Objection going to the form of the district court's decree, if
not taken on a first appeal to the circuit court of appeals, may be
deemed waived on a second.
A decree of the district court that plaintiff "do have and
recover " a stated sum, with provisions establishing a lien and for
foreclosure, was affirmed by the circuit court of appeals with
directions that "such execution and further proceedings be had as
according to right and justice, and the laws of the United States,
ought to be had."
Held that a decree of the district court
directing foreclosure sale, and that execution issue for any
deficiency, was consistent with, and did not exceed, the
affirmance.
The amount of deficiency being fixed by the sale, the insertion
of the amount in the execution was but a clerical act.
Under Rev.Stats. of Texas, Art. 1206, a suit against a
corporation is not abated by its dissolution pending appeal.
Federal courts sitting in equity may render summary judgment
against sureties on appeal bonds.
Such practice does not invade the constitutional right of trial
by jury; nor is it objectionable upon the ground that the legal
remedy, by action on the bond, is adequate.
While it is the proper and usual practice in such cases to give
notice to the surety,
quaere whether notice is always
essential
Objections that a summary judgment on an appeal bond was not
preceded by notice and deprived the sureties of the right of trial
by jury are waived by invoking the trial court's decision of the
merits upon an undisputed state of facts.
Quaere whether Rule 29 of this Court -- Rule 13, 5th
C.C.A. -- intends that the sureties on a supersedeas bond shall not
be bound to
Page 243 U. S. 274
pay deficiency decree in foreclosure cases, but shall pay only
the costs and damages resulting from the delay caused by the
appeal?
A money decree against a corporation and its sureties on a
supersedeas bond, followed by levy, was satisfied by a payment made
by one of the sureties "as trustee for himself and the other
stockholders" of the corporation. The record not showing that the
surety paid as such, in satisfaction of his own liability,
held that the sureties had no standing to complain of the
decree, since satisfaction, by the principal obligor, ended their
liability.
228 F. 273 affirmed.
The case is stated in the opinion.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
Pease and Heye were sureties on a supersedeas bond given on
appeal to the United States circuit court of appeals in a suit to
foreclose a vendor's lien. The District Court for the Southern
District of Texas had entered a decree against the People's Light
Company, declaring that Rathbun-Jones Engineering Company "do have
and recover" $6,804.90, with interest; establishing a lien on
certain personal property, and directing that it be sold to satisfy
the judgment, if the same be not paid within sixty days. The
appellate court affirmed the decree. 218 F. 167. The mandate
directed that the defendant and the sureties "pay the costs in this
Court, for which execution may be issued out of the district
court," and
"commanded that such execution and further proceedings be had in
said cause as, according to right and justice, and the laws of the
United States, ought to be had."
Thereupon, the district court, apparently without notice having
been given specifically to sureties, entered its
Page 243 U. S. 275
"decree on mandate." This decree ordered "that said mandate be
made the judgment of this court;" that a sale be made, as herein
provided, "to satisfy said judgment," and that,
"in the event said property does not sell for sufficient amount
to satisfy said judgment, interest, and costs, the clerk of this
court issue execution against the defendant and against the
sureties on the appeal bond, . . . for any deficiency that may
remain."
