al.
• Court: Oklahoma Supreme Court

1926 OK 103

247 P. 392

118 Okla. 188

SOUTHWESTERN SURETY INS. CO. et al. v. FARRISS et al.

Case Number: 13749

Supreme Court of Oklahoma

Decided: February 2, 1926

Syllabus

¶0 1. Judgment -- Subrogation by--Essentials of Right--Equitable Principles.

A judgment whereby subrogation is awarded to sureties on a guardian's bond in one action, to be enforced against a subsequent anticipated recovery in another action, must, when the subsequent recovery is had, be shown to be then supported by equitable principles, and where it is clearly shown that the parties against whom the right of subrogation is sought to be enforced have equities equal to or superior to the equities of the subrogees, as well as legal rights which would be invaded by the enforcement of subrogation against them, equity will refuse relief against the legal right so strengthened by equal or superior equities.

2. Indians--Minor--Federal Law--Alienation or Incumbrance of Land.

By Act of Congress of May 27, 1908 (35 Stat. at Large, 213), Indian minors are protected against the voluntary or involuntary alienation or incumbrance of their lands, both allotted and inherited, unless the same be effected in the course of probate proceedings, and any other "instrument" or "method" of alienation or incumbrance is absolutely null and void."

3. Same--Courts -- Stipulated Judgment--Void in Part--Cannot be Validated.

In an action by a second guardian upon the bonds of a prior absconding guardian, the court has indubitable jurisdiction to determine and fix liability of sureties, but where the court attempts in the same judgment to fix a lien by way of subrogation against the lands of such minor wards and in favor of such sureties, such purported lien being decreed pursuant to written stipulation between the attorneys for the parties, the stipulation so entered into is an "instrument" and its incorporation in the judgment is a "method" of incumbering the lands of said minors which is expressly prohibited by section 5 of the Act of Congress, supra, and is void because so expressly declared by said section.

4. Same.

Being void, such judgment cannot thereafter be validated by an order of the same court denying a motion or petition to vacate same, and neither the void judgment nor the order denying the petition to vacate can operate as an estoppel under a plea of res adjudicata in a subsequent action between the same parties. The lack of judicial power to decree the lien inheres in every subsequent proceeding by which color of authority is sought to be imparted to the void portion of said judgment.

Stanard & Ennis, for plaintiffs in error.

Blanton, Osborn & Curtis, for defendants in error.

LOGSDON, C.

¶1 Only one proposition is presented and argued seriously by plaintiffs in their brief, and that is the proposition stated in the tenth assignment of error as follows:

"That said court erred in not holding as a matter of law by rendition of proper judgment that as to the defendants in error, Alpha Cash, Patterson Shi Cash, Thomas L. Farris, and A. H. Shi, the judgment rendered in the district court of Garvin county, Okla. on the 8th day of June, 1921, in said cause No. 1532, entitled Alvin F. Pyeatt, Guardian, et al. v. Southwestern Surety Co., a Corporation, et al., refusing to vacate and modify the judgment rendered by the district court of Garvin county, Okla., in said action, on the 29th day of January, 1914, was res adjudicata of all questions raised and presented by said defendants in error in this action, and that said defendants in error were estopped thereby from denying the validity of said judgment so rendered in case No. 1532."

¶2 It appears that the minors, Tyree Cash, Minnie Ruth Cash, and Irene Cash, and the guardian, Alvin F. Pyeatt, were not parties to the motion or petition to vacate judgment in cause No. 1532, and are therefore not included within the terms of the order denying same. Only Alpha Cash, Patterson Shi Cash, and their grantees, T. L. Farriss and A. H. Shi, were petitioners in that proceeding. As to these four defendants it is earnestly insisted that the order of June 8, 1921, denying the petition to vacate the judgment of January 29, 1914, is res adjudicata and operates as all estoppel to question the validity of said judgment on which plaintiffs base their right of subrogation and their claim of lien in this instant action. Two questions naturally present themselves in the consideration of this contention: (1) Granting the validity of the plea of res adjudicata, do the facts disclosed by the record present equities entitling plaintiffs to be subrogated under the final judgment in cause No. 826? (2) Is the lien here sought to be foreclosed such a lien as a court of equity had power to declare and establish at the time it assumed to do so?

