Respondents Brief — Dugas v. American Surety Co.

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-

CHARLES FLMURE @RO

SUPREME COURT OF THE UNITED STATES ~~

OCTOBER TERM, 1936 .

No. 340

’ ETIENNE DUGAS

versus

AMERICAN SURETY COMPANY OF NEW YORK.

On Writ of Certiorari to the. United States Circuit Court

of Appeals for the Fifth Circuit.

ORIGINAL. BRIEF ON BEHALF OF AMERICAN

SURETY COMPANY OF NEW YORK,

! _ RESPONDENT. —

)

/

i VICTOR LEOVY,

HENRY H. CHAFFE,

‘ HARRY McCALL,

JAS. HY. BRUNS,

Attorneys for American Surety Company

7 - of New York, Appellee.

New Orleans, , |

January 9, 1937...

Montgomery-Andree Printing Co., Inc., 430-32 Chartres, N. O. La.

a a eee ae a ee ee ee ee eee ay

SUBJECT INDEX

Statement of Case

Argument on Motion to Dismiss

Argument on the Merits: *...... eg ue danoenas

Specification of Error No.1.................

Specification of Error No.

Specification of Error No. 3...

Specification of Error No. 4...

5

6

Ls)

Specification of Error No.

‘ Specification of Error No.

Final Conclusion . Perr

TABLE OF AUTHORITIES CITED

(a) cases:

Aetna Life Insurafice Co. v. Middleport, 124 U.S. 534

Amadeo v. Northern Assurance Co., 201 U. S. 194. .

Basket v. Hassell, 107 U. S. 602...............

Baush Machine Tool Company v. Aluminum Com-

pany of America, 63 Fed. (2d) 778.

Beardsley v. Arkansas & Louisiana Railway Com-

peng, 166 U. i. EBB... .....602...

Brewster v. Wakefield, 22 Howard 118

Brown v. Staples, 138 La. 602.......

City Bank v. Hunter, 129 U.S.557............

Clifton v. Sheldon, 23 Howard 481......._._..

Davis v. Mercantile Trust Company, 152 U.S. 590.

Dolan v. Jennings, 139 U.S, 385... ..

Dugas v. American Surety. Company of New York,

ee ee iu oaeca casuaeeees

Dugas v. New York Casialty Company, 181 La. 322

Elliot v. Lombard, 292 U.S. 189.................

Estis jx Trabue, 128 U.S. 225............ eras

i

TABLE OF AUTHORITIES CITED— (Continued)

(a). cases: (continued) Pages

Fiebelman v. Packard, 108 U.S.14............ Sore:

Forgay v. Conrad, 6 Howard 201..........: Oe 12

area ©. Vela, S06 U. 0. Oe... ee. 13.

Gilfillan v. McKee, 159 U.S. 308..:........... 6 oe

Manrick v. Patrick, 119 U.S. 156..........:..... 12

Hampton v.. Rouse, 13 Wallace 187............... . 12

Hardee v. Wilson, 146 U.S. 179................. ae t

Hartford Accident and Indemnity Company v. Bunn,

SRT ice ates ae eae ae 13

Healey Ice Machine Company v. Green, 184 Fed. 515 27

Henningsen v. United States Fidelity & Guaranty

SS 2 ee eer ree, ree 31

Hickey v: Johnson, 9 Fed. (2d) 498............... * 27

Inglehart v. Stansbury, 151 U.S. 68......... ~. 8

Lamb v. Cramer, 305 U.5.297................... ie |

Lamb v. Schmitt, 285 U. S. 222................. 27

Langnes v. Green, 282 U.S. 531, 535-9............ 11

Local Loan Company v. Hunt, 292 U.S. 234........ 26

Martel v. Rovira, 164 La..1099..°................ 81

Mason v. United States, 186 U.S.581........ Sead m3

Mussina v. Cavazos, 6 Wallace 355... .. pee ai ee 12

Masterson v. Herndon, 10 Wallace 416............ 11

McCabe v. Guaranty Trust Company of New York,

PC ARNG os We ee ee aT 27

McCutchen v. Union Trust Company, 271 Fed. 586. 24

Osage Oil & Refining Company v. Continental Oil

Company, 34 Fed. (2d) 585................. &

Owings v. Kincannon, 7 Peters 399............... 12

“Protector”, The, 11 Wallaee 82........ ar rare 12

Public Service Commission v. Havemeyer, 296 U. S.

