Court Opinion

ID: 3525581
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:37:41.776928+00
Date Added: 2024-06-11T13:54:59.973424
License: Public Domain

This suit was instituted in the Circuit Court of the City of St. Louis, returnable to the February term, 1915, on an indemnity bond executed, April 17, 1899, by Graham  Miller as principals and by appellant as surety, to respondent as obligee, called therein Railway Company, in the penal sum of $10,000. Said bond recites:
"The obligation of this bond is such that, *Page 115 
Whereas, The said Graham  Miller are general railroad tie contractors, engaged in the business of furnishing to railway companies crossties, switch ties and lumber, in the State of Missouri; and,
"Whereas, The said Graham  Miller for several years past have been selling ties and lumber to the Railway Company and desire to furnish ties and lumber to said Railway Company during the year 1899, and,
"Whereas, The Railway Company is willing to continue purchasing of said Graham and Miller ties and lumber, from time to time as it may want them, provided the same conform to specifications and requirements of the Railway Company and are accepted by its fully authorized agent after inspection; and, provided further, that the said Graham  Miller will hold it, the Railway Company, harmless by reason of any and all claims which may be made against it by laborers, materialmen and others, to and on account of any ties and lumber furnished by them to the Railway Company, between January 1st, 1898, and January 1, 1900.
"Now, Therefore, If the said Graham  Miller shall well and truly protect and indemnify the Railway Company against all loss and damage, costs and attorney fees, by reason of any claims which may be made against the Railway Company on account of any ties and lumber which have been or may be furnished by them and accepted by the Railway Company, as aforesaid, by any person or persons whatsoever, and warrant and defend their title to all such ties and lumber, then this obligation to be void, otherwise to be and remain in full force and effect."
The plaintiff, at and prior to that time, owned and operated a line of railroad running through the states of Missouri, Kansas and Oklahoma. The amended petition, for breaches of said bond, charges in substance that, pursuant to said arrangement, between April 28 and August 1, 1899, Graham  Miller furnished and delivered to plaintiff 49,320 ties of the value of $21,207.10; that after plaintiff had paid said sum to Graham  Miller, *Page 116 
the Bagnell Timber Company, on or about December 23, 1899, commenced an action in the Circuit Court of Pettis County against plaintiff and Graham  Miller, "wherein and whereby it was claimed by said plaintiff in said suit that there was a balance of $5,422.50 due to it from said defendant in said suit on account of certain of the ties so as aforesaid furnished by the said Graham  Miller to plaintiff and paid for by plaintiff as hereinbefore stated, and for which it prayed judgment and that the judgment should be declared a lien upon the lines of the said Missouri, Kansas  Texas Railway Company within the State of Missouri." That plaintiff gave notice of said suit to defendant surety company, and that plaintiff had paid Graham  Miller in full for said ties, and that it would look to defendant to protect it from further payments and expenses in connection with said matter, but defendant refused to defend said suit and requested plaintiff to fight said suit to a finish, which plaintiff did at great cost and expense; that the Bagnell Timber Company dismissed said action as to Graham  Miller; that there were three trials and judgments rendered in said action which were appealed to this court; that on the third trial the Bagnell Timber Company, on December 7, 1912, recovered judgment against plaintiff for the sum of $9,654.12, and costs taxed at $436.50, which was affirmed on appeal May 31, 1913. [See Bagnell Timber Company v. Missouri, Kansas  Texas Railway Company, 180 Mo. 420,242 Mo. 11, and 250 Mo. 514.] Plaintiff prayed that its damages be assessed at $10,400.12, and that it have judgment for the penalty of the bond.
The appellant demurred to said petition on the ground that it did not state facts sufficient to constitute a cause of action against defendant, in that, "It appears from the averments of said amended petition that the final judgment alleged to have been obtained by said Bagnell Timber Company, the plaintiff, was for and on account of ties by said Bagnell Timber Company to plaintiff, and not for ties sold or furnished by said Graham  *Page 117 
Miller to plaintiff, and that the non-payment of said judgment by said Graham  Miller or by this defendant did not constitute a breach of the bond in suit, nor entitle plaintiff to recover against defendant in this action." The demurrer was overruled.
