Irish Levy Electric Co. v. Moss, 147 So. 22

147 So. 22 | La. | 1933

Lead Opinion

This is a suit upon a contract. The sum claimed is $5,400.95. There was judgment for the plaintiff and against the defendant for $3,000, with legal interest thereon from date of judicial demand, and for costs of the suit. On the application of Hart Enterprise Electrical Company a rule was issued and served upon the necessary parties to show cause why a new trial should not be granted, and why Hart Enterprise Electrical Company should not be substituted for Irish Levy Electric Company, Inc., as the plaintiff herein. The rule was heard, a new trial was granted, the plaintiff in rule was substituted as plaintiff in the suit, and judgment was rendered in favor of the plaintiff in rule for the sum, interest, and costs awarded in the original judgment. The defendant appealed from the judgment suspensively and devolutively, and the Union Indemnity Company became surety on the appeal bond. After the transcript was filed in this court, appellee answered the appeal, and prayed that the judgment appealed from be increased from $3,000, with interest and costs, to $4,339.40, with interest and costs as originally awarded, and, as thus amended, that it be affirmed. Thereafter appellee petitioned for a rule upon the appellant, the Union Indemnity Company, and the receivers of that company to show cause why a new bond with a solvent surety or sureties should not be furnished. Appellee attaches to its petition for the rule a certified copy of a judgment rendered in division C of the civil district court of the parish of Orleans, on January 6, 1933, placing the Union Indemnity Company in the hands of two receivers, and enjoining said company from further conduct of any of its business or any part thereof.

The prayer of the petition is that this court forthwith declare the appeal bond furnished by the appellant worthless, as to the surety on the bond; that appellant be ordered to furnish a new bond, with solvent surety, within four days, or, upon his failure so to do, that his appeals, both suspensive and devolutive, be dismissed. Appellee also prays, in the alternative, that, if this court desires further inquiry into the worth of the bond and the solvency of the surety, the case be remanded to the district court for that purpose, with instructions to report its findings to this court.

The appellant, the surety on the bond, and the receivers were ordered to show cause why the relief prayed for in appellee's petition should not be granted. The appellant alone filed a return to the order, and the matter is submitted on the appellant's return and brief, and on briefs filed by appellee and by William B. Grant, and Porteous, Johnson, and Humphrey, amici curiæ.

Appellant relies upon two exceptions, viz. that this court is without jurisdiction in the premises; and that the petition does not disclose a cause of action.

The rule was applied for under the authority of section 3 of Act No. 112 of 1916, as amended by Act No. 284 of 1928. The amending act merely extends the time for furnishing a new appeal bond from two days to four days. The section, as amended, reads:

"Be it further enacted, etc., That the right to furnish such new, or such supplemental or additional bond shall be exercised as follows: The party desiring to furnish such new, or such supplemental or additional bond shall have the right so to do at any time prior to judgment; if the adverse party, or any other party in interest shall cause to be served upon him through the proper officer for service a notice that such adverse party, or the party in interest, claims that a bond furnished in the proceeding to which he is a party or in which he has an interest, is insufficient either as to form or substance, or of the solvency, or because of the pecuniary insufficiency of the surety or sureties thereon, the said party who has furnished such bond shall have the right within four days, exclusive of Sundays, legal holidays and half-holidays, to furnish the new bond, or supplemental bond above referred to. If he shall fail to furnish same, the case shall then proceed without any diminution of the right of the adverse party, or other party in interest, to test the sufficiency of the bond furnished, whether as to the amount or form thereof, or the solvency of the surety or sureties thereon; provided, that should any bond be declared invalid for any reason whatsoever, the party furnishing such bond shall have the right, within four judicial days thereafter, to furnish a new bond; and provided further, that should this new bond be found to be defective in any respect whatever, or the surety or sureties insufficient, the person furnishing such new bond shall not thereafter be entitled to furnish any additional bond."