a ee ree ee oe 11

Root v. Woolworth, 150 U.S. 401................ 18

Ross v. Miller, 252 Fed. 697.................... 27

de we 4

~ t.

iti

TABLE OF AUTHORITIES CITED— (Continued)

| (a) cases: (continued) _ Pages

Sand Springs Home v. Title Guarantee & Trust Com-

- pany, 16 Fed. (2d) 917.-.:-........ Pete ea 27

Shields v. Thoms, 18 Howard 253................ 27

Simpson v. Greeley, 20 Wallace 152............... 12

Sipperley v. Smith, 156 U.S. 86.............. ". 13

Smyth v. Strader; Pevine & Co., 12 How. 327...... 12

Sterling v. Gredig, 5 Fed. Supp..329............... 25

Stelos Company v. Hosiery Motor-Mend Corp., 295 U.

ee ee ee ee 11

Thompson v. Maxwell, 95 U.S. 391......... {Sune 20

Todd v. Daniel, 16 Peters 521.....:.............. 13

Williams v. the President, Directors and Company of

the Bank of the United States, 11 Wheaton 414 12

Wilson v. Alexander, 276 Fed. 875............... 22

Wilson v. Kiesel, 164 U.S. 248.................. 13

Wilson, the Heirs of, v. Life and Fire Insurance Com-

pany of New York, 12 Peters 140............ 12

Winters v. United States, 207 U.S. 564........... 13

(b) Statutes:

©. Louisiana Act No. 172 of 1908................... 2

Louisiana’ Civil Code:

Me IE a ir a oie ee 30

ck... eee Lap een eee ae 31

ek re ta rel ec es eat erat 2 31

Federal Interpleader Act of May 8,:1936, 44 Statutes

at Large, Chapter 273, page 1) ns 4

7 (ec) Text Books:

Cyclopedia of Federal Procedure, Vol. 4, Sec. 1157,

| OE rere eer eee 28

Eemtts Rules OF ane 26. x... 5... fe ick cass. 29

‘2 Hughes Federal Practice, Sec. 1226, page 394. 28

Story’s Equity Pleadings, 9th Ed., ‘Chapter 8, pages

* 292, et seq., _ Section 336. oR ae a... 263

@. Bf

¢

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1936 '

No. 340.

ETIENNE DUGAS

versus

AMERICAN SURETY COMPANY OF NEW YORK.

On Writ of Certiorari to the United States Circuit Court

of Appeals for the Fifth Circuit.

ORIGINAL BRIEF ON BEHALF OF AMERICAN

SURETY COMPANY OF NEW YORK,

RESPONDENT.

STATEMENT OF CASE.

The basic question herein presented is whether a

surety on an appeal bond can be held liable after a judicial

determination, by a court of competent jurisdiction, that

the principal on the bond has discharged its full duty to

the appellee and owes no more to him. The petitioner herein

contends that the answer to this.question Should be “ves”,

whereas it is our contention, supported by the judgment

of the district court and that of the United States Circuit

Court of Appeals, that the answer should be “no”.

_ An approach to this matter will be facilitated by a

chronological statement of the facts, which we shall make

as briefly as possible:

On February 12, 1930, the American Surety Com-

pany of New York (hereinafter refered to as American),

the respondent herein, executed, as surety, a bond for

Lumbermen’s Reciprocal Association, a Texas insurance

company, as principal, in the penal sum of Twenty. Thou-

sand Dollars ($20,000.00) ; said bond being given in order

to qualify the. insurance company to do business in the

State of Louisiana, as required by Louisiana Act No. 172

of 1908. A copy of the bond will be found at page.... of

the record. While not an issue in the case, we append in

the margin hereof a copy of Act 172 of 1908.*. Etienne

*“ACT NO. 172

AN ACT

Requiring fire, life, aecident ‘and other kinds of insurance *

companies, other than surety and fidelity and fraternal

societies, and insurdnce companies insuring against the

breakage of-plate glass only organized under.the laws

of other States, to'give a bond payable to the State .