The defendant, by its answer, admitted that the plaintiff and defendants are corporations; admitted the execution of the bond sued on; that the Bagnell Timber Company, a corporation, on or about December 23, 1899, commenced an action in the Circuit Court of Pettis County against said J.T. Miller and L.G. Graham, co-partners, and plaintiff herein, as stated in the petition; that three trials were had in said cause, and that the judgment rendered on the third trial was affirmed on appeal by the Supreme Court for the sum claimed by the defendant, and that plaintiff on July 1, 1913, paid said judgment, interest and costs, but defendant denies generally all and singular the other allegations in said petition contained.
The cause was tried to the court at the February term, 1919, and taken under advisement. Thereafter, at the April term, on April 7, 1919, the court rendered its finding and judgment in favor of plaintiff and against the defendant, assessing the plaintiff's damages for the breach of said bond in the sum of $10,000, from which an appeal was duly taken.
The pleadings, evidence, instructions to the jury and the judgment in the Bagnell Timber Company case were read in evidence. The amended petition in that case charges, in substance, that on or about April 20, 1899, the Bagnell Timber Company entered into an agreement with the said Railway Company and Graham  Miller, whereby it undertook and agreed to deliver and furnish to defendants $50,000 oak railroad ties to be delivered at St. Louis, Sedalia, and Wagoner, I.T., as defendants might direct, and defendants undertook and agreed to pay plaintiff forty-three cents per tie for first class and thirty-three cents per tie for culls; that there is a balance due said Bagnell Timber Company from the defendants in said cause of the sum of $5,422.50 for ties *Page 118 
delivered by plaintiff to the defendant railway company on the tracks of said railway company at Wagoner, I.T., in accordance with the terms of said agreement, between the months of April and August, 1899, both inclusive, as appears by an itemized account thereto attached; that said balance became due on August 1, 1899, and within ninety days thereafter, to-wit, on October 27, 1899, the plaintiff, in order to establish its lien for said sum upon the railway company as aforesaid, did file said account, etc. (On the first appeal it was held the Bagnell Timber Company was not entitled to a lien on that part of the railroad which lies in this State, the material having been used in another State).
The amended answer of the Railway Company admitted that the Bagnell Timber Company delivered upon its line of railroad at Wagoner 49,320 ties, but denied that it, either severally or jointly with Graham  Miller, purchased or agreed to purchase any ties from said Bagnell Timber Company, or undertook or agreed to pay said plaintiff therefor. It admitted that it had failed and refused to pay plaintiff said sum of $5,422.50 on account of said ties, and denied that there is any sum due by this defendant to plaintiff for said ties so delivered on its tracks at Wagoner, and denies that plaintiff delivered any ties to defendant under an agreement between plaintiff and defendant. It averred that Graham  Miller, in the year 1899, were tie contractors for defendant and bought ties from various persons in order to deliver them to defendant Railway Company under their contract and arrangement with plaintiff, the details of which were unknown to defendant. Other portions of the answer are deemed irrelevant to the issue and are omitted.
The evidence offered by the plaintiff on the trial of the cause, tended to prove that the ties were sold by the Bagnell Timber Company to Graham  Miller, while the evidence offered by the defendant surety company tended to prove that the ties were sold by the Bagnell Timber Company to the Railway Company and Graham  Miller. *Page 119 
One of the instructions given for the Bagnell Timber Company reads: "That court instructs the jury that it is admitted by the parties to this case that plaintiff delivered to the defendant Railway Company the number of ties stated in the petition, and it is admitted that the unpaid balance due to the plaintiff for such ties, on October 26, 1899, was the sum of $5,406.65; and the court instructs the jury that if they believe from all the facts and circumstances in evidence that the said railroad ties were delivered under a contract of sale made by plaintiff with the said Railway Company and Graham  Miller, or with the said Railway Company alone, and that the said unpaid balance is yet due to the plaintiff, then the verdict should be for the plaintiff and its damages should be assessed at an amount equal to said sum of $5,406.65, with interest thereon at the annual rate of six per cent, from said October 26, 1899."
The court instructed the jury for the defendant, as follows: "If you find from the evidence that the contract for the sale of the ties, the purchase price of which is sought to be recovered in this cause, was made between the plaintiff and the co-partnership of Graham  Miller, and was a separate and sole contract with them alone, and between the plaintiff and said co-partnership alone, your verdict and finding must be for the defendant."