Appellant contends that this court has no jurisdiction either to hear the rule or remand the case, and in support of that contention he cites Smith v. Phillips, 168 La. 406, 122 So. 126; Hand v. Harper, 171 La. 47, 129 So. 664. In the Smith-Phillips Case, the court found that the appellee had filed no motion in the court of original jurisdiction, as provided in the second and third sections of Act No. 112 of 1916, and for that reason refused to dismiss the appeal, saying:

"No such motion was filed or opportunity given, in this case. We would have no authority, therefore, to dismiss this appeal, even if we believed that the sureties named in the bond were not bound as sureties by their signatures under their affidavit."

The Hand-Harper Case is merely an affirmance of the ruling in the Smith-Phillips Case. In neither of those cases did the appellee apply to the court of original jurisdiction, as provided by Act No. 112 of 1916, or to this court for a remand of the case in order that the appellant be given an opportunity to avail himself of his rights under the statute. In those cases the defect complained of appeared on the face of the bond. In this case we have quite a different situation. In the rule filed herein there is a prayer, in the alternative, for a remand of this case to the court of original jurisdiction, with instructions to inquire into the solvency of the surety. While this court has no original jurisdiction except such as is conferred by section 10 of article 7 of the Constitution 1921, it may, under its supervisory powers, and in aid of its appellate jurisdiction, provided timely application is made therefor, remand a case to the court of original jurisdiction for the purpose of enabling an appellant, or for the purpose of requiring an appellant, to perfect his appeal in the manner and form prescribed by Act No. 112 of 1916.

The array of distinguished counsel who urge the dismissal of the appeal take the position that this court can neither hear the rule nor remand the case. As to their first contention, they are correct, for we have said supra that this court's original jurisdiction is limited to certain specific cases, but with respect to its power to remand a case for the purpose of enabling an appellant to furnish a new bond, if the surety thereon becomes insolvent after the transcript of appeal has been filed in the appellate court, we think they are laboring under a misapprehension. Gray, MacMurdo Co. v. Lowe Pattison et al., 9 La. Ann. 478, sustains appellant's right to maintain his appeal. In that case the surety on the appeal bond became insolvent after the transcript was filed in this court. On the application of the plaintiff to the court of original jurisdiction for the right to furnish a new bond with solvent surety, the judge denied the application and dismissed the appeal. In passing upon relator's application for a writ of prohibition, this court said:

"We think the District Judge erred. The right of appeal is a constitutional right, and in the present case, the right of suspensive appeal was clearly conferred by the law. If a party in good faith fulfils within the legal delay, the conditions upon which the right of suspensive appeal is granted, it would be an inequitable and harsh construction of a provision of law framed for the protection of defendants, to say that his right should be defeated by a subsequent contingency unforeseen, and over which he had no control, the subsequent failure of his surety. Such a doctrine would also involve an inequality which could not be reconciled with equity. For by Art. 3012, when the security received `by the direction of law,' becomes insolvent, his place `should be supplied by another,' il doit en etre donne une autre. The rule is derived from the Napoleon Code, and originally from the Roman law."

The opinion in the Gray-Lowe Case was rendered sixty-six years before the passage of Act No. 112 of 1916. We think it is sound in law, reason, and equity, and it should be adhered to.

For the foregoing reasons, it is ordered that this case be remanded to the Twenty-Fourth judicial district court, with instructions to inquire into and pass upon the sufficiency of the appeal bond herein and of the solvency of the surety thereon, and, if the bond be found defective, or the surety thereon insolvent, that appellant be required, in the manner and form and as provided by Act No. 112 of 1916, to furnish a new and satisfactory appeal bond with a solvent surety or sureties for the amount required by law, and to make due report thereof to this court.

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Concurrence Opinion

Act No. 112 of 1916 was intended to be applied only to cases where the bond was originally defective, or the surety was originally insufficient or insolvent. The amendment of the act, by Act No. 284 of 1928, did not change the law in that respect. But my opinion is that the provisions of the statute may well be applied, as far as they are applicable, to a case that has been remanded to the court of original jurisdiction, on a proper showing being made in the appellate court that the surety on the appeal bond has become insolvent since the appeal was taken.