The sale was had. Pease, being the highest bidder, purchased all
the property for a sum which, when applied upon the judgment, left
a large deficiency. Immediately after the sale and before execution
issued, Pease and Heye's administratrix (he having died pending the
appeal) filed, in the district court, a motion that execution be
stayed and that so much of the "decree on mandate" as directed its
issue be set aside. On the same day, a similar motion was filed by
the trustee in liquidation of the People's Light Company (it having
been dissolved pending the appeal). Both motions were presented by
the counsel who had theretofore acted for the defendant. The
authority of the court to issue the execution was attacked on
several grounds. Both motions alleged that the original decree
contained no provision for such execution, and that it could not be
enlarged on return of the mandate, because the term had expired at
which it was entered. They alleged that the order for execution was
illegal because the People's Light Company had been dissolved and
Heye had died pending the appeal. They asserted that the "decree on
mandate," so far as it directed the issuance of the execution, was
"wrongful and illegal," because "it was entered by the court
without pleading, without notice, and without hearing, against, to,
or of these petitioners," and "deprived them of their property
without due process of law." The motion on behalf of the sureties
alleged also that they had been deprived of their constitutional
right to "trial by jury in actions at common
Page 243 U. S. 276
law." The prayers for relief were rested also on still broader
grounds, which involved directly the whole merits of the
controversy. It was alleged that the
"bond did not secure, . . . the payment of the amount of said
judgment or any deficiency that might remain after the application
of the proceeds of the sale of said property, but operated only as
indemnity against damages and costs by reason of said appeal,"
and that the costs on said appeal had been paid. The motions,
which were fully heard upon evidence introduced by the petitioners,
were denied. An appeal was taken by all the petitioners from this
denial, and by Pease alone from the "decree on mandate." Both the
decrees were affirmed on appeal, and a rehearing was refused. 228
F. 273. Thereupon, petitions to this Court for certiorari to the
circuit court of appeals were filed and granted.
After issue of the execution, Pease instituted still another
proceeding -- a suit to restrain its enforcement. But when the
injunction was denied by the district court, the marshal made levy,
and Pease, "as trustee for himself and the other stockholders of
the People's Light Company," paid to the clerk of court the balance
due on the judgment. An appeal from the denial of the injunction
was dismissed by the circuit court of appeals; but review of that
decree is not sought here.
The petitioners still contend, on various grounds, that the
proceedings below are void for lack of due process of law, or
should be set aside for error:
First. It is contended that the "decree on mandate" was
void so far as it ordered execution to issue for any deficiency,
because that direction was not contained in the original decree or
in the mandate of the circuit court of appeals. We are referred to
cases holding that the lower court must enforce the decree as
affirmed without substantial enlargement or alteration. But the
original decree ordered that the plaintiff "do have and recover"
$6,804.90.
Page 243 U. S. 277
This is the customary language used in personal judgments which
are, without further direction, enforceable by general execution.
If the defendant desired to insist that, because the suit was a
foreclosure proceeding, the decree in this form was not proper, the
objection should have been taken on the first appeal, and, not
having been so taken, must be considered as waived. The "decree on
mandate" obeyed the command of the mandate "that such execution and
further proceedings be had in said cause as, according to right and
justice, and the laws of the United States, ought to be had." The
amount of the deficiency was fixed by the sale; the insertion of
the amount in the execution was but a clerical act.
Second. It is contended that all suits pending against
the People's Light Company abated upon its dissolution. As we read
the Texas statute (Rev.Stats. 1911, Art. 1206), such a consequence
is carefully avoided. It is there provided that, upon dissolution,
the president and directors shall be trustees of the creditors and
stockholders of the corporation, "with full power to settle its
affairs," and with power "in the name of such corporation . . . to
collect all debts, compromise controversies, maintain or defend
judicial proceedings." This general language makes no distinction
between pending and subsequent "judicial proceedings," which the
trustees are empowered to maintain and defend in the corporation's
name, and there seems no reason why such a distinction should be
read into the statute. There is also the further provision in the
article that
"the existence of every corporation may be continued for three
years after its dissolution from whatever cause, for the purpose of
enabling those charged with the duty to settle upon its
affairs."
The People's Light Company, which takes this appeal and gives
bond for its successful prosecution, is hardly in a position to
assert that it is nonexistent and incapable of maintaining and
defending pending suits.
Page 243 U. S. 278
Third. It is contended that the district court had no
power under the Constitution to render a summary judgment against
the sureties upon affirmance of the decree appealed from, and that
resort should have been had to an action at law. The method pursued
has been introduced by statute into the practice of many states,
including Texas Rev.Civ.Stats., Art. 1627.
