W. J. Donnelly Co. v. Fidelity & Casualty Co.

Washburn, J. The parties stand in this court in the same relative position as in the trial court. The plaintiff, the W. J. Donnelly Company, brought suit against Abraham Goldberg and others *371 and recovered a judgment against them in the municipal court of Lorain. For the purpose of appealing that case to the court of common pleas, the present defendant, the Fidelity & Casualty Company, a corporation authorized to issue and execute bonds in the state of Ohio, executed on the 3d day of August, 1922, a certain appeal bond, which was on that day filed in the municipal court and duly approved. That bond, after reciting the recovery of judgment, and that the defendants therein intended to appeal from said judgment to the court of common pleas of Lorain county, Ohio, further provided that the defendant herein “hereby promises and undertakes in the sum and to the amount of $2,050 that said appellants, if judgment be adjudged against them, or either of them on the appeal, will satisfy such judgment and costs; and also that said appellants will prosecute their appeal to effect and without unnecessary delay.” After said bond was filed and approved, the appeal was perfected by filing in the common pleas court, on August 19, 1922, a transcript from the docket of the municipal court. Thereafter the plaintiff filed a motion to dismiss the appeal, for the reason that the court of1 common pleas had no jurisdiction to hear said appeal, which motion was granted, and the appeal dismissed on October 16, 1922. Plaintiff brought this action against the defendant to recover upon the bond, and the trial court sustained a demurrer to plaintiff’s petition, the demurrer being upon the ground that the petition did not state facts sufficient to constitute a cause of action. Plaintiff not desiring to plead further, *372 judgment was entered against it, and it is now prosecuting this proceeding in error to reverse such judgment. The petition, in addition to pleading the facts hereinbefore set forth, alleged that by reason of the filing of said undertaking by the defendant the judgment of plaintiff was stayed and plaintiff was prevented from obtaining execution upon its said judgment until after said appeal was dismissed, “at which time the said” judgment debtors “had disposed of all their property upon which execution could be levied; and that thereby plaintiff was prevented from realizing upon its said judgment. ’ ’ By the demurrer the defendants admitted the truth of all the facts, well pleaded, and all the proper inferences to be drawn therefrom. In justification of the ruling of the common pleas court sustaining the demurrer to the petition it is claimed that insomuch as the common pleas court had no jurisdiction to entertain the attempted appeal from the municipal court, the appeal bond was not operative, there being no consideration for the same; that it was a mere nullity and the defendant was not liable thereon. Counsel agree that there is no provision in our laws authorizing an appeal from the municipal court of Lorain to the common pleas court, and for the purpose of this opinion we assume that such is the case, without deciding that question, because it is not presented in this record. There are cases which hold that where no appeal' can lawfully be taken in a given case, a bond given for no other purpose than the taking of such an appeal is wholly without consideration and there *373 fore void; but there are other cases which hold that even where there is no legal right to an appeal the bond given in an attempt to appeal is valid and enforceable. This is on the principle of estoppel, the cases holding that the obligors are estopped to deny their liability, where the bond has subserved one or more of the purposes for which it was given and the appellant has had the benefit thereof. Many of the cases in these two classes are, of course, affected by the peculiar wording of the statute or the bond, but we prefer the reasoning of the cases which hold that where the condition of the bond is that the appellant will prosecute his appeal to effect and without unnecessary delay, and by the filing of the same the appellant actually obtains a stay of execution, he ought not to be heard, in a suit upon the bond, to say that no appeal was ever taken; especially is that so in a case like our present case, where the defendant, for a price paid, entered into a bond and thereby prevented the plaintiff from collecting its judgment for the reason that the judgment debtors were thereby enabled to dispose of their property and put it beyond the plaintiff’s reach. Under such circumstances the defendant ought in equity and good conscience to be estopped from saying that the bond given by it was entirely without force and effect. In Adams v. Thompson, 18 Neb., 541, 26 N. W., 316, the appeal was dismissed on the motion of the party for whose benefit it was given, because the bond was not filed in time. In disposing of the case the court said: “The purpose and object of an appeal in judicial *374 proceedings is generally two-fold: (1) To enable the losing party to obtain a new trial in a higher court, and thereby possibly escape what he coin ceives to be an unjust judgment; and (2). to stay the issuance of an execution against him. Hence it cannot generally be said that when the appellant