Price v. Carlton

121 Ga. 12 | Ga. | 1904

Fish, P. J.

(After stating the foregoing facts.) 1. As a general rule, a surety on an eventual condemnation-money bond has no right to be heard in the proceeding against his principal, in which the bond was given. In Holmes v. Langston, 110 Ga. 861, 869, sureties on a bail-bond in an action of trover, one of the obligations of which was, like the bond in the present case, to pay the eventual condemnation-money, sought to intervene in the bailtrover proceeding. Their prayer to be made parties was denied; and this judgment was affirmed by this court. In the opinion (on page 869) it was said: The securities “are bound by the judgment against their principal, but they do not become parties to the case until judgment is entered. If there is any law authorizing such securities to be heard in the case, we are not aware of its existence.” The court added, however, that even if they had become parties to the case under consideration, there was no merit in their defense. It has been held that in a suit on an administrator’s bond the sureties might defend, even though the principal does not, and set up any reason which would relieve the principal, as well as any fact which would discharge them though the principal be held liable. Bird v. Mitchell, 101 Ga. 46. We need not, however, discuss now the question as to what would be the rights of a surety on a bond given in a judicial proceeding where suit was brought directly on the bond and no judgment was entered against the surety in the main case. There may be instances where equity would permit a surety on an eventual condemnation-money bond to intervene for his own protection. If, for example, the principal is insolvent and declines to defend, the surety ought to have a right to be heard. Or if the surety has a defense peculiar to himself, and one which the principal is under no obligation to urge, the surety may be permitted to intervene. In Coburn v. Smart, 53 Cal. 742, it was held: “The sureties of a defendant in an action of replevin, upon an undertaking given to effect a return of the property in controversy to the defendant pending the action, have an interest in the action which entitles them to intervene if the defendant is insolvent, and the action is not being defended in good faith.” See also Hoffman v. Steinau, 34 Hun, 239; 16 Enc. P. & P. 937 — 8; 1 Brandt on Suretyship (2d ed.), §250;'2 Id. § 506; Guthrie v. Capelle, 1 Har. 368. Certainly equity will not permit an insolvent principal to render a solvent surety liable by collusion with the creditor and a failure to urge defenses which would discharge himself and the surety as well. Under the code, judgment may be entered in the main proceeding, against the surety on an eventual condemnation-money bond. Civil Code, § 2978. Of course, if such a surety had a defense peculiar to himself, equity would permit him to resist the enforcement of the judgment against him. And the judgment may be impeached for fraud, collusion, or mistake. Charles v. Hoskins, 14 Iowa, 471. But will it require him to wait until after judgment is entered ? We think not. Equity always seeks to avoid circuity of action and a multiplicity of suits. And where the surety has a defense which would discharge him, and which the principal is under no legal obligation to make, as where the principal is insolvent and is not defending in good faith, we see no good reason why equity should not, and many reasons why it should, permit the surety to intervene and set up his defenses in the main proceeding. This conclusion does not conflict with the ruling in Holmes v. Langston, supra. Language used there is somewhat broad; but there was no suggestion in that case that the principal was not i defending in good faith, nor did the sureties seek to set up a good defense peculiar to themselves which the. principal was under no legal obligation to plead, even if he could do so. We think, therefore, that the court did not err in overruling the demurrer to the application of Smith, the surety, to intervene. His right to intervene and set up defenses peculiar to himself as surety would not give him a right to file any defense which his principal could make. Holmes v. Langston, 110 Ga. 869. And hence he could not-set'up such a defense unless he established his allegations of collusion and bad faith on the part of Price, the administrator of Hawkins. There was no evidence introduced in support of these averments. We have, however, in the discussion which follows, given Smith the benefit of these allegations and dealt with them as if they had been established by evidence. Inasmuch as we have reached the conclusion that there is no merit in any of the defenses relied on by him and which are properly before us, it is unnecessary to determine what effect the failure to verify the answer to his intervention would have, when the intervention was sworn to; or whether, if the answer is to be disregarded, the allegations of the petition should be taken as true, or should still, under the decision in Hudson v. Hudson, 119 Ga. 637, be proved by him. Smith filed two amendments to his intervention. Both of these were stricken on demurrer. He excepted pendente lite to the striking of one of the amendments, but, so far as the record shows, no exception was taken to the striking of the other. The only ground of the amendment to the striking of which exception was taken, which was argued in this court, was that one which sets up that the' judgment in Clarke superior court in the suit brought by Hawkins against Dearing and Newton’s executor was not binding upon Smith, the surety. For this reason, this ground only of the amendment will be dealt with.