Treasurer conditioned for the prompt payment of claims ©

arising in this State, and providing — for the

enforcement of this Act.

Section 1. Be it enacted by the General Assembly

of the State of Louisiana, That all fire, life, accident and

other kinds of insurance companies other than fidelity and

surety and fraternal societies and insurance companies in-

Dugas, petitioner herein, worked in Louisiana fer an em-

ployer carrying a workmen’s compensation policy with the

Lumbermen’s Reciprocal Association. Dugas was hurt in

an accident; and, the Lumbermen’s Reciprocal Association

having gotten into financial difficulties, Dugas brought

suit in the Civil District Court for the Parish of Orleans,

State of Louisiana, against the American on its qualifying

bond (No. 188,642 of the docket of that Court). In said

suit he obtained judgment, on April 14, 1931, for compen-

sation at the rate of Twenty Dollars ($20.00) per week,

for a period not to exceed three hundred (300) weeks (R.

p. 14). From such judgment the American appealed

suspensively to the Court of Appeal for the Parish of Or-

leans and furnished appeal bond in the sum of Ten Thou-

suring against the breakage of plate glass orily organized |

under the laws of other States, in addition to requirements

now prescribed by law, shall, annually give-a bond in favor

of the State of Louisiana, with at least three good and suf- ©

ficient sureties, resident of this State, and approved by the

State Treasurer, in the full sum of Twenty thousand dol-

lars ($20,000.00), or a bond of a surety company author-

ized to do business in this State, conditioned for the prompt

payment of all claims arising and accuring to any person

during the term of said bond by virtue of any policy issued

by any such corporation upon the life or person of any citi-

zen of this State, or upon any property situated in this

State, and such bond shall be annually renewed, and the

old bond will become cancelled by the acceptance of the new

bond by the State Treasurer, such acceptance being full

authority to the Clerk of Court where the old bond is re-

corded to make such cancellation on:his records. Provided

sand Dollars ($10,000.00) executed by New York Casualty

Company as surety (R. p. 16). The said appeal was per-

fected and the record filed in the said Court of Appeal, but

nothing further was done therein for the reasons herein-

after stated. Thereafter, on June 5th, 1931, the American

filed its bill of interpleader in the United States District

Court for the Eastern District of Louisiana, deposited in

the registry of the court the sum of Twenty Thousand Dol-

lars ($20,000.00), being the ‘full penalty of its qualifying

bond for the Lumbermen’s Reciprocal Association, and

called into the said proceeding, as defendants, all Louisiana

creditors of the said association, including Etienne Dugas.

The jurisdiction of the Federal Court was based on the

Federal Interpleader Act of May 8, 1926; 44 Stat. at Large,

Chapter 273, p. 416. The said statute is quoted in the

that no bond shall be canceled, or withdrawn unless a new

bond has been substituted as above provided, or satisfac-

tery evidence has been submitted to the insurance depart-

ment that the company has discharged all of its obligations

and liabilities in this State, and that it has no liabilities

whatever outstanding in this State:

Section 2. Be it further enacted, etc., That the re-

quirement of this Act shall not be construed to relieve any

insurance company of the several duties now required by

law, but the requirement of this Act shall be held to be and

are intended to be in addition to the duties and require-

ments now prescribed by law. Provided that the provisions

of this Act shall become effective from and after March Ist,

1909, when present authority of the Companies now in this

State will expire.” ;

5

margin.* An appropriate restraining order was entered

and rule was issued requiring the, various defendants to

shew cause why a preliminary injunction should net issue

restraining ‘and enjoining them from suing, or taking any

steps to sue or doing anything toward the prosecution of

any suit or proceeding in any state court or in any other

federal court on any claim arising out of or connected with

the qualifying bond of February 12, 1930, in question (R.

p. 11). Dugas resisted the bill by an exception of no cause

of action, plea of estoppel and an answer (R. pp. 19-27).

