Court Opinion

ID: 3474024
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:44:54.130156+00
Date Added: 2024-06-11T13:44:24.128729
License: Public Domain

In our original decree herein, which was handed down by Division C, the judgment appealed from is reversed, and the injunction sued out by the National Surety Company is dissolved with the right to have the execution of the plaintiff's judgment against appellee limited to the recovery of $3,174.88, the difference between the par value of the stock received by plaintiff and the price for which she sold it.
The National Surety Company applied for a rehearing, and in its application therefor it is alleged that defendant executed a surety bond in the sum of $5,000 under what is known as the Jitney Ordinance of the City of New Orleans; that plaintiff was injured while alighting from a Spanish Fort car, owned and operated by the New Orleans Railway  Light Company; that she had obtained a judgment against the New Orleans Railway  Light Company for $10,000 and against defendant surety company for *Page 1042 
$5,000; that in full satisfaction of her judgment for $10,000 against the New Orleans Railway  Light Company she accepted stock of that company of the par value of $11,338.84, and, on the same day, she sold this stock for $8,163.96 cash. It is alleged that this court erred in not holding that the discharge of the principal on the bond also discharged the surety. The alleged errors in Nos. 2, 3, 4, and 5 are merely amplifications of No. 1, which we have stated fully. It is also alleged that the court erred in holding that the principle announced in the case of Horsthemke v. National Surety Co., 151 La. 65, 91 So. 544, is controlling.
Appellant filed two briefs with respect to this application. In one, the application for a rehearing is opposed. In the other, appellant asks that our original judgment be amended, or, in the alternative, that the rehearing, if granted, be limited to an amendment of the judgment by increasing the sum awarded therein.
A rehearing was ordered without reservation or limitation, and the case is before us as if originally presented; but it is only necessary for us to consider the assignment of errors.
Mr. Benj. W. Kernan, as amicus curiæ, has filed a brief in this suit in which he gives an accurate statement of the case. We cannot improve upon that statement, and we therefore quote it in full:
  "Mrs. Hopkins sued the New Orleans Railway  Light Company for damages sustained while alighting from one of its cars of the Spanish Fort line. From a judgment rejecting her demand she appealed, and this court rendered judgment in her favor for $10,000 with legal interest from judicial demand. 150 La. 61, 90 So. 512, 19 A.L.R. 1362. At the time the judgment was rendered, the defendant railway company was being operated by a receiver appointed by the United States District Court.
"Suit was then brought against the National Surety Company, of New York, and the New Orleans Railway 
Light Company, alleging *Page 1043 
that under Ordinance No. 2346, Commission Council Series, a bond in the sum of $5,000 for each car operated by it had been filed by the New Orleans Railway  Light Company upon which bonds the National Surety Company, of New York, was surety. That under the conditions of the ordinance and the bonds, and because of the fact that there were two cars concerned in the accident to her, plaintiff was entitled to recover in solido against both defendants the amount of the judgment recovered by her against the railway company.
"The right to recover a penalty of 10 per cent. of the judgment was also claimed under Act 225 of 1918.
"Judgment was rendered in favor of plaintiff against the National Surety Company, of New York, for $5,500 on April 19, 1922, which, on appeal to this court, was reduced to $5,000; the claim for the 10 per cent. penalty being rejected (154 La. 62, 97 So. 297), June 4, 1923.
"Under the plan of reorganization of the New Orleans Railway  Light Company, its property was sold in foreclosure proceedings and purchased by the new corporation, the New Orleans Public Service, Inc. Ordinary creditors, Mrs. Hopkins' claim being so ranked, received, under the reorganization plan, $11,338.84 in common stock of New Orleans Public Service, Inc., in full settlement and satisfaction of her judgment; a formal act of settlement being executed and acknowledged before Paul W. Maloney, notary public, her attorney, January 13, 1923. This stock was sold by her for $8,163.96 on the same day it was received. (Tr., 13, 14, and 15.)
"Execution was issued under the judgment of June 4, 1923, and was enjoined by the National Surety Company upon the ground that plaintiff had collected from the principal obligor a sum in excess of its obligation, and had received a settlement of the judgment against the railway and light company.