See cases in
the margin. [
Footnote 1]
Pursuant to the requirements of the Conformity Act (Rev.Stats. ยง
914), this practice is followed by the federal courts in actions at
law.
Hiriart v.
Ballon, 9 Pet. 156;
Gordon v. Third Nat.
Bank, 56 F. 790;
Egan v. Chicago Great Western Ry.
Co., 163 F. 344. The constitutional right of trial by jury
presents no obstacle to this method of proceeding, since, by
becoming a surety, the party submits himself "to be governed by the
fixed rules which regulate the practice of the court."
Hiriart v.
Ballon, 9 Pet. 156,
34 U. S. 167.
Although the adoption of state procedure is not obligatory upon the
federal courts when sitting in equity, they have frequently
rendered summary judgment against sureties on appeal bonds.
See cases in the margin. [
Footnote 2] Some of the district courts, by
Page 243 U. S. 279
formal rule of court, require the bond to contain an express
agreement that the court may, upon notice to the sureties, proceed
summarily against them in the original action or suit.
See
Rule 91, Ariz.Dist. Court Rules, adopted March 5, 1912; Rule 90,
Wash.Dist. Court Rules, 1905. But this is not a general provision,
nor is it a necessary one. For, as this Court has said,
sureties
"become
quasi-parties to the proceedings, and subject
themselves to the jurisdiction of the court, so that summary
judgment may be rendered on their bonds."
Babbitt v. Finn, 101 U. S. 7,
101 U. S. 15. The
objection that a court of equity has no jurisdiction because there
is an adequate remedy at law on the bond is not well taken. A court
of equity, having jurisdiction of the principal case, will
completely dispose of its incidents and put an end to further
litigation. Applying this principle, equity courts, upon the
dissolution of an injunction, commonly render a summary decree on
injunction bonds. See cases cited in the margin. [
Footnote 3]
Fourth. It is contended that notice was not given to
the surety of the motion for summary judgment. It is a proper and
usual practice to give such notice, but it may be questioned
whether notice is always essential.
See Union Surety Co. v.
American Fruit Product Co., 238 U. S. 140;
Johnson v. Chicago & Pacific Elevator Co.,
119 U. S. 388, and
cases in the margin. [
Footnote
4]
Page 243 U. S. 280
Furthermore, the last two objections, if originally well taken,
were waived or cured by the subsequent proceedings. For the motions
filed later invoked a decision by the court upon the question of
the sureties' liability on the evidence presented by them, and no
relevant fact was in dispute. There was no issue to submit to a
jury, even if the sureties had been otherwise entitled thereto.
After thus voluntarily submitting their cause and encountering an
adverse decision on the merits, it is too late to question the
jurisdiction or power of the court.
St. Louis & San
Francisco Ry. Co. v. McBride, 141 U.
S. 127;
Western Life Indemnity Co. v. Rupp,
235 U. S. 261,
235 U. S.
273.
Fifth. It is further contended that the district court
erred in entering judgment against the surety for the deficiency,
instead of merely for the costs and any damages to the plaintiff
resulting from the delay incident to the unsuccessful appeal. This
objection raises a more serious question. The supersedeas bond was
in the common form, conditioned that the appellant shall "prosecute
its appeal to effect and answer all damages and costs, if it fails
to make its plea good." It has long been settled that a bond in
that form binds the surety, upon affirmance of a judgment or decree
for the mere payment of money, to pay the amount of the judgment or
decree.
Catlett v.
Brodie, 9 Wheat. 553. Rule 29 of this Court -- Rule
13, 5th C.C.A. -- makes provision for a difference with respect to
the bond between a judgment or decree for money not otherwise
secured and cases "where the property in controversy necessarily
follows the event of the suit, as in real actions, replevin, and in
suits on mortgages." It is not
Page 243 U. S. 281
clear whether the purpose of the rule, in case of secured
judgments or decrees, was merely to limit the amount of the
penalty, or was also to affect the nature of the liabilities, so
that the sureties would be liable to answer only for the costs, and
damages actually resulting from the delay.