In the plea of estoppel and in the answer he specifically

urged the proceeding in the state court, and, more particu-

larly, the taking of an appeal and the furnishing of a

suspensive appeal bond as reasons why he should not be

, VA

*An act Authorizing casualty companies, surety com-

panies, insurance companies or associations or fraternal

or beneficial societies to file bills of interpleader.

Be it enacted by the Senate and House of Represen-

tatives of the United States of America in Congress as-

sembled, That the district courts of the United States shall

have original jurisdiction to entertain and determine suits -

in equity begun by bills of interpleader duly verified, filed

by any casualty company, surety company, insurance com-

pany or association or fraternal or beneficial society, and

averring that one or more persons who are bona fide claim-

ants against such company, association, or society resides

or reside within the territorial jurisdiction of said court;

that such company, association or society has in its custody

or possession money or property of the value of $500 or

more, or has issued a bond or a policy of insurance or cer-

tificate of membership providing for the payment of $500

or more to the obligee or obligees in such bond or 4s insur-

ance, indemnity, or benefits to a beneficiary, beneficiaries,

or the heirs, next of kin, legal representatives, or assignee

fw

brought into the interpleader proceeding. A preliminary.

injunction was issued as prayed for on June 25, 1931 (R.

p. 31). On June 15, 1932, there was a final hearing as

to the rights, duties and obligations of the American, and

on September 19, 1932, there was a final decree perpetuat- _

‘ing the injunction and holding that the American had com-

plied with all of its obligations under or on account of its

qualifying bond and releasing and discharging it from any

and all further: liability on account of said bond (R. p. 32).

The decree then referred the matter to a special master to

’ determine the manner in which the balance of the fund re-

maining on deposit in the registry of the court should be

distributed :o the defendants. The specjal master filed a

- of the person insured 6r member; that two or more adverse

claimants, citizens of different States, are claiming to be |

entitled to such money or property or the penalty of such

bond, or to such insurance, indemnity, or benefits; that

such company, association, or society has deposited such

money or property or has paid the amount of such bond sr

policy into the registry of the court, there to — the

. judgment of the court.

Sec. 2. In all such cases if the policy or certificate

is drawn payable to the estate of the insured and has not

been assigned in accordance with the terms of the policy

or certificate the district court of the district of the resi-

dence of the personal representative of the insured shall

have jurisdiction of such suit. In case the policy or cer-

tificate has been assigned during the life of the insured ‘in

accordance with the terms of the policy or certificate, the

district court of the district of the residence of the assignee

or of his personal representative shall have jurisdiction.

In case the policy or certificate is drawn payable to a bene-

ficary or- beneficiaries and there has.been no such assign-

ment as aforesaid the jurisdiction shall be in the district

court of the district in which the beneficiary or beneficiaries

VERY ee : : cs sits — :

Boi waht es: sniskuihs samamnampaemmimemas _

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a .

report on April 17, 1933 (R. p. 33). He found the total

amount due Dugas to be the sum of $4160.68, but, the

claims proved being almost four.times the fund available

for distribution, the exact pro rata share due Dugas was,

according to the report, $1141.29. On April 20, 1933, coun-

sel for all claimants, including counsel for Dugas, filed a

stipulation acquiescing in the special master’s report and

« waiving tae twenty day delay accorded them by Equity

Rule No. 66 for the filing of exceptions to the said report,

and, on such stipulation, had the District Judge confirm

the said report (R. p. 37). No appeal was taken by Dugas

from the decree of September 19, 1932, or from the dis-

tributive decree of April 30th, 1933.

or their personal representatives reside. In case there are

‘claimants of such money or property, or in case there are

beneficiaries under any such bond or policy resident in

more districts than one, then jurisdiction shall be in the

district court in any district in which a beneficiary or the

personal tepresentative of a claimant or a deceased claim-

ant or beneficiary resides. Notwithstanding any provision

of the < udicial Code’ to the contrary, said court shall have

power “o issue its process for all such claimants and to

issue ar order of injunction against each of them, enjoin-

ing them from instituting or prosecuting any suit or pro-

‘ceeding in any State court or in. any other Federal court

on account of such money or property or on such bond or

on such policy or certificate of membership until the fur-

ther order of the court; which process and order of injunc-

tion shall be returnable at such time as the said court or

a judge thereof shall determine ard shall be addressed to

and served by the United States marshals for the respec-

tive districts wherein said claimants reside or may be

found.

