Campbell & Zell Co. v. American Surety Co.

PUTNAM, Circuit Judge. The questions involved in this case are technical, and somewhat difficult, as to which the court is liable to err. But the difficulty is not the fault of the law. The plaintiff had a clear, straight path given it, which, if pursued, would have left no doubt. While it is clear it might have brought a suit in its own name, and taken a bond to itself, so that there would now be no question, it brought suit in the name of a foreign receiver, although, according to the rules of law which have been settled from the beginning of our judicial system, a receiver appointed in one state has no more authority in another state than a police judge or a police officer of one state has a right to come to another and arrest criminals or preside at trials. Of course, this remark is confined to an ordinary receiver, and does not apply to a statutory receiver, in whom the title vests, and who becomes the statutory successor of the corporation. The first question arises on the pleadings of the defendant with reference to the name of the principal corporation, combined with a question as to its existence. The defendant says that the plaintiff' is bound to prove its existence, and also bound to prove that it is the corporation of which the receiver was appointed in the state of Maryland, which receiver initiated these proceedings. It seems that the true name of the corporation is the Campbell & Zell Company of Baltimore City, while, in the proceedings before us, it is described simply as the Campbell & Zell Company. So far as the existence of the corporation is concerned, on the pleadings, and according to our practice, the burden rests on the plaintiff. It proves this by producing the bond sued in this case, which describes it as a corporation. This-makes out a prima facie case. It is not necessary to prove the existence of a corporation by the production of records. For ordinary purposes the de facto existence of a corporation may be proved by admissions of the adverse party, and this is sufficient. Here we have the description in the bond of the plaintiff as a corporation, and therefore its existence is admitted by the defendant under its seal. Then, as to the identity of the corporation: If the defendant here could show that there were two Campbell & Zell corporations, special proof might be required on the part of the plaintiff that this is the corporation of which Mr. Homer was made receiver. The court is of the opinion that, as the case stands, the identity is proven. The facts of the case are, briefly, as follows: As already stated, the local court in Maryland appointed Mr. Homer receiver of the Campbell & Zell Company of Baltimore City. At a term of the superior court for the county of Essex, in Massachusetts, held on-the first Monday of December, 1902, Homer brought suit against the Barr Pumping Engine Company. In his writ and declaration he described himself as follows: “Charles C. Homer, of the state of Maryland, receiver of the Campbell & -Zell Company, a corpo [493] ration established under the laws of the state of Maryland.” Then followed several counts; all, except one, of a doubtful character. They may be construed as alleging a promise to Homer as receiver. If all the counts were of that indefinite character, this suit would fail, because there would be nothing on the record to inform the American Surety Company that it was giving an obligation to protect any kind of a claim except on promises made to Homer as receiver. Therefore defendant could not be held for a judgment on promises made to the present plaintiff. There was, however, a count which set out the facts specifically, and alleged a contract made between the Barr Pumping Engine Company and the Campbell & Zell Company, and an obligation to pay by the Barr Pumping Engine Company to the Campbell & Zell Company, which, according to the dates alleged, preceded the appointment of Homer as receiver. The judgment in the state court followed that count, and was in favor of the Campbell & Zell Company, and not of Homer, as receiver. The law, as settled, applies, that, where there is one good count, claiming sufficient to warrant the judgment, the judgment must stand, even though all the other counts are bad. So that the case stands as though the declaration in the suit in the state court showed that Homer, although the nominal plaintiff, was really suing in behalf of the Campbell & Zell Company, and on a contract made with it. This appears on the face of the papers, which the American Surety Company was bound to inform itself about, and which we may presume it did inform itself about, when it gave the bond in suit. Therefore the true condition was shown at the outset, and, as we will find, whatever was afterwards done was entirely consistent with the facts as they thus appeared, and only contributed to give full effect thereto. That proposition must be kept firmly in mind, and the dates also. At that stage of the case the Barr Pumping Engine Company, desiring to release an attachment of its property, gave a bond for that purpose. In that bond the American Surety Company, the present defendant, became surety. Nevertheless, we must look at the four corners of the obligation of suretyship to learn its proper construction. Guaranty Co. v. Press Brick Co., 191 U. S. 416, 24 .Sup. Ct. 142, 48 L. Ed. 242. This is not a new rule. In Bowman v. Read, 2 Wall. 591, 603, 17 L. Ed. 812, the court says: “Sureties are as much bound by the true intent and meaning of their contracts which they voluntarily subscribe as