Court Opinion

ID: 6848035
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:31:56.790628+00
Date Added: 2024-06-11T16:05:01.169439
License: Public Domain

HICKENLOOPER, Circuit Judge
(dissenting) .
I am of the opinion that the judgment of the District Court should be affirmed, and I feel constrained to briefly state the grounds of my dissent. Both the testimony of MeClaskey and the condition of the bond seem to me to indicate with sufficient clearness an intent on the part of MeClaskey to turn over the entire distillery warehouse to the control and operation of Morton. Legal difficulties were encountered. The operations to be conducted by Morton might well subject MeClaskey to fines and penalties levied by the federal government, and to civil liability to the holders of warehouse certificates. Accordingly, MeClaskey demanded a bond to protect himself agairist these possibilities. It is this bond which forms the basis of the present suit.
The condition of the bond is not only that “Morton shall well and truly perform and discharge all the duties, obliga tions and liabilities imposed by law or by contract on the said MeClaskey, * * * ” indicating the substitution of control, but also that Morton “shall pay all sums of money, demands, debts and liabilities for which the said Sam MeClaskey may be liable by reason of his connection with said distillery * ”* * and shall save the said Sam MeClaskey harmless and free from all liability, cost or damage of any kind or character whatsoever” (in connection with the business). Thus the surety assumed, in addition to. other relationships, the position of guarantor for the payment by Morton to MeClaskey of the specific “demands, debts and liabilities” to which MeClaskey was subjected by the Ginnocehio judgment. Morton has not indemnified nor reimbursed MeClaskey. It is not apparent to me why the surety should not be required to do so in accordance with the letter of the bond.
The defense urged, and the only conceivable defense available to the surety, was that MeClaskey had not in truth and in fact severed his connection with and interest in the distillery business, but had so participated in the withdrawal of the Ginnocehio whisky as to bar a right of recovery upon the bond. This would obviously be a defense to a suit for recovery upon a contract bond, for in the event of such participation a breach o£ contract would not appear. It would also constitute a defense in a suit for breach of an agreement to indemnify MeClaskey against wrongful acts of Morton, for the acts in which MeClaskey participated could not be so far considered Morton’s acts nor so far wrongful toward MeClaskey as to come within the agreement to indemnify. But it is difficult to see how sueh participation would defeat McClaskey’s right to recover under the stipulation that Morton should assume *608and pay all “demands, debts and liabilities” for which MeClaskey should be found liable “by reason of his connection with said distillery.” This provision presupposes a veritable continuance of McClaskey’s connection with and at least a formal participation in the business, although the exclusive conduct and management was to be substantially turned over to Morton.
This consideration aside, however, it is to be noted that the aetion was at law. The issue of fraud in retaining a material interest (a partnership) in the conduct of the business was raised by the pleadings. Substantial evidence was introduced to support the contentions of the plaintiff. Under such circumstances the case was properly submitted to the jury and this court is foreclosed as to a re-examination of the question of fact. Had there been no substantial evidence of good faith and honest dealing, perhaps this court would be justified in holding that the only possible inference to be drawn from the facts was that of a fraudulent conspiracy to shift a financial burden from MeClaskey and Morton, on the one hand, to the appellant, on the other; but this does not seem to me to be such a case.
Both upon the ground that Morton was primarily responsible for the conversion of the Ginnocehio whisky, that he has not reimbursed MeClaskey, and that the appellant is therefore liable as his surety, and the ground that the issue of fact was properly submitted to the jury as supported, on plaintiff’s part, by substantial evidence, and we should not therefore now assume to find contrary to the verdict, I am of the opinion that the judgment should be affirmed.