At the close of the testimony, the court refused a demurrer offered to the evidence by the defendant. The court gave declarations of law for the plaintiff, in substance as follows:
2. Plaintiff is not estopped to prosecute this action by the adverse judgment in the Circuit Court of Pettis County.
3. That if the court find from the evidence that plaintiff purchased ties from Graham  Miller and said Graham  Miller caused said ties to be delivered by the Bagnell Timber Company to plaintiff at Wagoner, I.T., and plaintiff paid Graham  Miller therefor according to their order and direction, that thereafter the Bagnell *Page 120 
Timber Company sued and recovered judgment against plaintiff in the Pettis County Circuit Court for the balance alleged to be due it from plaintiff and Graham  Miller on account of the same ties, then the finding and judgment will be for plaintiff.
The court gave a declaration for the defendant in substance that if the court found from the evidence that the ties mentioned in the petition were not sold to plaintiff by Graham  Miller but were sold to plaintiff alone, or to plaintiff and Graham 
Miller, then the judgment should be for the defendant.
It is thus seen that it was judicially determined on the trial in the Circuit Court of Pettis County that the Missouri, Kansas 
Texas Railway Company did not buy the ties from Graham  Miller, but that the Bagnell Timber Company sold and delivered them to the Railway Company and Graham  Miller, and that it owed the Timber Company the balance found to be due it by said judgment.
The learned trial court overruled the defendant's demurrer to the evidence, and by its declaration of law given for the plaintiff ruled that the plaintiff was not estopped by said judgment from recovering in this action on the ground that the matters in issue were adjudicated and determined adversely to plaintiff in the Bagnell Timber Company suit, on the theory that the Railway Company and the Surety Company were not adversary parties.
It is well settled that a judgment against two or mor defendants, if there are no issues between them, does not bind them as against each other. [E.E. Southern Iron Co v. Woodrull Realty Co., 175 Mo. App. l.c. 255; Charles v. White, 214 Mo. 187, l.c. 211, and cases cited.] To illustrate: If A recover judgment against B and C on a promissory note, their liability, intersese, is still an open question. If C pay the judgment, he may, in an action against B, show that B was principal and he was surety on the note and recover the whole sum paid by him in satisfaction of the judgment. *Page 121 
But in an action between themselves neither would be heard to say that the note was a forgery, or to assert that they were not concluded by the judgment on such an issue. The judgment was a final adjudication that B and C owed A the sum found due on the note. That is a closed issue.
In Herman on Estoppel, sec. 138, cited by respondent, in speaking of a judgment against adversary parties, it is said: "Thus a judgment against A and his sureties is no bar in an action between one surety and his co-sureties to recover of each his proportionate share of a judgment of amercement that had been collected of him; while it establishes the demand, it does not establish the liability of the sureties between themselves; that point is not before the court in the action wherein the original judgment was rendered."
Again, in McMahan v. Geiger, 73 Mo. 145, also cited by respondent, it is said: "Parties to a judgment are not bound by it, in a subsequent controversy between each other, unless they were adversary parties in the original action. If A recovers a judgment against B and C, upon a contract, which judgment is paid by B, the liability of C to B in a subsequent action for contribution is still an open question, because, as to it no issue was made or tried in the former suit. As between the several defendants therein a joint judgment establishes nothing but their joint liability to the plaintiff. Which of the defendants should pay the entire debt, or what proportion each should pay in case each is partly liable, is still unadjudicated; but a judgment against two joint debtors prevents either from denying the existence and obligation of the debt, though he may still prove by any competent evidence in his power that the whole burden of the obligation should be borne by the other."
The rule invoked, however, has no application to the case in hand. The plaintiff notified the Surety Company, an indemnitor, to defend the suit in the Pettis County Circuit Court so that it would be concluded by the judgment *Page 122 
that might be rendered therein. "Where one is bound to protect another from a liability, he is bound by the result of the litigation to which such other is a party, provided he had notice of the litigation and opportunity to control and manage it." [Strong v. Phoenix Ins. Co., 62 Mo. 289, l.c. 295.] He is just as much bound by the judgment in the cause as the real defendant in whose name the defense is made. [State ex rel. v. Stone,269 Mo. 334, l.c. 344; Murch Bros. Constr. Co. v. Fidelity and Cas. Co.,190 Mo. App. 515.] The judgment is also conclusive upon the Railway Company as to the facts therein determined.
Was the failure of the Surety Company to pay the judgment in favor of the Bagnell Timber Company a breach of the conditions of the bond? To justify a recovery on the bond it must be shown that the damage or injury alleged is such as fairly falls within the terms of the contract. [22 Cyc. 86, par. 4.]