Sec. 3. Said court shall hear and determine the

cause and shall discharge the complainant from further

On March 7th, 1934, Dugas brought a new suit in

the Civil District Court for the Parish of Orleans, State of

Louisiana, No. 206,399 of the docket of the said court,

against the New York Casualty Company, the surety on

the appeal bond of the American in the original suit in the

Civil District Court, in which new suit he claimed $3019.39,

being the difference between the amount found due by the

special master in the interpleader suit and the distributive .

sum therein allowed to Dugas and paid to him (R. p. 39).

On March 14, 1934, an amended petition was filed reducing

the amount claimed to $2999.00 for the purpose of prevent-

ing a removal to the federal court (R. p. 44). To this.

suit the New York Casualty Company filed various excep-

.tions, among others, one of prematurity (R. p. 46). The

liability; and shall make the-injunction permanent and

enter all such other orders and decrees as may be suitable

and proper, and issue all such customary writs as may be

necessary or convenient to carry out and enforce the same.

Sec. 4. Public Act numbered 346, Sixty-fourth Con-

gress, entitled “An Act authorizing insurance companies

and fraternal beneficiary societies to file bills of inter-

pleader”, approved February 22, 1917, and Public Act

numbered 465, Sixty-eighth Congress, entitled “An Act to

amend an Act entitled ‘An Act authorizing insurance com-

panies or associations and fraternal beneficiary societies

to file bills of interpleader’, approved February 22, 1917”,

approved February 25, 1925, be and the same are hereby

repealed. Said repeal shall not affect any act done or any

right, accruing or accrued in any suit or proceeding had

or commenced under said Acts hereby repealed, prior to

the passage of this Act, but all such acts or rights, suits

or proceedings shall continue and be valid and may be

prosecuted and enforced in the same manner as if said

Acts had not been repealed hereby.

eS rennet ae =

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. ° .

state district court maintained the exception of prematurity

and dismissed the suit (R. p. 49). Dugas appealed from

that judgment of dismissal to the Supreme Court of the

State of Louisiana, which, on January 7, 1935, reversed

the judgment of the state district court and remanded the

| case with an opinion clearly forecasting an unfavorable

outcome for the New York Casualty Company. Dugas v.

New York Casualty Company, 181 La. 322, copied in the

Record at p. 56.

On January 29, 1935, the American filed, in the

original interpleader proceeding in the United States Dis-

trict Court, a supplemental petition (R. p. 68), in which

it averred the happenings above stated since the final de-

“ cree of September 19, 1932, and set out that if Dugas

should be permitted to obtain a judgment in the state court

,against the New York Casualty Company, the- American

would, of course, have to reimburse its surety, with the

| result that Dugas would, in effect, be collecting from the

American in the teeth of the decree of the federal district

court of September 19, 1932; and, accordingly, in aid of the

former decree of the district court, the American asked for

an injunction against Dugas specifically restraining him

from taking any steps in connection with his suit against

the New York Casualty Company, and an injunction

against the Civil Sheriff for the Parish of Orleans restrain-

ing him from executing any judgment, decree or order that

might be entered in the said suit. Nod restraining order

was sought. The matter was heard on application for a

en

10:

preliminary injunction and such injunction was issued on

February 13, 1935 (R. p. 98). Dugas filed various plead-

ings in opposition to the relief sought, which contained very

much the contentions urged by him in opposition to the

original interpleader suit (R. pp. 79-98). It being there-

' after stipulated that the matter should be submitted for

final trial on the record as made up in connection with the

application for a preliminary injunction (R. p. 100), a per-

manent injunction issued on February 25, 1935 (R. p. 101).

From such injunction Dugas appealed to the United States

Circuit Court of Appeals for the Fifth Circuit, which tri- ”

bunal, on April 9, 1936, affirmed the judgment of the‘ dis-

trict court. Dugas v. American Surety Company of New .

