United States Fidelity & Guaranty Co. v. Board of Com'rs of Woodson County, Kan.

Citation145 F. 144
Decision Date30 March 1906
Docket Number2,298.
PartiesUNITED STATES FIDELITY & GUARANTY CO. v. BOARD of COM'RS. OF Woodson County, Kan.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

(Syllabus by the Court.)

When the jurisdiction of the Circuit Court is based solely upon diversity of citizenship, the suit may be maintained in the district in which either the plaintiff or defendant resides.

The removal from state to national court or joinder of objection to district with general demurrer waives the objection that the suit is pending in the wrong district.

After the removal of an action from a state court to a Circuit Court of the United States, and the avoidance of the service of summons by the latter court upon the motion of the defendant, that court may lawfully permit the plaintiff to file an amended petition and may order a summons to issue thereon.

A surety is a favorite of the law and never liable beyond the strict terms of his obligation.

But his contract is nevertheless but an agreement, and like all other agreements it must receive a just and rational interpretation.

The actual intent and meaning of the parties when the agreement was made, deduced from the entire contract, from its subject-matter, from the purpose of its execution, and from the situation and circumstances of the parties when they made it, must prevail over the dry words of the instrument, inapt expressions, and careless recitals therein, unless that intention runs counter to the plain sense of the binding words of the agreement.

That construction which sustains and vitalizes an agreement should be preferred to that which strikes down and paralyzes it.

A county board designated a private bank, the Toronto Bank, a depository of the funds of the county on condition that an approved bond should be furnished. The cashier of the bank and by the fidelity company, as surety, which recited the designation and was conditioned, among other things, that the obligors would indemnify the board against any losses it should sustain by reason of the designation. But it contained recitals that the corporate body, the Toronto Bank, Toronto Kan., was the principal, and that this corporate body executed the bond, and it contained a condition, among other things, that the obligors would indemnify the board against the defalcations of this corporate body. The board deposited the funds of the county with the private bank which it had designated, and that bank defaulted. Held, the bond shows that the intention of the parties was that the obligors should bind themselves thereby to indemnify the board against the defalcations of the designated bank whether it was a private or a corporate institution, and the surety is bound to do so.

A defendant waives a demurrer to the plaintiff's evidence or a motion for judgment because it establishes no cause of action by the subsequent introduction of evidence to the merits on his own behalf.

Where a jury is waived, and an action at law is tried by a national court which makes a finding or renders a judgment, no question of fact and no question of mixed law and fact except those questions of law which have been reserved by exception, motion, or request, are reviewable in an appellate court.

The question whether or not at the close of the trial there is substantial evidence sufficient to sustain a finding for either party is a question of law.

Any question of law is reviewable in a trial before a court without a jury, which is reviewable in a trial before a jury.

This question is reviewable when the trial is by the court without a jury upon a motion for judgment, a request for a declaration of law, or any other action which fairly presents this issue of law to the trial court for determination before the trial ends.

The trial ends when the finding is filed, or, if no finding is filed before, when the judgement is rendered.

This writ of error was sued out to reverse a judgment of $5,000 upon a bond of the United States Fidelity & Guaranty Company a corporation, as a surety of the Toronto Bank of Toronto in the state of Kansas. The board of county commissioners of Woodson county, Kan., the obligee in the bond, brought the action in the district court of Woodson county in the state of Kansas, and the defendant removed it to the United States Circuit Court for the District of Kansas upon the ground of the diversity of the citizenship of the parties. The fidelity company then appeared specially for that purpose, and upon its motion the service of the summons was set aside. Thereafter upon a motion of the plaintiff the court permitted it to file an amended petition and ordered that a summons should issue against the defendant thereon. This summons was duly served upon the defendant, which demurred to the amended petition on the grounds: (1) that the court had no jurisdiction of its person; (2) that it had no jurisdiction of the subject-matter of the action; and (3) that the petition did not state facts sufficient to constitute a cause of action. At the same time it made a motion to dismiss the action upon the ground that the federal court had acquired no jurisdiction by reason of the service of the summons issued by it, and the court denied this motion and overruled the demurrer. The fidelity company then answered, the case was tried by the court without a jury, and a judgment was rendered against the company.

