Maryland Casualty Co. v. Scheurman

Brooke, J. (after stating the facts). A motion for new trial thereafter was made based upon two grounds: (1) That the court erred in refusing to direct a verdict for the defendants. (2) Because the court erred in directing a verdict for plaintiff. In this court there are seven assignments of error, all of which involve the propriety of the action of the court in directing a verdict for the plaintiff and which may be considered together. If we understand the po [6] sition of appellants in this court, it may be stated briefly as follows: That, considering the correspondence between the Interstate Construction Company, Limited, the partnership association, with the government with reference to the contract, and with the plaintiff with reference to the bond, and the contract itself between the partnership association limited and the government, the bond attached to the contract and here in question is the obligation of the partnership association as principal, and plaintiff company as surety, and is not the bond of the four-defendants herein as individuals. It is further asserted that plaintiff, having contracted with defendants in their corporate capacity and having accepted premiums from the Interstate Construction Company, Limited, for the execution of said bond, is estopped from now claiming that the- bond in question is the bond of the individual members of the partnership association. We are unable to agree with the contention of defendants’ counsel. The obligation sued upon is not ambiguous. It names as principals the four defendants herein and binds, not only them, but their heirs, executors, administrators, successors, and assigns, jointly and severally. It is executed by said four defendants in their individual capacity and without any reference whatever to the Interstate Construction Company, Limited, whose contract with the government was guaranteed by said bond. When default had been made by the Interstate Construction Company, Limited, the copartnership association, under its contract with the government, the government brought suit against the four defendants herein as individuals and as principals in said bond, and against the plaintiff as surety thereon. To said suit defendants interposed various demurrers, which, however, were finally withdrawn or abandoned, and a judgment by consent was rendered against them as principals and against [7] the plaintiff as surety, for the amount of the unpaid claims against the Interstate Construction Company, Limited. We are of opinion that defendants are bound by the judgment of the Alabama Federal court, and that they are now estopped from again litigating with their codefendant, the plaintiff, the question settled by that judgment. They assert that estoppel under the judgment is raised only between those who are adverse parties in the former suit, and not as between codefendants inter sese, citing 23 Cyc. pp. 1279, 1280. The rule announced in the text is not without exception, and the cases cited in support thereof include none wherein, of two defendants, one is a surety and the other a principal, as in the case at bar. It seems plain that, when defendants admitted their liability in the suit against them as individuals in the Alabama court and consented to judgment going against them . in that capacity, plaintiff, their, surety, was obliged to admit its liability as such. Again, it is fundamental that the party who is secondarily liable (the surety), when he has paid the claim, succeeds to all the securities and benefits held by the. obligee against the principal debtor. If the surety discharges the obligation of the principal, he thus stands in the shoes of the obligee and may enforce any remedy which the obligee may enforce against the principal. Suppose plaintiff had not paid the judgment and suit had been begun upon said judgment either by the United States or by any of the use plaintiffs for whom said suit was brought, defendants could scarcely have interposed the defenses now relied upon. Plaintiff, having paid said judgment, is now subrogated to the rights of the obligee and is entitled to the same protection as would be the parties to whom it paid the judgment. The fact that the parties were codefendants and made the same defenses to the claim against them is of no conse [8] quence, when once judgment has passed against them in different capacities. Where one is entitled either to reimbursement or contribution from the other in a collateral proceeding, they cannot again question their joint liability to the original plaintiff. This principle finds ample support in the following text-books and authorities: 1 Freeman on Judgments (4th Ed.), § 158; 2 Black on Judgments (2d Ed.), § 599; Lloyd v. Barr, 11 Pa. 41; United States Fidelity & Guaranty Co. v. Haggart, 168 Fed. 801 (91 C. C. A. 289); Osage City Bank v. Jones, 51 Kan. 379 (32 Pac. 1096). Judgment is affirmed. Kuhn, C. J., and Stone, Ostrander, Bird, Moore, Steere, and Fellows, JJ., concurred.