¶3 Subrogation, being based upon principles of equity and good conscience, its enforcement must be consonant with right and justice. Unless plaintiffs have shown themselves entitled to this equitable consideration they cannot enforce subrogation against the legal rights of the defendants. As is said in Bispham's Principles of Equity, section 338:

"The right of subrogation being an equitable one, it is consequently subject to the general qualification by which all equities are affected:--namely, that it must not be enforced to the detriment of equal or superior equities existing in other parties, nor where its enforcement would operate to the prejudice or injury of the creditor; and cannot, therefore, be insisted upon until the creditor is fully paid and satisfied. And it has been said that it will not be enforced against a legal right."

¶4 In the instant case, prior to the fraudulent sale by the guardian, for whose acts these plaintiffs were sureties, the minor wards held title in fee and unincumbered to the lands here involved. By the final judgment in cause No. 826 (Pyeatt et al. v. Estus et al., 72 Okla. 160, 179 P. 42), they recovered title and possession of these lands, but with an incumbrance of $ 15,000 thereon. The amount paid to those minors by these plaintiffs under the judgment in cause No. 1532 was the sum of $ 9,318. Whatever may have been the view of the trial court as to the probable result of the proceeding in error in cause No. 826, as justifying the judgment for subrogation in cause No. 1532, it is clearly evident that when that final decision was rendered it left equities in the minor wards superior to those here asserted by plaintiffs under the judgment of subrogation. Plaintiffs merely discharged their legal and contractual obligations by paying the $ 9,318, while the minor wards were compelled to pay $ 15,000 to clear the title to their lands, which would not have been incumbered but for the fraudulent and criminal acts of the guardian for whom plaintiffs were sureties. The minor wards, who stand in the relation of creditors, have not been fully paid and satisfied, and to enforce the right of subrogation against them under such circumstances would be to prejudice and injure them in their legal rights, as well as to wholly ignore their superior equities.

¶5 This claim of plaintiffs would be clearly enforceable against any property of the absconding guardian through subrogation to the rights of the wards against it. They being creditors, or standing in that relation at least, and having received the full amount for which plaintiffs were legally and contractually bound, their rights of recourse against the property of the absconding guardian would inure it to the benefit of plaintiffs, under the doctrine of subrogation, to the extent of the payment so made. No authority has been called to the attention of this court which would authorize surety, after making good the default of his principal, to recover back the amount so paid from the creditor receiving the payment. This is the effect of the claim of subrogation in this ease.

¶6 Is the lien here sought to be foreclosed such a lien as a court of equity had power to declare and establish at the time it assumed to do so? The judgment fixing and establishing the lien was entered January 29, 19,14, and the action in which it was entered was one to recover on the bonds of the defaulting guardian. It is indubitable that the court had jurisdiction of the action on the bonds of the guardian, and judicial power to determine and fix liability thereon, but did it have judicial power in that action to impress a lien upon the lands of these minor Indians? The lien which is sought to be enforced became a part of the judgment by stipulation entered into by attorneys for the new guardian and those representing the surety companies, and which stipulation was approved by both the county and district judges. Could this stipulation confer such jurisdiction? It has been often determined by this and the federal courts that the disability of minority imposed by 2 of the Act of Congress of May 27, 1908, (35 St. at L. 312), is in the nature of a restriction on alienation as to minor allottees and minor heirs. Collins Inv. Co. v. Beard, 46 Okla. 310, 148 P. 846; Bell v. Fitzpatrick, 53 Okla. 574, 157 P. 334; Brewer v. Dodson, 60 Okla. 81, 159 P. 329; Brewer v. Perryman, 62 Okla. 176, 162 P. 791; Tidal Oil Co. v. Flanagan, 87 Okla. 231, 209 P. 729; Truskett v. Closser, 198 F. 835; Priddy v. Thompson, 204 F. 955; Barbre v. Hood, 228 F. 658. By section 5 of this act "any attempted alienation or incumbrance by deed, mortgage, contract to sell, power of attorney or other instrument or method" of the lands of allottees prior to removal of restrictions is expressly prohibited and declared to be "absolutely null and void." The written stipulation entered into by the attorneys for the parties in cause No. 1532, and approved by the county judge, was an "instrument", and its incorporation in the judgment of the district court was a "method" of incumbering allotted lands prior to the removal of the minority restrictions against alienation or incumbrance. It was an "instrumen...