In Utterson v. Elmore, 154 Mo. App. 646, l.c. 651, the court said. "The bond in this case does not provide for the completion of the contract by the contractors in all its details. It simply provides for the completion of the contract `by completing the building as described by the plans and specifications.' It must be accepted as the settled law of this State, that there is no implied obligation on the part of a surety that he has undertaken more or other than that expressed in his contract, and it is only to the extent and in the manner and under the circumstances pointed out in his bond, is he bound. [Bauer v. Cabanne,105 Mo. 110, 16 S.W. 521; Nofsinger v. Hartnett, 84 Mo. 549; Reissaus v. Whites, supra; Beers v. Wolf, 116 Mo. 179, 22 S.W. 620; School Dist. v. Green, 134 Mo. App. 421, 114 S.W. 578.]"
The rule is stated in 22 Cyc. 84 B: "In construing contracts of indemnity, the ordinary rules of construction employed in the interpretation of contracts generally are applicable. Indemnity contracts, like other contracts, are to be so expounded as to effectuate the intention of the parties. . . . Where a doubt arises *Page 123 
from any ambiguity or obscurity in the language, the court will incline against the party whose words are the matter to be construed."
Heman Constr. Co. v. St. Louis, 256 Mo. 332, l.c. 338, was an action on a contract of indemnity. On page 229, this court said: "The contract in this case ought to be construed according to the ordinary and usual import of the language in which it is expressed."
In Moore v. Title Guaranty  Trust Co., 151 Mo. App. 256, the condition of the appeal bond was that the appellant would prosecute his appeal to a decision in the Supreme Court and perform such judgment as shall be given by the said Supreme Court, etc. The cause was transferred to the Kansas City Court of Appeals. The judgment was affirmed by that court and the surety company refused to pay. In a suit upon the appeal bond, JOHNSON, J., said: "The rule is firmly fixed that a surety has the right to stand on the letter of his bond and that his obligations will not be enlarged by implication. The letter of the bond before us restricted the liability of defendant to responding to the judgment of the Supreme Court and we could not enlarge that liability without doing violence to the terms of the contract of suretyship."
In American Bonding Company v. Pueblo Inv. Co., 150 Fed. l.c. 24, SANBORN, J., held that a surety is never liable beyond the strict terms of his contract. His obligation may not be extended by construction or by implication.
By referring to the conditions of the bond, it is seen that the liability against which the Surety Company undertook to protect and indemnify the Railway Company was solely in connection with ties furnished by Graham  Miller to the Railway Company. Has the plaintiff suffered loss or damage on account of any ties or lumber furnished it by Graham  Miller? It is averred in the amended petition for breaches of the bond, that between April 28 and August 1, 1899, Graham  Miller furnished and delivered to the Railway Company 49,320 ties; that after plaintiff paid them in full therefor, *Page 124 
the Bagnell Timber Company sued plaintiff and Graham  Miller, claiming there was $5,422.50 due to it from the defendants in that action on account of certain of the ties so furnished bythe said Graham  Miller to plaintiff and paid for by plaintiff and for which it prayed judgment.
The sole issue on the trial of the Bagnell Timber Company case, as appears from the pleadings and the instructions given by the court, was whether the Bagnell Timber Company sold the ties to the Railway Company and Graham  Miller, as was contended by the plaintiff therein, or whether Graham  Miller sold them to the Railway Company, as was contended by the Railway Company. That was the sole issue also on the trial of this cause, as appears by the pleadings and declarations of law given by the court. That was the theory on which the case was tried in the court below. It must be tried here on this appeal on the same theory. It was not tried on the theory that Graham  Miller had bought the ties from the Bagnell Timber Company as plaintiff's agents and that plaintiff became bound thereby to pay for them, or that, after receiving the money from plaintiff to pay for them, they had embezzled the money or had defaulted and had thus breached the bond.
It conclusively appears by the judgment in the Pettis County Circuit Court that the ties were sold by the Bagnell Timber Company to the Railway Company and Graham  Miller, and that in paying the judgment the Railway Company paid its own debt. That finding is fatal to a recovery in this action against the indemnitor. [22 Cyc. 107.] It follows that there was an entire failure of proof on the issues presented by the pleadings. The failure of the Surety Company to pay that judgment is not a breach of any condition of the bond, express or implied, unless its obligations be extended by construction or by implication. This we cannot do without doing violence to the terms of the contract of suretyship.
It follows that, in my opinion, the learned trial court erred in overruling the evidence. I dissent from the majority opinion. *Page 125