American Surety Co. v. Ballman

CALDWELL, Circuit Judge, after stating the case as above, delivered the opinion of the court. Do the facts found estop the plaintiff from recovering on the defendants’ bond? The first contention of the learned counsel for the plaintiff in error is that while the facts found may constitute a contract, with the usual consequences of a contract, they cannot operate by way of estoppel, because the agreement and representations of the plaintiff relied on for that purpose related to matters of intention with respect to future conduct, and not to a present or past state of things. While the representations that will constitute an estoppel generally have relation to a present or past state of things, the rule is not inflexible. In Dickerson v. Colgrove, 100 U. S. 578, 25 L. Ed. 618, the supreme court says, “This remedy is always so applied as to promote the ends of justice;” and it was applied in that case upon representations relating solely to matters of intention with respect to future conduct. And see, to the same effect, Holland v. Drake, 29 Ohio St. 441; Preston v. Mann, 25 Conn. 118; Southard v. Sutton, 68 Me. 575; Shields v. Smith, 37 Ark. 47; Halliday v. Stuart, 151 U. S. 229, 14 Sup. Ct. 302, 38 L. Ed. 141; Insurance Co. v. Mowry, 96 U. S. 544, 24 L. Ed. 674. In the case last cited, the court say: “Tbe doctrine of estoppel is applied with respect to the representations of a party, to prevent tbeir operating as a fraud upon one who has been [294] led to rely upon them. They would have that, effect if a party, who by his statements as to matters, of fact or as to his intended abandonment of exist-, ing rights, had designedly induced another to change his conduct or alter his condition upon reliance upon them, could be permitted to deny the truth' of his statements or enforce his rights, against his declared intention to abandon them.” When the plaintiff notified the defendants to come in and defend the suits brought by the Burlington Elevátor Company against the plaintiff, the defendants had the right to appear and defend the action in the court of original jurisdiction, and, if beaten there, to prosecute a writ of error to the circuit court of appeals in the name of the plaintiff, holding the plaintiff harmless from the costs and expenses incident to such proceedings. The defendants were prevented from pursuing this course by the agreement of the plaintiff that the defendants, instead of coming in and defending the action themselves, should employ counsel at their own expense who' should co-operate with the counsel of the plaintiff in defending the action, and that, if beaten in the trial court, the plaintiff, with the co-operation and assistance of the defendants, through their counsel, would sue out a writ of error, and obtain the judgment of the'appellate court. The defendants, at heavy expense, performed their part of this agreement. An adverse judgment was rendered by the trial court, which was deemed erroneous, and thereupon, in accordance with the understanding between the parties, a writ of error was sued out in good faith, and a transcript1 of the record filed in the appellate court, and briefs of defendants’ counsel, so that the cause was ready to be argued and submitted !bn its merits, when the plaintiff, without the knowledge or consent of the defendants, dismissed the writ of error, and paid to the Burlington Elevator Company the full amount' of the judgment against it. Even though the plaintiff had not formally dismissed the writ of error, its payment of the judgment appealed from necessarily worked that result, and terminated the defendants’ right to prosecute a writ of error to final judgment in the court of appeals. In view of the agreement of the parties, this action on the part of the plaintiff clearly estops it from now asserting any claim against the defendants based on the judgment of the Burlington Elevator Company against it. Under the facts found by the circuit court, the payment of that judgment by the plaintiff was a waiver of any claim against the defendants based on it. A further contention of the plaintiff in error is that, if the facts raise an estoppel, it extends no further than to merely destroy the conclusiveness as against the defendants, of the judgment obtained by the Burlington Elevator Company against the plaintiff. Since the plaintiff by its notice compelled the defendants to either defend the former action, or to be bound by the judgment, and they did defend it in good faith and at great expense, until their right to do so was cut off by the wrongful act of the plaintiff, the plaintiff cannot compel them to incur the same expense to make the same defense which it called upon them to make in the former action. That would have the effect of permitting it to litigate again the question of its liability on the primary bond in this suit. It cannot play fast and loose with sureties [295] in that way. By compelling them to defend the former action^ and then depriving them of the benefit of a full defense, it deprived itself of the right to pursue these sureties, and discharged them from liability. Stark v. Fuller, 42 Pa. 320. The case of Boyle v. Edwards, 114 Mass. 373, is not in point, because the sureties in that case were not vouched in to defend, but volunteered to do so. The judgment of the circuit court is affirmed.