United States Fidelity & Guaranty Co. v. Smith

The respondent recovered judgment for $423.75 against the defendant for attorney fees and costs expended by respondent in defending a certain action at law prosecuted against it by reason of having become surety upon a bond given by appellant to the creditors of Force-Hewitt Company for the faithful performance of his duties as trustee for said creditors. The execution of "the bond was admitted by the answer. The execution of the application for the bond was denied on information and belief only. It was presumptively in his knowledge and could not be so denied (Curtis v. Richards, 9 Cal. 33 , 38), although it was evidently treated at the trial as sufficient. The trial court’s finding No. 3 describes the covenant upon which defendant’s liability in this action is founded as follows: “That it is true that in the application for said bond and undertaking executed by said J. L. Smith, it was agreed in writing among other things, that the defendant, J. L. Smith, would indemnify and save the plaintiff harmless from any and all loss, costs, charges, suits, damages, counsel fees and expenses of whatever kind or nature which the said plaintiff shall have or may for any cause at any time sustain or incur, or be put to for or by reason or in consequence of said company having executed the said bond as surety.” The court also found that W.

At the trial respondent was unable to produce the original application for the bond, but produced a photographic copy of it instead. Upon objection being made by appellant and after some argument it was agreed to go forward with the trial, using the photographic copy instead of the original, but with the agreement that the original would be produced before judgment was rendered. The trial then proceeded to the end and was submitted without continuance, reference being again made to the original application which had been agreed to be produced, but nothing was said by either party or the court at that time about how or when the original application would be produced and nothing was said about any continuance of the trial for that purpose. After the lapse of more than a month respondent produced and handed to the clerk of the trial court ex parte the said original application, applied to the court and obtained findings and judgment. The exact understanding in respect to just how the said original application was to be produced and under what circumstances is not clear in the record. Appellant’s understanding is stated to be that a further hearing of some kind should have been held. The respondent’s counsel apparently thought he was carrying out the agreement by merely filing the document with the clerk before judgment, but it appears to us that appellant should have been given an opportunity to examine the original application and point out any discrepancies or defects that he might be able to find in the same. Upon the oral argument in this court appellant, who appeared in propria persona and by attorney, was asked by the court what injury he had suffered by reason of the irregularity and he stated that with

Appellant contends that the suit against the respondent, indemnity for the expense of which the judgment herein was given, was based upon a false claim and hence appellant’s agreement to indemnify respondent contained in his application for the bond does not include that suit. The testimony shows that after Somers & Company obtained a judgment against appellant it then sued respondent on the bond. The respondent herein filed in that action a demurrer which was overruled. Judgment went against respondent for failure to answer over. Then respondent appealed. The district court of appeal reversed the trial court’s judgment. The supreme court first affirmed the trial court and later in bank reversed the trial court, holding that the cause of action of Somers & Company against respondent was barred by the statute of limitations. (Somers v. United States Fidelity & Guaranty Co., 191 Cal. 542 [ 217 Pac. 746 ].) That opinion sets out a copy of the bond and holds that because the bond was a contract of suretyship and guaranty instead of a contract of indemnity the cause of action accrued against the respondent herein sooner than otherwise and consequently was barred by the statute of limitations. Digressing for the moment, it should be noted that in the opinion denying a rehearing the court points out that it had previously decided that Somers & Company was a creditor of .“the assignor and the obligee included in the bond,’’ which, by reference to the previous decision

This cause of action was not barred by the statute of limitations. The action was based upon appellant’s written obligation. The action in which such expenditures were made was commenced less than four years before this action. The cause of action, however, did not accrue until the expenditures were made and that occurred less than one year before the commencement of the action.

Appellant also claims that he was personally employed as counsel to be associated .with respondent’s regular attorneys of record; that he acted in that capacity; that his

The remaining points raised by appellant constitute attacks upon the sufficiency of the evidence to show the necessity and good faith of the expenditures made by respondent in defending the litigation as found by the court. It is claimed that it is not proven that Somers & Company, which obtained the judgment against appellant, were creditors of Force-Hewitt Company. That judgment was received in evidence at the trial, but appellant has not incorporated it in his bill of exceptions or transcript. We must assume, therefore, that it showed that the plaintiff therein was a creditor of Force-Hewitt Company as determined by the trial court’s findings herein and by the supreme court when reviewing the judgment in Somers v. United States F. & G. Co., 191 Cal. 542 [ 217 Pac. 746 ]. The evidence also supports the findings declaring the good faith, necessity and reasonableness of the respondent’s expenditures in employing attorneys and disbursing costs. That respondent waived its judgment against Somers & Company for costs of suit in return for a dismissal of the action does not mean that such costs cannot be recovered from appellant. From what appears in the record it was necessary and expedient and resulted in keeping down the total amount for which appellant became liable. It was done in good faith to finally dispose of the litigation.

Respondent’s complaint that the court failed to allow the full amount of attorney fees and costs which the undisputed evidence and findings show it to have expended cannot be considered by this court because respondent did not appeal.

The judgment is affirmed.

Sturtevant, J.; and Nourse, J., concurred.