fails to obtain a new trial, he fails in the whole object and purpose of his appeal, as he has usually enjoyed the benefit of the stay of execution.” The stay of execution actually obtained was regarded as sufficient consideration to support the contract of suretyship, although the attempted appeal was not effectual to give the appellate court jurisdiction. In a case where no appeal was possible under the law, and on motion of the appellee the attempted appeal was dismissed for that reason, the accommodation surety was held liable on the bond. Gudtner v. Kilpatrick, 14 Neb., 347, 15 N. W., 708. To the same effect are Love v. Rockwell, 1 Wis., 382, Pratt v. Gilbert, 8 Utah, 54, 29 P., 965, and Meserve v. Clark, 115 Ill., 580, 4 N. E., 770. See, also, U. S. Fidelity & Guaranty Co. v. Ettenheimer, 70 Neb., 147, 99 N. W., 652. The principle underlying these and other cases is that, while the laAV makes no provision for a bond, and therefore there is no statutory bond, there is a common-law obligation, which, if based upon a consideration, is valid and enforceable, and that Avhere a party, by virtue of giving a bond and attempting to perfect an appeal, has secured and enjoyed the delay which he could secure only by the giving of a bond, such is a sufficient consideration for the bond, and he is estopped to deny the fact that he did appeal the case, even although *375 the appellate court did not have jurisdiction to entertain the appeal and to afford him the relief he sought. “1. An undertaking for stay of execution on a judgment of a justice of the peace, taken and signed after the period fixed by the statute for entering the same, when based upon a sufficient consideration, is valid as a common law contract, though it may not be available under the statute.” Duckwall v. Rogers, 15 Ohio. St., 544. See, also, Swofford Bros. Dry Goods Co. v. Livingston, 16 Colo. App., 257, 65 P., 413. In the case at bar there are facts alleged in the petition and admitted by the demurrer which we think establish beyond all peradventure a consideration for the bond sued on, and which justify and demand the application of the doctrine of estoppel against the defendant. These facts are that this defendant, by signing this bond for a premium paid it, prevented the plaintiff from obtaining execution upon its judgment until after the appeal was dismissed and the judgment debtors “had disposed of all their property upon which execution could be levied;” and thereby plaintiff was prevented from realizing upon its said judgment. The defendant engaged to be bound if the judgment debtors failed to “prosecute their appeal to effect and without unnecessary delay.” It would manifestly be unjust to plaintiff to hold that this condition was satisfied by an attempted appeal, in which the bond prevented execution against the debtors until the appeal was dismissed, and thereby enabled them to put their property beyond the reach of an execution. *376 We think that the sound principle of law is stated in the cases which hold that to prosecute to effect means to prosecute with success; to make substantial and prevailing the attempt to obtain a judgment in favor of the appellant. Crane v. Buckley, 203 U. S., 441„ 27 S. Ct., 56, 51 L. Ed., 260; Schutz v. Swigert (Ariz.), 234 P., 1078; Campbell v. Harrington, 93 Mo. App., 315; Trent v. Rhomberg, 66 Tex., 249, 18 S. W., 510; Babcock v. Carter, 117 Ala., 575, 23 So., 487, 67 Am. St. Rep., 193. Many of the cases which relieved sureties of liability were cases of simple suretyship, known as accommodation contracts, where the surety received no compensation, and they were decided when another class of suretyships was little known, that class of surety contracts entered into for a money consideration, and where, not infrequently, in addition to the premium paid, the party procuring the bond is required to secure the surety company against loss in case the penalty of the bond is exacted. It is now generally held that the rule applying to the former class of cases, where a surety is held liable only within the strictly construed terms of his contract, does not apply to a corporate surety, which is engaged in the business of becoming surety for premiums supposed to be based upon the amount of risk. And some decisions are to the effect that such contracts are construed most strongly against the surety. So far as we have been able to ascertain, the precise question presented by the record in this case has not been determined by the courts of Ohio. For the most part, the Ohio cases were accommodation surety cases, where the strict con *377 struetion rule applied. The reason for that rule being nonexistent in the present case, we decline to apply it. We know of no good reason why a paid surety should be favored in a court of justice to the extent of construing its undertaking that appellants will “prosecute their appeal to effect” to be of no force and effect if the case is not appealable, when by the filing of such undertaking the appellee was prevented from issuing execution to collect its judgment. The principles herein-before indicated we regard as just and reasonable and applicable to the situation presented by the record. For error in sustaining the demurrer, the judgment is reversed and the cause remanded. Judgment reversed and cause remanded. Pardee, P. J., and Funk, J., concur in judgment.