"The right to action against the National Surety Company, of New York, was grounded on the bond which it had signed as surety for the New Orleans Railway 
Light Company under Ordinance No. 2346, Commission Council Series, and the cause for action arose by failure of the New Orleans Railway  Light Company to indemnify her for the injuries she had sustained as a result of its fault in the operation of the car for which the bond was given, as established by final judgment of this court.
  "Plaintiff's right to recover against the National Surety Company is fixed by the terms of the ordinance requiring the bond and by the *Page 1044 
bond. The judgment against the New Orleans Railway 
Light Company was merely a judicial recognition of the fact that she had been injured by the fault of that company in the operation of the car covered by the bond, and that she was entitled to $10,000 indemnity therefor."
Ordinance 2346, Commission Council Series, of the City of New Orleans, provides that all persons or corporations engaged in the business of transporting passengers for fares in the city shall file with the commissioner of public safety an indemnity bond for the sum of $5,000 for each and every vehicle so employed. In accordance with this ordinance, the New Orleans Railway  Light Company executed the bond involved in this suit, with the National Surety Company as surety thereon. This bond was approved in the manner and as was required by the ordinance, and was conditioned as follows:
  "Now therefore the condition of this instrument is such that if the principal indemnifies the obligee or any other person or persons who may sustain damages to his or their person, or property, as a result of the fault of the principal, its agents, servants or employees, in an amount not to exceed the sum of $5,000.00 for the car used and employed by the principal and known and designated as car No. 509, then this instrument shall be null and void; otherwise to remain in full force and effect."
This obligation is not in the form of an original indemnity contract. It is merely a collateral undertaking and it is limited to $5,000. We are therefore of the opinion that when plaintiff received from the principal a sum equal to or exceeding $5,000, the obligation of the surety was discharged and it was released from further liability on the bond. If this were not true, plaintiff would have the right to enforce the collection of the full amount of the bond regardless of what amount she may have recovered from the principal. Conceding that the provisions of the ordinance must be read into the bond (both of which are quoted in the original opinion), there is nothing in either to *Page 1045 
indicate that the city council, or the principal or surety, intended any further obligation on the part of the surety other than to indemnify any one injured in person or property, by the fault of the principal, etc., up to the sum of $5,000.
The bond, whatever it may be called, is not an indemnity contract or original obligation; it is merely a collateral undertaking.
  "A bond by a third party, that is by one other than the debtor or promisor, is regarded as a guaranty, and the original right is not thereby superseded, but the bond is merely a cumulative security." White v. Cuyler, 6 T.R. 176.
In our original opinion it is assumed that because plaintiff accepted from the New Orleans Railway  Light Company what it was willing to give, her settlement of her judgment against that company was therefore involuntary. The plaintiff, however, declares that the settlement was voluntary, and she has evidenced that declaration by an authentic act.
  "The voluntary acceptance on the part of the creditor, of an immovable or any other property in payment of the principal debt, is a full discharge of the surety, even in case the creditor should be afterwards evicted from the property so accepted." C.C. art. 3062.
The decision in Horsthemke v. National Surety Co., 151 La. 55, 91 So. 544, is based upon facts entirely different from the facts of this case. In that case the judgment was for $3,000 and the carrier had paid nothing. The decision merely holds that the surety may be sued directly and that it was not necessary to make it a party to plaintiff's suit against the carrier. Inasmuch as the judgment was for $3,000 and the surety was obligated up to $5,000, and the carrier had paid nothing on the judgment against it, the holding in the Horsthemke Case is correct.
For these reasons our former decree rendered *Page 1046 
herein is avoided, and the judgment of the civil district court, rendered in the following words and figures, to wit:
  "It is ordered, adjudged, and decreed that there be judgment herein in favor of the plaintiff, National Surety Company, and against the defendant, Mrs. Augusta D. Hopkins, and the civil sheriff for the parish of New Orleans, perpetuating and making permanent the writ of injunction herein issued on the 14th day of July, 1923, enjoining and restraining the said Mrs. Augusta D. Hopkins and the civil sheriff for the parish of Orleans from proceeding any further under the writ of fieri facias issued in proceeding No. 140460 of the docket of this honorable court, entitled Mrs. Augusta D. Hopkins v. National Surety Co. et al., and from seizing or attempting to seize, and from selling or attempting to sell, plaintiff's property wherever situated"
— be and the said judgment is hereby affirmed. Appellant to pay costs.
Right to apply for rehearing is reserved to plaintiff.
ST. PAUL, J., dissents.