The right of an appellee to demand that the appellant shall furnish a new bond, under penalty of having his appeal dismissed, when the surety on the appeal bond has become insolvent since the appeal was granted, is based upon article 3043 (originally article 3012) of the Civil Code; which provides that, when the surety given to secure an obligation — whether given voluntarily or required by law — becomes insolvent, the debtor must furnish another surety, except, of course, where the creditor has stipulated or agreed that a certain person shall be the surety. The exception has reference, particularly, to a conventional obligation, such as a promissory note, where the payee has accepted a certain individual as indorser or surety. But the fact that the article of the Code, by its terms, has reference to judicial bonds as well as to conventional suretyships, leaves no doubt that the article is applicable to a case like this — where the surety on an appeal bond has become insolvent since the bond was given. It was so decided in Gray, MacMurdo Co. v. Lowe Pattison et al., 9 La. Ann. 478. In that case it was said that the court was wrong in intimating in Stanton v. Parker, 2 Rob. 551, that, if the surety on an appeal bond becomes insolvent after the appeal is brought up, the case is the same as if no surety had been given. In Benton v. Mahan, 27 La. Ann. 649, the court held that, where the court of original jurisdiction had found the surety on the appeal bond insolvent, and had ordered the appellant to furnish a new surety, and the appellant had failed to comply with the order, the appeal should be dismissed. There it was said that an appeal with an insolvent surety was virtually an appeal with no surety.

In Mayweather v. Long, 170 La. 747, 129 So. 151, the surety on the appeal bond was sufficient when the bond was filed, but he became insolvent after the record was filed in this court. The appellee proceeded in the district court, under the provisions of Act No. 112 of 1916, to require the appellant to file a new bond with good and solvent surety within two days, or have his appeal dismissed. The appellant filed a new bond with good and solvent surety, but filed it on the third day after being notified of the appellee's complaint, instead of filing it on the second day, as required by the statute. The appellee, therefore, filed a motion in the Supreme Court to dismiss the appeal. This court held that the case was not governed by Act No. 112 of 1916, and that the new appeal bond, having been filed within a reasonable time, saved the appeal from dismissal. All that that decision is authority for is that it is not out of order for the appellee to file his complaint in the district court, instead of filing it in the appellate court, when he discovers that the surety on the appeal bond has become insolvent. There is an expression in the opinion in that case to the effect that the appellee's only remedy was to contest the solvency of the surety in the district court. But my own opinion is that, inasmuch as Act No. 112 of 1916 is not quite applicable to a case where the surety on the appeal bond has become insolvent after the case has passed out of the jurisdiction of the district court, the only appropriate court for the appellee to complain in, in such a case, is the appellate court; because that court must stay proceedings in such a case until the appellant has had a reasonable time in which to furnish a new bond. If the appellant does not offer to furnish a new bond, or if the parties do not agree upon the solvency of the new surety tendered, the case must be remanded to the district court to determine whether a new bond should be given, and, if so, whether the surety tendered on the new bond is sufficient.

Act No. 45 of 1890, which amended article 575 of the Code of Practice by providing that an appellant should prove the solvency of the surety on the appeal bond whenever it was questioned by any party interested in the appeal, was expressly repealed by Act No. 289 of 1926. The latter act amended the article of the Code of Practice so as to provide that a bonding company or surety company, as well as a person residing within the jurisdiction of the court, might lawfully be the surety on an appeal bond; and the act repealed all laws in conflict with it, or contrary to its provisions, "especially Act No. 45 of 1890," which latter act was itself an amendment and re-enactment of article 575 of the Code of Practice. In the meantime, however, Act No. 45 of 1890 was superseded and, in effect, repealed by sections 2 and 3 of Act No. 112 of 1916; which act provides, in detail, the method for testing the validity of any judicial bond, including appeal bonds, and the method of testing the solvency or sufficiency of the surety, and the furnishing of new or additional bonds.