principals. They are bound in the manner, to the extent, and under the circumstances as they existed when the contract was executed.” This bond, if it is severed into parts, contains some expressions which might require the court to construe it strictly as a contract between the American Surety Company and Homer, as receiver; but we must look at all the expressions found in it, and at what was contained in the plaintiff’s declaration in the state court; and, looking at these, we find it clear that the parties understood that the Campbell & Zell Company had the real interest, and that Homer was simply a go-between. Of this, the American Surety Company [494] had knowledge when it executed the obligation in suit, so that in executing it the surety company subjected itself 'to all such future steps as might be taken by the courts in working out the substance as shown on the face of the papers. Assuming that the original suit had been brought in the state of Maryland by Homer, as receiver of the Campbell & Zell Company, in his name as such receiver, and had there proceeded to judgment in his name as such receiver, and that afterwards the receivership had been discharged, and by order of court the original condition had been restored, then, undoubtedly, in working out the substantial rights of the Campbell & Zell Company appearing‘on the face of the papers, supplementary suits could properly have been brought in its name, and judgments taken accordingly, in the Maryland courts; and all rights to the bond, both in equity and in law, would have vested in it. That is a settled rule, and it goes quite as far as we are required to go in order to maintain the suit now before us, under existing circumstances. It appears that, suit having been brought in the way in which we have described in the state court, and that court having determined, as it should have determined, that it could not be prosecuted in the name of the receiver, therefore, in accordance with the settled practice, not only in Massachusetts, but in the federal courts, the writ and declaration were amended, and Homer, the nominal plaintiff, disappeared, the Campbell & Zell Company appeared in his place, and judgment was rendered in its favor. This case turns on that fact. The surety company says that it did not contract with the Campbell & Zell Company, but with Homer, as receiver. Nevertheless, as we have said, the substantial parties to the litigation appeared on the face of the papers, and were always known to the surety company; and they must be presumed to have contracted in reference to what thus appeared. Reference has been made to Revised Laws of Massachusetts of 1902, c. 173, §§ 48, 121, with reference to amendments. Section 121 provides for notice to parties interested in case of certain amendments, and, further, that, if notice has been given, the action of the court allowing the amendment shall be conclusive. No such notice was given here. But this statute does not reach this case, in which the amendment was made in accordance with the rules of the common law. In Chapman v. Barney, 129 U. S. 677, 9 Sup. Ct. 426, 32 L. Ed. 800, an action was brought in the name of the United States Express Company, declaring it to be a corporation. It was, however, not a corporation, but a joint-stock association, organized under and by virtue of the laws of a state which authorized such association to bring suit in the name of the president. Thereupon the Circuit Court permitted an amendment at common law bringing in “Barney, president of the United States Express Company,” which amendment the Supreme Court approved. In Fenton v. Lord, 128 Mass. 466, where suit had proceeded in name of the wife to and including verdict, she was allowed to amend by joining her husband as plaintiff. In the same way, in East Tennessee Land Company v. Leeson, 178 Mass. 206, 59 N. E. 639, exactly the same amendment as at bar [495] was allowed, apparently under the rules of the common law. Therefore, in the case at bar, this was a common-law amendment, based upon matter appearing on the face of the papers and of the bond in suit. We regard the amendment as not at all a substantial matter, and as merely one of form. The American Surety Company must be assumed to have known that the declaration was thus amendable, because the decisions to which we have referred in the Supreme Court of the United States and in 128 Mass, were made long before this bond was given. What our decision would be in case the rule admitting amendments of this class had been changed in actual practice after the bond was given we need not consider. So far as we have gone, this case is with the plaintiff. This leaves only one question; that is, the condition arising out of the fact that the plaintiff has not offered any proof showing that the judgment obtained in the state court was not paid. At common law, in suits on bonds with a condition, the burden of proving payment depends on the pleadings. The plaintiff alleges that the judgment was not paid. The answer contains a general denial, and, of course, puts that allegation in issue; so that, on the state of the pleadings, the burden rests apparently on the plaintiff to prove nonpayment. That burden, of course, is easily met by the rule that a debt incurred is ordinarily presumed not to have been paid. In the absence of proof, we will rest on the usual presumption. If that fails the plaintiff, it is his own fault, because he could have relieved the court of this difficulty, and offered proof that payment had not been made. Judgment for the plaintiff for the amount claimed and costs.