Court Opinion

ID: 7815507
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:34:42.735247+00
Date Added: 2024-06-11T16:30:35.285666
License: Public Domain

Ed. F. McFaddin, Associate Justice, dissenting. The majority is holding that the Manufacturers Casualty Insurance Company was subrogated, to the extent of $2,-000.00 to the position of Mrs. McLaughlin against Sheehan, Tyrrell, and Hoover, who were sureties on Wilhelm’s supersedeas bond in his first case in this Court. My study convinces me: (a) that the insurance company can now assert by subrogation only the rights that Mrs. McLaughlin could have asserted against the sureties on Wilhelm’s supersedeas bond; (b) that Mrs. McLaughlin lost the right to assert the $2,000.00 claim here involved, against the sureties, Sheehan, Tyrrell, and Hoover, on the supersedeas bond because Mrs. McLaughlin did not rely on that bond: instead she pursued the insurance company by execution; and (c) that when the insurance company paid the $2,-000.00, it merely satisfied a judgment against the insurance company, and is not entitled to any subrogation. The present case is a sequel to that of Wilhelm v. McLaughlin, decided by this Court on June 2, 1958, 229 Ark. 118, 313 S. W. 2d 821, and referred to as the “first case”, to distinguish it from this one, referred to as the “present case”. Wilhelm was a real estate broker, duly licensed by the State, and, as a prerequisite for such license, Wilhelm was required to, and actually did, file with the State a fidelity bond in the sum of $2,000.00, with Manufacturers Casualty Insurance Company as surety thereon. The bond was conditioned as required by law. (See § 71-1301 et seq. Ark. Stats.) In the first case, Mrs. McLaughlin established that Wilhelm had defrauded her. She sued, not only Wilhelm, but also Manufacturers Casualty Insurance Company (hereinafter called “Manufacturers”), as surety on his said real estate broker’s bond. Mrs. McLaughlin recovered judgment against Wilhelm for $3,700.00, and against Manufacturers for $2,000.00 on its bond, and the judgment provided that the $2,000.00, when paid, would apply on the $3,700.00 judgment against Wilhelm.1 Manufacturers did not appeal from the judgment against it in the first case. Wilhelm appealed to this Court in the first case and posted a supersedeas bond with Sheehan, Tyrrell, and Hoover as the sureties thereon. The judgment against Wilhelm in the first case was dated June 25,1957, and the supersedeas bond was dated July 23, 1957. When Manufacturers did not appeal the judgment against it, Mrs. McLaughlin threatened execution against Manufacturers and took the matter up with the State Insurance Department to recover on the bond. Manufacturers finally paid Mrs. McLaughlin the $2,000.00, which was the judgment against Manufacturers, and took from Mrs. McLaughlin, under date of October 3, 1957, a so-called “Assignment”.2  When we affirmed the chancery decree in the first case, Manufacturers then initiated the present case by filing in the Chancery Court on July 21, 1958 its “motion for Summary Judgment” against Myrtle A. Sheehan, E. F. Tyrrell, and Warren P. Hoover, for the said $2000.00 that Manufacturers had paid Mrs. McLaughlin to satisfy the judgment rendered against Manufacturers by the Chancery Court in the first case. The Chancery Court refused Manufacturers’ plea for summary judgment against Sheehan, Tyrrell, and Hoover (but gave summary judgment against Wilhelm), and Manufacturers has now appealed. The majority of this Court is now allowing Manufacturers a judgment against Sheehan, Tyrrell, and Hoover on the theory of subrogation; and I dissent from the majority opinion. Here are my reasons: (1) Manufacturers was a party to the first case and suffered a judgment to go against it for $2,000.00 and failed to appeal or supersede the judgment; rather, Manufacturers paid the judgment against it and should not now reap a windfall profit against the sureties on Wilhelm’s bond. (2) Mrs. McLaughlin did not rely on the supersedeas bond signed by these sureties, Sheehan, Tyrrell, and Hoover: rather, she pursued Manufacturers with a threat of execution. When Mrs. McLaughlin did not rely on the supersedeas bond, she thereby discharged the sureties; and Manufacturers cannot stand in any position better than Mrs. McLaughlin could occupy. The text in 3 Am. Jur. 773 states the rule: “Where the appellee declines to accept the potection of an appeal or supersedeas bond, the surety has been held discharged in some, though not all, of the cases.” Likewise, in C. J.'S. Volume 5B, page 720, the text gives the rule : “A surety on a supersedeas bond may set up the defense that plaintiff has declined to accept the full protection of the bond and has acted inconsistently therewith concerning the subject matter of the judgment.” In 53 A.L.E. 807, there is an annotation entitled: ‘ ‘ Failure of obligee in supersedeas bond to accept protection thereof or his act inconsistent therewith as affecting liability on bond.” It is true that the sureties, Sheehan, Tyrrell, and Hoover have filed no brief in this Court; but, from the study I have made, I have reached the conclusion that we should not allow subrogation in this case in the face of the authorities that I have mentioned none of which is cited or discussed in the majority opinion. When Mrs. McLaughlin pursued Manufacturers, she waived her right to also claim under the supersedeas bond; and she could not convey to Manufacturers a right that she had already waived. I submit that the Chancery Court was eminently correct in refusing Manufacturers its summary judgment against the sureties; and for these reasons I respectfully dissent, with Justice Johnson joining in this dissent.   Mrs. Luptak was a defendant in the first ease. Mrs. McLaughlin obtained a separate judgment against Mrs. Luptak for $1,300.00, but that is not involved in the present case in any way.    This instrument, which is the basis of the claim of subrogation herein, reads as follows: “In consideration of payment of the $2,000.00 judgment against the Manufacturers Casualty Insurance Company, which was paid to me after execution was issued in the case of Margaret O. McLaughlin v. Milton Wilhelm et al, in the Carroll Chancery Court, Western District, I hereby transfer, assign and set over unto the Manufacturers Casualty Insurance Company, the surety on Wilhelm’s real estate brokers bond, all the right, title, interest and equity that I may have had in said judgment on October 3, 1957, or at any other time.”