2. Smith contends that the judgment in the litigation in Clarke county was not conclusive upon Hawkins as to the issue raised by the distress warrant and counter-affidavit in' Oglethorpe county; and that even if that judgment was res adjudicata as to Hawkins and his administrator, it was not so as to Smith. “ An adjudication of the same subject-matter in issue in a former suit between the same parties, by a court of competent jurisdiction, should be an end of litigation.” Civil Code, § 3741. “ A judgmenfc of a court of competent jurisdiction is conclusive between the same parties and their privies as to all matters put in issue, or which under the rules of law - might have been put in issue in the cause wherein the judgment was rendered.” Civil Code, § 3742. “ The judgment of a court of competent jurisdiction is conclusive between parties and privies, as to the facts'which it decides, until reversed or set aside.” Civil Code, §5348. Mr. Freeman, in his work on Judgments, states that to make a matter res adjudicata, there must be a concurrence, (1) of identity of the subject-matter; (2) of the cause of action; (3) of persons and parties; (4) in the quality of .the person against whom the claim is made. § 252. The rule laid down in Massachusetts is that the court will inquire, (1) whether the subject-matter of the controversy has been brought in question and within the issue in the former proceeding, and has terminated in a regular judgment on the merits; (2) whether the former suit was between the same parties in the same right or capacity, or their privies claiming under them; (3) whether the former judgment was before a court of competent jurisdiction. See 1 Gray, 299. The rule stated by the Supreme Court of the United States in Cromwell v. County of Sac, 94 U. S. 351, is, that where the two actions were upon the same claim or demand, the judgment in the first action is conclusive as to every matter actually involved, and as to every admissible matter which might have been received to sustain or defeat the claim or demand; but that where the second suit was upon a different claim or demand, the judgment in the first is conclusive only as to issues which were actually litigated. See also Worth v. Carmichael, 114 Ga. 699. These rules, though not in all respects consistent with each other, were all apparently approved by this court in Brady v. Pryor, 69 Ga. 691, and in Stevens v. Stembridge, 104 Ga. 622-623. We do not understand, however, that either of these decisions was intended to be an authoritative ruling as to the correctness of any one of the rules stated. In the first case nothing more was ruled than that a party to an award was not, in subsequent litigation to foreclose a mortgage given by him to secure the payment of amounts found against him by the • award, concluded by mere recitals in the award, which related to a matter not really involved in the award, and not intended to be made a part of the judgment which was entered np on the award. In the second case it was ruled that where a defense of partial payment, made by the defendant in an illegality to the foreclosure of a mortgage securing the payment of promissory notes, was sustained, this would be conclusive upon the plaintiff in a subsequent action upon the notes. Mr. Herman says: “An adjudication by a competent tribunal is conclusive, not only in the proceeding in which it is pronounced, but in every other where the right or title in controversy is the same, although the cause of action may be different, between the same parties or their privies.” 1 Herman on Estoppel and Res Jud. 233. It is not necessary that all the parties in the first suit should have been parties in the second; it is enough if all the parties in the second suit were parties in the first. 24 Am. & Eng. Enc. Law (2d ed.), 733 (4). The judgment will be conclusive on all issues which were involved • in a former suit, even * though, the cause of action was not the same in the two cases. Id. 778-779. It is immaterial that the two actions were based on -different grounds, or tried on different theories, or are instituted for different purposes and seek different relief. Id. 780 — 781.