When article 575 of the Code of Practice was again amended and re-enacted, by Act No. 289 of 1926, the provision in Act No. 45 of 1890, requiring an appellant to prove the solvency of the surety on his bond whenever it was questioned by any party interested in the appeal, was retained in the first section of the act of 1926; but, in the repealing clause, in the second section, of the act of 1926, the act of 1890 was expressly repealed, as I have shown. It is likely, therefore, that the retention of the provision of the act of 1890, in the first section of the act of 1926, was an accident. But that is a matter of no importance, now, for two reasons: First, because it was decided in Hitt v. Herndon, 166 La. 497, 117 So. 568, that Act No. 112 of 1916 was not repealed by Act No. 289 of 1926; and, second, because, even if the act of 1916 had been repealed or superseded by the act of 1926, the latter act was superseded and in effect repealed, in so far as it provided for testing the solvency or sufficiency of sureties on appeal bonds, by Act No. 284 of 1928, which has amended and re-enacted section 3 of Act No. 112 of 1916, providing in detail the method of testing the solvency or sufficiency of sureties on all bonds required in judicial proceedings, including appeal bonds. It was decided, as we have said, in Mayweather v. Long, that Act No. 112 of 1916 was not applicable to a case where the surety became insolvent after the bond was furnished; and the amendment of the act, by the act of 1928, has not made it applicable to such a case. It is equally certain that the provisions of Act 45 of 1890, retained in Act No. 289 of 1926, for proving the solvency of the surety on an appeal bond, were not applicable to a case where the surety had become insolvent after the bond was furnished. The expression "whenever it is questioned" meant "in all cases where the solvency of the surety was questioned." It did not mean that any party interested in an appeal might compel the appellant to prove the solvency of the surety on his appeal bond every day, or every week, or as often as the interested party might entertain a doubt about the solvency of the surety on the appeal bond. All of that, however, is a matter of no importance now since Act No. 45 of 1890 was superseded by Act No. 112 of 1916, and since Act No. 289 of 1926 was in turn superseded by Act No. 284 of 1928; which act is not applicable to a case where the surety on an appeal bond becomes insolvent after the bond is furnished.

It seems that, in deciding that Act No. 289 of 1926 did not repeal Act No. 112 of 1916, in Hitt v. Herndon, the court was under the impression that the act of 1916 provided only for correcting irregularities and supplying deficiencies in appeal bonds, and did not provide for testing the solvency or sufficiency of the surety on appeal bonds. But that was a mistake, resulting from the reading of the second section of the act of 1916, without reading also the third section, which, in very plain terms, provides for testing the solvency or sufficiency of the surety on any and all bonds required in judicial proceedings.

It is suggested in one of the briefs filed in this case that, inasmuch as the surety on the appeal bond is a surety company, and has been judicially declared insolvent in a receivership proceeding, the bond should be deemed canceled, as in the case of an insurance policy. It is true that, when an insurance company is judicially decreed to be insolvent, in a receivership or liquidation proceeding, the outstanding policy contracts of the company are thereby canceled, and the company becomes indebted to the policyholders for the unearned part of the premiums. Federico Macaroni Manufacturing Company v. Great Western Fire Insurance Company et al., 173 La. 905, 139 So. 1, 79 A.L.R. 1256. But we doubt that that rule is applicable to a surety company, whose obligation is not to the other party to the contract but to a third party. Besides, although we might well take judicial notice of the insolvency of the surety on the appeal bond in this case, we have to remand the case to the district court, because we have no method for determining the solvency or sufficiency of the surety that may be tendered on a new bond to be furnished by the appellant. It is necessary, therefore, to remand the case to the district court to allow the appellant an opportunity to furnish a new bond within a reasonable time.