Court Opinion

ID: 8801136
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:32:52.277141+00
Date Added: 2024-06-11T17:03:53.547038
License: Public Domain

TRIEBER, District Judge
(dissenting). I am constrained to dissent from so much of the majority opinion which holds that the appellees are liable to contribute two-thirds of the amount due from the two bonds, and from that part of the opinion which holds that they are liable for any part of the costs paid out by the appellant in the suit brought by the county. In my opinion each of the bonds must be treated as being for the sum of $5,000, and therefore the sureties on each of the bonds are liable for one-half. The statute of Kansas under which these bonds were executed (section 1704, General Statutes of Kansas 1901) reads as follows:
*326“Deposit of Money in Other Counties.—That in all counties having a population of less than twenty-five thousand inhabitants, the county treasurer may deposit all public moneys in some responsible bank or banks within the state of Kansas, to be designated by the board of county commissioners, in the name of said treasurer as such officer, which bank or banks shall pay such interest on average daily balances as may be agreed upon by the board of county commissioners: Provided, that in no case the rate of interest shall be less than two per centum per annum on such average daily balances. Before making such deposits, the said board shall take from said bank or banks a good and sufficient bond in a sum double the largest approximate amount that may be on deposit at any one time, or the bond of some surety company empowered to do business in the statel of Kansas, in a sum aggregating the largest sum which may be on deposit at any one time, conditioned that such deposits shall be promptly paid on the check or draft of the treasurer of said county; but in no case shall more than one-half of the amount of said bond be subscribed by the officers of said bank; and such bank or banks shall, on the first Monday of each month, file with the county clerk of such county a statement of the amount of money on hand at the close of business each day during the previous month, and the amount of interest accrued thereon to said date: Provided, that it shall be unlawful for the board of county commissioners of any county to deposit any funds of their county in any bank in which the county treasurer, or any member of the board of county commissioners, shall be the owner of any stock or otherwise pecuniarily interested therein.”
It seems to me that there can be no room for doubt that the liability of the appellees was only for $5,000, although the’ bond being executed by individuals, and not by a surety company empowered to do business in the state of Kansas, it had to be for double the amount of the largest approximate amount that may be on deposit at one time. The deposits by the first order, when appellant executed its bond, were limited to $5,000, and later the deposits were increased by an additional $5,000, making the largest amount which could be deposited with the Toronto Bank $10,000, secured by the two bonds, or $5,000 for each. I can hardly conceive that it was the intention of'the Legislature of the state of Kansas to place a greater burden on its own citizens, who would sign bonds merely for accommodation, than on foreign corporations, engaged in the business of becoming sureties on bonds, for 'compensation. To me the language of the statute is plain that the. sole object of requiring the penalty of the bond to be double the amount of liability which could possibly accrue, when the bond is signed by individuals, was that it would make the bond safer, and thus protect the county from loss, in case of the insolvency of some of the sureties; while, on the other hand, if the bond is .executed by a surety company, which was absolutely safe by reason of. its compliance with the laws of the state of Kansas, there was no likelihood of inability to respond to any loss for which it may becorne liable. Had the second bond been also signed by a surety corporation, the penalty would only have been $5,000, and appellant could in that case have asked for contribution of one-half only. The effect of the majority opinion is as if the Toronto Bank had been required to give a bond for $15,000, and appellant had assumed responsibility for $5,000 and appellees for $10,000. As this was not what either the statute or the orders of the board of commissioners required, my opinion is that appellees are only liable for one-half of the amount paid by appellant on its bopd, less one-half paid by them.
*327On the question of contribution of costs, the law, as I understand it, is that when one of the sureties is sued, and in good faith contests the suit, with reasonable cause to believe that the defense is good in law, and the result of the contest, if favorable to that surety, would inure to the benefit of his cosureties, whether parties to that action or not, he is entitled to contribution for the costs and attorney’s fees necessarily expended by him, although he may not be successful, or if the cosureties are as responsible for the necessity of a suit, by reason of a refusal to pay, as the surety sued is. On the other hand, if the claim is contested by the surety upon grounds which would inure solely to his own benefit if successful, and by reason thereof, in all likelihood, throw a greater burden on his cosureties, or its success could in no event benefit them, such a surety is not entitled to contribution from his cosureties for the costs and attorney’s fees paid out by him in defense of the action.