In Freeman v. Bass, 34 Ga. 355, suit was brought on a promissory note, given, among other things, for the purchase-price of slaves. The defendant sought to recoup damages on account of the unsoundness of one of the slaves. The plaintiff set up res adjudicata, and introduced the record of another suit brought by him against the defendant in another court on another promissory note based upon the same consideration. In that suit the defendant had pleaded failure of consideration, growing out of the unsoundness of the same slave. - It was ruled that, “When the subject-matter of defense to a promissory note has been passed upon by a court of competent jurisdiction, such judgment, while in force, is conclusive.” In Duncan v. Stokes, 47 Ga. 593, it was held that a judgment in a suit on an open account was conclusive in a subsequent action between the same parties, growing out of the same transaction, wherein it was claimed that the defendant was liable to pay the amount of the account by reason of fraud and deceit practiced upon the plaintiff. In Holmes v. Langston, 110 Ga. 861, an action of trover was brought against Holmes to recover certain promissory notes which had been deposited with the plaintiffs as collateral security for two notes of the defendant, and which had been returned to the defendant for collection. It appeared that the plaintiffs had previously brought suit against the defendant on Iris two notes and had recovered a verdict in a given amount. It was held that in the trover suit the defendant Holmes, “so far as the amount of his debt to plaintiffs is concerned, was precluded from pleading or proving any matter which was or could have been placed in issue in the former suits.” In the present case the two suits were not based upon the same ' cause of action, but they involved the same issue, and the subject-matter in each instance related to the character and amount of the indebtedness of Hawkins under the contract with Newton. The fact that other issues were involved in the Clarke county suit is immaterial. The issue between Hawkins and Newton’s estate was the determination of the amount which Hawkins owed the estate upon a general accounting of all matters between them. This necessarily involved the amount due under the contract with Newton relating to the Billups land. This contract was-attached to the petition as an exhibit. Hawkins brought this issue into-the case. He alleged that it was a contract of purchase. Newton’s executor in effect denied this. Thus the issue was made up. In order to ascertain the amount of indebtedness due by Hawkins,-it was absolutely necessary to determine whether the contract was one of purchase, or whether it was to be treated at that time as one of rental. If of purchase, Hawkins owed $2,000 with 8Jo interest per annum; if of rental, he owed $150 a year rent from the time he went into possession of the land. It was therefore absolutely essential that the auditor should determine the relationship, of the parties with reference to the contract. He decided this issue by holding that while the, contract was originally one of purchase, it became, under its terms, by action of the parties, a contract of rental; and he found that Hawkins was indebted to Newton’s estate so many dollars as rent for the land in question. * Upon this report of the auditor a verdict and judgment were entered in favor of Newton’s executor, and they have nev.er been reversed or set aside. When the whole of the auditor’s report is read there can be no question that he intended to determine the issue in relation to the contract, and the judgment entered up on the report can certainly admit of but one construction. Such being the case, the judgment was conclusive upon the administrator of Hawkins, both as to the issue which he sought to raise and as to the amount of rent due under the contract.

3. Was the judgment res adjudicata as to Smith"? The obligation of a surety is one .of strict law, and can not be extended by implication. Civil Code, § 2968; Bethune v. Dozier, 10 Ga. 235; Steele Co. v. Laurens Co., 98 Ga. 354; Hill v. O’Neill, 101 Ga. 834. The general rule is that the judgment against the principal is only prima facie evidence of liability against the surety, unless the condition of the bond makes it otherwise. See 27 Am. & Eng. Enc. Law (2d ed.) 455. This rule has been applied in this State to sureties on administrators’ and guardians’ bonds. Justices v. Woods, 1 Ga. 84; Smith v. Gettinger, 3 Ga. 143; Bennett v. Graham, 71 Ga. 211; Gibson v. Robinson, 90 Ga. 756 (2), 762. Sureties on replevin and attachment bonds are, in the absence of fraud or collusion, generally concluded by the judgments against their principals. 2 Brandt on Suretyship (2d ed.) §§471, 481. And so also are sureties on injunction bonds. Id. §§479, 480. Formerly it was necessary to bring suit against the sureties on the bond, but our code expressly provides that where a bond is given in a judicial proceeding, conditioned to pay the eventual condemnation-money, judgment may be entered up against the surety, and it shall not be necessary, as heretofore, to bring suit on the bond. Civil Code, § 2978. See also Offerman R. Co. v. Waycross R. Co., 112 Ga. 613. There is -a similar provision in .the code with reference to sureties on bail bonds, who are also bound for the eventual condemnation-money.- Civil Code, §4605. In Jackson v. Guilmartin, 61 Ga. 544, it was said:" “The bail or security takes the fortunes of his principal, and is bound equally with him by the judgment in the main action. No suit on the bond is necessary. The bail can no more go behind the judgment or attack it, by affidavit of illegality, after it is duly entered up against both, than can the principal.” See also, in this connection, Thomas v. Price, 88 Ga. 533 (2). In Holmes v. Langston, 110 Ga. 861, 869, which ¡was also a bailtrover proceeding, it was said: “Their liability is absolutely fixed by the judgment against their principal, and they must stand or fall by the result of his defense, such - being the express undertaking in the bond. .If judgment has been rendered against him by a court of competent jurisdiction, they are absolutely bound by it,, and will not be heard to impeach or attack it in any way for causes which were or could have been matter of defense by their principal. . . After becoming securities on the bond they must remain silent witnesses to the conflict between the parties to the suit, standing ready to fulfil at the end of the litigation the obligation they have undertaken.” See also, in this connection, Lockwood v. Saffold, 1 Ga. 72; 2 Brandt on Surety-ship (2d ed.).§483; 2 YanFleet’s Former Adj. §557. Judgments do not bind strangers, but a surety is not a stranger to the judgment against his principal. “A surety is either a stranger where the action is brought by a plaintiff against the principal alone, or he is a privy. If a stranger, he can not be permitted to take advantage of a judgment in favor of his principal; the action must be tried de novo against him. This gives him the right to plead all the defenses his principal did, and as the case would have to be tried by an entirely different jury, its verdict might be contrary to that rendered against the principal; and the natural sequence would be of having two antagonistic verdicts on precisely the same facts; for it is said that if separate suits be brought for the same cause of action against co-obligors, where one is principal and the other surety, and the principal is discharged on trial of a plea to the merits, which would inure to both if sued jointly, such judgment is not an estoppel against the plaintiff, if pleaded by the surety in bar of the action against him, for the reason that strangers are not bound by an estoppel, nor can they take advantage of it. It must, therefore, be evident that in the sense in which parties are held to be strangers, and not bound by .res adjudicata, can not apply to sureties. They must therefore be privies.” 1 Herman on Est. & Res Jud. 172 — 173. See also §§162, 173. If the judgment were in favor of the principal, the sureties could plead it in bar of an action against them on the bond. Brown v. Bradford, 30 Ga. 927. "Any act of the principal which estops him from setting up a defense personal to himself, operates equally against his surety.” McCabe v. Raney, 32 Ind. 309. “The surety’s obligation is to satisfy the judgment against his principal. . . If that judgment is good against the principal, the surety can not dispute its' validity.” McCloskey v. Wingfield, 32 La. Ann. 38, 43. See also Boone County v. Jones, 54 Iowa, 699 (6), 709.