A. J. Jones, A. M. Keene, and Edward C. Gates, for plaintiff in error.

J. C. Culver and A. F. Florence (W. R. Biddle, on the brief), for defendant in error.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

SANBORN Circuit Judge, after stating the case as above, .

The jurisdiction of the court below is challenged by counsel for the fidelity company upon the sole ground that after that corporation had removed this action from the state court, and the federal court had set aside the service of the summons upon the motion of the defendant, it permitted the plaintiff to file as amended petition and ordered the issue of a summons thereon which was subsequently properly served upon the defendant. The Circuit Court had jurisdiction of the subject-matter of the action because the citizenship of the parties was diverse and the amount involved in the controversy exceeded $2,000. Where the jurisdiction of the Circuit Court is founded solely upon the fact that the parties are citizens of different states, the action may be brought in the district in which either the plaintiff or the defendant resides, and the plaintiff in this action resided in the state of Kansas. Act Aug. 14, 1888, c. 866, 25 Stat. 434 (U.S. Comp. St. 1901, p. 508); McCormack v. Walthers, 134 U.S. 41, 43, 10 Sup.Ct. 485, 33 L.Ed. 833; Wilson v. Western Union Tel. Co. (C.C.) 34 F. 561. Again, by its removal of the action from the state to the federal court (Memphis Sav. Bank v. Houchens, 52 C.C.A. 176, 182, 115 F. 96, 102), and by its joinder in its demurrer of its objections to the jurisdiction of the court with its objection that the amended petition did not state facts sufficient to constitute a cause of action )St. Louis, etc., Ry. Co. v. McBride, 141 U.S. 127, 131, 11 Sup.Ct. 982, 35 L.Ed. 659; Southern Express Co. v. Todd, 56 F. 104, 106, 5 C.C.A. 432, 434), the defendant waived its objection that the action was not brought or pending in the proper district.

The removal of the case did not estop the defendant from assailing and avoiding the service of the summons; but, when that service had been quashed, the jurisdiction of the federal court over the subject-matter of the suit and its power to proceed by the issue of the usual process to acquire jurisdiction of the person of the defendant remained unimpaired. The plaintiff had the right to file a new and original petition in that court and to cause the issue of a summons thereon against the defendant as a matter of course. The receipt of the court of an amended petition and the issue of a summons upon that petition deprived the defendant of no right or privilege which it would have had if the summons had been issued upon a second original petition, and the conclusion is unavoidable that a Circuit Court of the United States has a summons against the defendant thereon in an action which the latter motion, the federal court has set aside the service of the summons which had been issued in the state court. The Circuit Court lawfully acquired jurisdiction of the subject-matter of this action and of the person of the defendant, and the objection of counsel for the defendant to the power of that court to proceed in this case was properly overruled.

The next contention is that the court should have sustained the demurrer to the petition because it did not state facts sufficient to constitute a cause of action. Under the statutes of Kansas, individuals and partnerships are permitted to conduct the business of banking under certain legal restrictions and are called private banks. Gen. St. Kan. 1901, Secs. 473, 452, 408, 415, 416. Five or more persons are authorized to form themselves into a banking corporation, and such corporation is empowered to carry on the business ordinarily transacted by banks. Section 407. Banking corporations are required, and private banks are forbidden to embody the name of the state in their respective names. Section 408, 452. The material facts set forth in the petition are these: The Toronto Bank was a private bank. On January 13, 1902, the board of county commissioners designated it by the name 'Toronto Bank' to receive the funds of the county after it should furnish an approved bond. The fidelity company as surety executed, and the cashier of this bank filed, the bond in suit, and it was approved by the board on February 3, 1902. Thereafter the bank received deposits of the plaintiff...

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