State ex rel. Glidden & Joy Varnish Co. v. National Surety Co.

Ellison, J. The relator, a corporation, made an assignment to James K. Meaher for the benefit of its creditors. Meaher gave a bond as such assignee with defendant as his surety, conditioned in the following language: [237] (Hidden & Joy Varnish Company, a corporation, organized under the laws of the state of Missouri, shall in all things discharge his duties, as assignee, of the (Midden & Joy Varnish Company, as aforesaid, and faithfully execute the trust confided to him, then the above obligation to be void; otherwise to remain-in full force.” [236] “The condition of this obligation is such that if the above bounden J ames K. Meaher, assignee, of the [237] On final settlement in the circuit court of Jackson county, there was a balance in the hands of the assignee due this relator of $1,898.58. He has failed and refused to pay over this sum and hence this action is. brought against defendant as surety on the bond aforesaid. The cause was tried before Sanford B. Ladd, Esq., a member of the bar chosen as special judge of the court, and resulted in a finding and judgment for relator. The court made a finding of facts, with conclusions of law thereon, which will be found set forth by us as a statement of the case, embodying, as it does, a clear and complete history of the case as made out by the evidence. The defense made by defendant consists of several points and an elaborate brief is filed in support thereof. It is contended that there was no valid assignment and that the order approving the final settlement of the assignee is void. These defenses are subdivided and various reasons urged in support of each. As will appear from what we shall say further on, much of the defense now urged is based on matter not open to defendant’s inquiry as a surety for the assignee. Other matters urged are open to such inquiry. First among the latter is the contention that the circuit court had no 'jurisdiction in the assignment proceedings. If that court had no jurisdiction in the matter of the assignment, then the accounting had with the assignee whereby a balance was found in his hands due this relator, binds no one and the surety on the bond of [238] the assignee may deny a liability thereon, since the whole proceeding whereby a liability of the assignee or his surety was established would be void. But we have no doubt the circuit court had jurisdiction of the assignment. That it had jurisdiction over such class of cases is not disputed; but it is said that it had no jurisdiction over this particular case from the fact (as contended by defendant) that there was no assignor, that is to say, the relator, pretending to be such corporation assignor, had no legal existence as such corporation. That it did not owe the debts claimed to be its obligation. And that it did not own the property claimed to have been assigned. AheIifefitTofNcre” tion: principal Since the circuit court had jurisdiction of the class of cases to which assignments for the benefit of creditors belong, and since all those matters relating to a proper exercise of that jurisdiction were necessarily passed on by that court, we hold that they are not now open questions to a surety on an assignee’s bond. If the court had jurisdiction and exercised such jurisdiction, it is of no consequence in a collateral proceeding that it erred in its judgments or orders. Hope v. Blair, 105 Mo. 85; State ex rel. v. Burckhartt, 87 Mo. 533; State ex rel. v. Smith, 104 Mo. 419; State ex rel. v. Withrow, 108 Mo. 1. Notwithstanding the record may not specifically show that the circuit court decided this relator had a legal existence as a corporation; that it did owe the debts, or some of them, claimed against it; and that it did own the property assigned, yet those were matters which were necessarily involved in the matter of the assignment and must be presumed in favor of the court’s jurisdiction, to have been found to exist. So it has been held that from the mere silence of the record as to personal service on a defendant the pre [239] sumption can not be indulged that a court of general jurisdiction had not jurisdiction of the person. McClanahan v. West, 100 Mo. 309; Hamer v. Cook, 118 Mo. 476. The foregoing disposes of much of the contention of defendant on this appeal and brings us to what we consider the controlling point in the case, viz.: the status defendant fixed upon itself by becoming surety, for the assignee, in the terms of the bond sued on. ”agamst^assignee: surety.s on By signing the bond the defendant covenanted and agreed that the assignee should do a particular act, that is, that he would faithfully execute the trust reposed in him by his appointment as assignee. In such case the surety, in the absence of fraud, is bound by the judgment against the principal in the obligation. ‘‘Indeed it may well be considered an established principle that whenever a surety has contracted with reference to the conduct of one of the parties in some suit or proceedings in court, he is, in the absence of fraud and collusion, concluded by the judgment.” Nolan v. Johns, 108 Mo. 437; Braidon v. Mercer, 44 Ohio St. 339. That was said in reference to a guardian’s bond in the latter case and an injunction bond in the former. And the same rule was applied to an administrator and to an executor’s bond. Harrison v. Clark, 87 N. Y. 572; Kelly v. West, 80 N. Y. 139; Irwin v. Backus, 25 Cal. 214; Nevitt v. Woodburn, 160 Ill. 203. The case of Garver v. Tisinger, 46 Ohio St. 56, was like this case, an action on an assignee’s bond, and the rule above announced was applied. And so of the cases therein cited, Little v. Commonwealth, 48 Pa. St. 337, and Commonwealth v. Steacy, 100 Pa. St. 613, as well as the later Ohio case of Walsh v. Miller, 51 Ohio St. 462. But defendant seeks to avoid the force of these [240] authorities by the statement that they are eases from jurisdictions where the surety either had his day in court or might have had it by exercising the right of appeal, which, it is said, is guaranteed in those jurisdictions. In some of the cases it is stated the surety might have appealed, but the decisions are not placed on that ground, and in some of the cases it will be found the rule is announced without reference to the right of a surety to appeal from the judgment against his principal. In Nevitt v. Woodburn, 160 Ill. 203, the court, in speaking of this question, said: “This finding that the executor as such owed the money to the estate is binding on the surety. ‘As a general rule, sureties upon official bonds are not concluded by decree or judgment against their principal, unless they have had their day in court, or an opportunity to be heard in advance; but administration bonds seem to form an exception to this general rule, and the sureties thereon, in respect to their liability for the default of the principal, seemed to be classed with such sureties as covenant that their principal shall do a particular act.’ Irwin v. Backus, 25 Cal. 214. The liability of a surety upon the administration bond is fixed by the judgment against his principal; and this is so by reason of the terms of the obligation which are substantially those of the bond sued on this case. It results from the nature of the obligation entered into' by a surety on an administration or executor’s bond, that he is bound and concluded by the judgment against his principal, in the absence of fraud or collusion. The judgment against the principal in such case is res judicata and can not be collaterally attacked in the action on the bond.” We therefore deem the surety bound, under the rule announced, without regard to a right of appeal, and hence find it to be unnecessary to say whether, [241] under the liberal statutes in this state in regard to appeals, a surety might prosecute an appeal in cases of this class. ~¡r¿u7.-: —: It will be noted that the qualification made to the liability of the surety in cases of this class, is that there must not be fraud and collusion in procuring the order or judgment for which the surety is to be held liable. If therefore a creditor, by collusion with an assignee has a fraudulent claim allowed with a view of recovering the amount thereof from the surety, the surety could defeat the attempt by a showing of such fraud and collusion. But the collusion of the assignor and assignee to defraud the assignor’s creditors is not such a fraud as concerns the surety, so long as the judgment or order for the payment of which it is sought to charge the surety is not procured by fraud. See Garver v. Tisinger, supra. Our holding therefore is that the court having jurisdiction of the assignment and having passed upon and adjusted the accounts and ascertained the balance in the assignee’s hands, the defendant surety can not be heard to say that there was no assignor or assignment; or, that the assignor did not own the property assigned; or that it did not owe the debts from which the balance against the assignee sprung. But that such surety stands obligated to make good the orders and judgment rendered against the assignee, being bound thereby as the assignee himself is bound. It follows that the judgment of the trial court should be affirmed. All concur.