We are, however, relieved from deciding this question; because
the record discloses that, after the issue of the execution
complained of, Pease paid the amount due "as trustee for himself
and the other stockholders of the People's Light Company." In other
words, the record does not show that Pease paid the amount as
surety in satisfaction of the deficiency of judgment against
himself. The payment by him may have been made "as trustee,"
because, before that time, the corporation had been dissolved. If
this payment was made on behalf of the corporation, obviously Pease
could get no benefit from a reversal of the decree, and as the
decree has been satisfied by the principal obligor, the sureties
are in no danger of further proceeding against themselves. On the
facts appearing of record, the decree is therefore
Affirmed.
[
Footnote 1]
Summary judgment was entered on appeal bonds in the following
cases:
White v. Prigmore, 29 Ark. 208;
Meredith v.
Santa Clara Mining Assn., 60 Cal. 617;
Johnson v. Chicago
& Pacific Elevator Co., 119 U. S. 388;
Jewett v. Shoemaker, 124 Iowa, 561;
Greer v.
McCarter, 5 Kan. 17;
Holmes v. The Bell Air, 5
La.Ann. 523;
Chappee v. Thomas, 5 Mich. 53;
Davidson
v. Farrell, 8 Minn. 258;
Beall v. New
Mexico, 16 Wall. 535;
Clerk's Office v.
Huffsteller, 67 N.C. 449;
Charman v. McLane, 1 Or.
339;
Whiteside v. Hickman, 2 Yerg. 358;
Allen v.
Catlin, 9 Wash. 603.
[
Footnote 2]
Cases where equity courts gave summary judgment against the
securities on appeal bonds:
Woodworth v. North Western Mut. L.
Ins. Co., 185 U. S. 354;
Smith v. Gaines, 93 U. S. 341;
Richards v. Harrison, 218 F. 134;
Fidelity &
Deposit Co. v. Expanded Metal Co., 183 F. 568,
aff'g
177 F. 604;
Perry v. Tacoma Mill Co., 152 F. 115;
Empire State-Idaho Mining & Developing Co. v. Hanley,
136 F. 99;
Brown v. North Western Mut. Life Ins. Co., 119
F. 148.
[
Footnote 3]
Cases where it was held that courts of equity might render
summary judgment on injunction bonds:
Russell v. Farley,
105 U. S. 433,
105 U. S. 445;
Lea v. Deakin, 13 F. 514;
Lehman v. McQuown, 31
F. 138;
Coosaw Mining Co. v. Farmers' Mining Co., 51 F.
107;
Tyler Mining Co. v. Last Chance Mining Co., 90 F. 15;
Cimiotti Unhairing Co. v. American Fur Refining Co., 158
F. 171. A few of the districts have a rule of court providing that
damages upon dissolution of an injunction
"may be assessed in the same proceeding, either by the court or
by reference to a master and judgment entered in the same action
against the sureties on the bond."
See Ark., West.D.Rule 16, as amended to Feb. 27, 1908;
Ark., East.D.Rule 14, as amended to Oct. 1, 1915.
[
Footnote 4]
Cases showing the usual practice of giving to the sureties
notice of the motion:
Empire state-Idaho Mining &
Developing Co. v. Hanley, 136 F. 99;
Gordon v. Third Nat.
Bank, 56 F. 790.
Cf. Leslie v. Brown, 90 F. 171.
Cases in state courts holding that notice to the surety is not
requisite:
Rogers v. Brooks, 31 Ark.194;
Meredith v.
Santa Clara Mining Assn., 60 Cal. 617;
Jewett v.
Shoemaker, 124 Ia. 561;
Portland Trust Co. v. Havely,
36 Or. 234, 245.