Court Opinion

ID: 6866153
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:54:51.028224+00
Date Added: 2024-06-11T08:50:09.924234
License: Public Domain

SIBLEY, Circuit Judge
(dissenting).
I agree that this appeal ought not to be dismissed for want of parties, and that the District 'Court had dependent jurisdiction to inquire into a violation of its prior injunctive decree. I think it erred in holding that the suit of Dugas against New York Casualty Company on the state court appeal bond is any violation of that decree. The decree is that American Surety Company, by paying into court $20,000, had “complied with all its obligations under its bond dated Feb. 12, 1930, as surety for Lumbermen’s Reciprocal Association or any similar previous bond,” and “that all defendants be and they are hereby perpetually restrained and enjoined from instituting or prosecuting in any State court or any other federal court any suit against American Surety Company on account of any right or claim growing out of said bond or any similar previous bond.” The injunction does not cover a suit on the subsequent appeal bond which American Surety Company had given as principal, with New York .Casualty Company as surety. Such a bond is altogether dissimilar from the bonds mentioned in the decree. Dugas had pleaded the pendency of his appeal secured by New York Casualty Company’s bond as a bar to the interpleader sought by the American Surety Company, but he did not *957seek to establish in that suit his rights under that bond; New York Casualty Company being no party to the interpleader. The court properly held that the matter he pleaded was no bar, and that interpleader was proper, and ordered all claimants to set up their claims against the $20,000 bond. Dugas rightly interpreted this as excluding from consideration his claim on this appeal bond, and he proceeded as he should have done for the protection of the surety on that bond to realize whatever was realizable as a general claimant from the fund before the court, and he collected $1,141.21. This he credited on the liability under the appeal bond, and then in a state court sued the surety, New York Casualty Company, for the balance of his claim, alleging that the bringing of the interpleader suit was an abandonment of the appeal pending in the state court and a breach of the appeal bond. The New York Casualty Company got a judgment in the trial court that its bond had not yet been breached and that the suit was premature. On appeal the Supreme Court of Louisiana carefully interpreted the bond of the New York Casualty Company and the state statute under which it was given, and held that the bond was breached and that a cause of action on it had arisen. Dugas v. New York Casualty Co., 181 La. 322, 159 So. 572, 575. At this point the American Surety Company, which is no party to the litigation in the state court, obtained in the federal court the supplementary injunction under review.
The Supreme Court of Louisiana said in part: “The United States District Court did not, in its decree, undertake to destroy or limit Dugas’ right of action against the New York Casualty Company, as surety on the appeal bond which was given to suspend the execution — and to secure the payment — of the judgment rendered by the district court for the parish of Orleans, from which an appeal was taken to the Court of Appeal for the Parish of Orleans. We must bear in mind that this suit is not founded upon the qualifying bond for $20,000, which the American Surety Company signed as surety for Lumbermen’s Reciprocal Association, but is founded upon the suspensive appeal bond for $10,000, which the New York Casualty Company signed as surety for the American Surety Company. The $20,000 qualifying bond passed out of the case -when the American Surety Company abandoned its appeal in the suit on that bond and thereby rendered the New York Casualty Company liable as surety on the $10,000 appeal bond * * * It is true that, if the New York Casualty Company has to pay Dugas, and if the American Surety Company has to reimburse the New York Casualty Company, the American Surety Company will have paid out more than the amount of the $20,000 qualifying bond. JBiit that happened in Mrs. Brim’s Case and in the Lyon Lumber Company Case [American Surety Co. v. Brim et al., 176 La. 867, 147 So. 18], as a consequence of the failure of the American Surety Company to provoke an interpleader suit until the plaintiff in each of those cases had obtained a final judgment against the American Surety Company [on suspensive appeal]; and by the same token it may happen in this case.”
The construction and effect of this appeal bond and the state statute under which it was given are settled for the federal courts by the decision of the Supreme Court of Louisiana. The effect of the federal injunctive decree is not thus settled, but 1 think the holding just quoted is correct. Had American Surety Company, when Dugas obtained judgment against it, at once filed its interpleader, all its obligations to Dugas would have been ended. But it saw fit to appeal and to arrest execution of the general judgment against it by giving another obligation for its payment. The consideration of the appeal bond was the delay to be obtained. That consideration was enjoyed, and the bond as a collateral obligation stands good according to its terms. According to those terms, the bond has been breached, and the liability on it has become absolute. The full penalty of $10,000 is not recoverable, but only the unpaid balance of the judgment. For that purpose only is the judgment involved in the action on the bond. The judgment, which indeed represents a liability on the $20,000 bond, is not thereby enforced, but is used only to measure the damages occasioned by the breaching of the $10,000 bond. Limiting the liability on the $20,000 bond has no effect to limit the liability on the $10,000 bond which is otherwise conditioned. It is very clear to me that such a suspensive appeal bond would stand good as a security if an appellant corporation should, pending appeal, go into bankruptcy, or be dissolved, or if, being a shipowner, it should begin limitation of liability proceedings under the federal statute. Such a thing has happened here. If American Surety Company, instead of giv*958ing this bond, had, in order to obtain the delay, pledged its property to Dugas, the pledge would surely stand good. American Surety Company would in that case lose additionally this property, but only because it had pledged it. It loses no more by reason of the surety’s probable right of recourse if this bond is enforced against New York Casualty Company. The bond is the price of a delay which was enjoyed. I think the District Court erred in interfering with its enforcement in the state court.