The authorities cited in the majority opinion are clearly distinguishable from the facts in the instant case. In Carter v. Fidelity Deposit Co., 134 Ala. 369, 32 South. 632, 92 Am. St. Rep. 41, the facts were that the surety seeking contribution had resisted the suit, which was to recover $23,063.51, and by reason of the contest the claim was reduced to $13,797.69, a saving of nearly $10,000, of which the cosureties were the beneficiaries, as much as he was.
In Fletcher v. Jackson, 23 Vt. 581, 56 Am. Dec. 98, it was held:
“Whether the costs and attorney’s fees may be recovered depends altogether on the question of whether such defenses were made under circumstances as to be regarded as hopeful and prudent.”
If the suit was needless, neither attorney’s fees nor costs can be recovered. John v. Jones, 16 Ala. 454.
In Gross v. Davis, 87 Tenn. 226, S. W. 92, all the sureties made a common defense, and counsel were employed by the plaintiff for the benéfit of all the sureties, with their knowledge and consent. The defense was for the benefit of all the sureties, and, if successful, would have benefited his cosureties fully as much as him.
Brandt on Suretyship and Guaranty,' § 309, says:
“Whether the surety can recover from his cosureties contribution for costs of a suit from him, for collection of a debt, depends upon the circumstances of each case.”
In Davis v. Emerson, 17 Me. 64, the court found:
“The failure to pay, which occasioned the costs, was imputable to the defendant, as much as to the plaintiff.”
And therefore -it was held that the defendant was liable for half the costs.
In Boutin v. Etsell, 110 Wis. 276, 85 N. W. 964, a surety was permitted to recover attorney’s fees paid by him to make a compromise of the liability assumed by all the sureties. A very favorable compromise was effected and a considerable sum of money saved to all the parties. The court upon these facts held that 'the defendant oughfi to contribute toward the expenses incurred by the plaintiff in good faith, of which they were beneficiaries as much as he was.
*328In Backus v. Coyne, 45 Mich. 584, 8 N. W. 694, the court said:
“Tiie foundation for tile right of contribution in such cases (employment of counsel and costs of suit) is the fact that the expense was incurred in defending for the common benefit. This will not, therefore, permit him to incur expense in uselessly resisting a legal demand, or in creating needless or unnecessary costs and expenses.”
In Van Winkle v. Johnson, 11 Or. 58, 5 Pac. 922, 50 Am. Rep. 495, the general rule that a surety, who defends in good faith for the benefit of all the sureties, is entitled to contribution from his cosureties is followed.
In Briggs v. Boyd, 37 Vt. 533, there was no question but that the defense, if successful, would have inured to the benefit of all the sureties.
In this case the defense made by tire appellant in the suit of the county against it (United States Fidelity & Guaranty Co. v. Board of Com’rs of Woodson County, 145 Fed. 144, 76 C. C. A. 114) could in no wise have benefited the appellees, if it had succeeded. In fact it would have thrown a greater burden on them, because the appellant would have been relieved of all liability, and the appellees would have been responsible for the entire amount of the bond. The defenses made by the appellant in that case, as shown by the pleadings, which are a part of the record of this case, were:
A demurrer assigning as grounds: (1) That the court had no jurisdiction of its person. (2) That it had no jurisdiction of the subject-matter of the action.
The demurrer having been overruled, it answered, denying all liability upon the following grounds: (1) That the application for the bond by the'bank falsely represented it as a corporation, when in-fact it was a partnership. (2) That the bond by its express terms bonded the bank as a corporation when in fact it was a private bank, and that the board of county commissioners knew of this fraud at the time the, bond was executed. (3) That one of the owners of the bank had sold his interest in the bank to his partner, without the knowledge or consent of the surety company, although that fact was known to the board of county commissioners. (4) That the board of county commissioners, after the execution of the bond by appellant had accepted a new bond in the sum of $10,000; “the bond” referred to being the bond signed by the appellees.
Which of these defenses, if successful, could have benefited the appellees? There can be but one answer to this: None. On the contrary, if the surety company had been successful, it would have been free from all liability, and the entire burden of the failure of the depositary bank would have fallen upon the appellees’.