It- follows from these authorities that if Smith had not intervened in the distress-warrant proceeding, he would have been bound by the judgment entered in that case even though it had been entered against the principal alone, and would not have been heard to resist the enforcement of the judgment against him by showing that it was erroneously or improperly entered in the first instance. He would not have been allowed to urge that the plea of res adjudicata filed by the plaintiff was not well taken, or indeed to have set up any defense which his principal could have made. The section of the code allowing judgments to be entered against the surety but emphasizes the rule that the surety would be bound by the judgment against his principal; for why permit judgment to be entered against the surety, when he could go behind the judgment and try the whole matter de novo ? The statute recognized the rule which bound the surety, and was evidently intended to do away with a useless suit on the bond, when the liability of the surety had already been adjudicated. Certainly the fact that Smith was allowed to intervene can place him in no better position with reference to the binding effect of the judgment than if he had not become a party. He was allowed to intervene for his protection, but this did not have the effect of abrogating well-settled rules concerning the relationship between him and his principal. After having intervened he undertook to represent both the principal and the surety. As principal he could insist that the judgment in Clarke county was not res adjudicata. As surety he could plead any fact which furnished him a defense independently of the principal. But he could not by pleading avoid the effect of the rule which made him bound by a judgment which bound the principal. In other words, he occupied no better position, with reference to defenses which the principal could have urged, than if he had never become a party. It is argued that Smith’s obligation extended only to the particular case in which the bond was given, and that to hold him bound by the judgment in Clarke county would in effect make him liable on a judgment rendered in an entirely different case. O’Dell v. Wootten, 38 Ga. 224, and Planters Bank v. Hudgins, 84 Ga. 108, are cited and relied on in support Of this proposition. The judgment in Clarke county was simply the evidence on which the judgment in the distress-warrant proceeding -was based; and it is the latter judgment upon which he is liable. The judgment in Clarke couuty could not have been enforced against Smith; nor could a suit based on such judgment have been maintained against him on the bond. This is the extent to which the principle of the decisions cited goes. They do not furnish a precedent for allowing the surety to inquire into the merits of the judgment against the principal in the proceeding in which the bond was given, and reopening the case as to the surety, merely because that judgment was itself founded on another judgment against the principal which was held to be res ad judicata. The same reply may be made to the contention that Smith can not be held bound by the finding of the auditor and the judgment in the Clarke county litigation, because he was entitled to a jury trial under the terms of his bond and the statute; for which contention Willis v. Bivins, 76 Ga. 745, is cited. Smith was entitled to the verdict of a jury in the distress-warrant proceeding, and that was all he had a right to demand. The fact that the judgment in Clarke county made it necessary to. direct a verdict can make no difference. There being no conflict in the evidence, it was proper to direct a verdict. See Robinson v. Wilkins, 74 Ga. 47. This view of the case makes it unnecessary to construe the contract between Hawkins and Newton, relating to the Billups land.

The foregoing discussion disposes of all the questions in the record which are insisted on here and which are necessary to be decided under the view we have taken of the case. There was no error in the record; and the judgment on both the main and 'the cross-bill of exceptions is

Affirmed,

All the Justices concur, except Gobb, J., disqualified.