York, 82 Fed. (2d) 953, which opinion will be found at page

118 of the record. It is on account of the decree of the

Circuit Court of Appeals, affirming the judgment of the

District Court of February 25, 1935, that the present ap-

plication to this Court was made. :

In the Circuit Court of Appeals American had filed a

motion to dismiss Dugas’ appeal because the Civil Sheriff

of the Parish of Orleans, against whom the decree of the

lower court ran jointly, had not appealed and nothing had

been done as to the said Civil Sheriff in the way of sum-

mons or severance. The Circuit Court denied the motion

to dismiss. From copy of Transcript of Record herein, re-

received by us only on January 8th, 1937, we learn for the

first time that copy of motion to dismiss was inadvertently

omitted; but that such motion was filed and discussed by

the Court in its opinion. We have requested the Clerk of

the Circuit Court of Appeals to forward a certified copy of

the motion to the Clerk of this Court.

V1

ARGUMENT.

I.

ON MOTION TO DISMISS.

As just hereinabove stated, the American filed a

motion in the Circuit Court to dismiss Dugas’ appeal, which

motion was, by that court, denied. While no cross petition

or writ was filed in this court by the, American, we under- |

stand the practice to be that this court may, nevertheless,

consider the motion to dismiss. Langnes v. Green, 282 U.S.

531, 535-9 (1931) ; Stelos Company v. Hosiery Motor-Mend

Corporation, 295 U. S. 237, 239 (1935); Public Service

Commission v. Havemeyer, 296 U. S. 506, 509 (1936). The

_ propriety of passing on the action of the Circuit Court in

denying the motion to dismiss in the present case is accen-

tuated by the fact that the basis of the motion would seem

clearly to. be jurisdictional.

The decree of the District Court appealed from

forbade any action by Dugas toward the prosecution of his

suit in the state court against the New York Casualty Com-

pany and enjoined the Civil Sheriff for the Parish of Or-

leans from taking any action toward the carrying out of

any decree which might be rendered by the state courts in

' the said proceeding. Therefore, even if Dugas should suc- -

ceed in his appeal, the decree of the District Court, long

since final, would still remain as against the Civil Sheriff.

In Masterson v. Herndon, 10 Wallace 416 (1870),

this court announced at pages 416-17:

“It is the established doctrine of this court that in

cases at law, where the judgment is joint, all the

12

parties against whom it is rendered must join in the

writ of error; and in chancery cases, all the parties

against whom a joint decree is rendered must join

in the appeal, or they will be dismissed. There are

two reasons for this: 1. That the successful party

may be at liberty to proceed in the enforcement of

his judgment or decree against the parties who do

not desire to have it reviewed. 2. That the appel-

late tribunal shall not be required to decide a second

or third time the same question on the same record.”

This rule seems first to have been laid down in Wil-

liams v. the President, Directors and Company of the Bank

of the United States, 11 Wheaton 414 (1826), in which the

court spoke through Mr. Chief Justice Marshall. In 1833

the same court, again through the Chief Justice, applied

the same rule to a chancery case in Owings v. Kincannon,

7 Peter's 399. Since that time the current of jurisprudence

has proceeded unbroken. ~ - >

The Heirs of Wilson v. The Life and Fire Ins.

Co. of New York, 12 Peters 140, (1838).

Forgay v. Conrad, 6 Howard 201, (1848).

Smyth v. Strader, Pevine & Co., 12 Howard

327, (1851).

Brewster v. Wakefield, 22 Howard 118, (1859).

Clifton v. Sheldon, 23 Howard 481, (1859).

Mussina v. Cavazos, 6 Wallace 355, (1867). .

“The Protector”’,-11 Wallace 82, (1870).

Hampton v. Rouse, 13 Wallace 187, (1871).

Simpson v. Greeley, 20 Wallace 152, (1873).

Fiebelman v. Packard, 108 U. S. 14, (1882). .

Hanrick v. Patrick, 119 U. S. 156, (1886).

Estis v. Trabue, 128 U. S. 225, (1888):

Mason v. United States, 136 U. S. 581, (1890).

Dolan v. Jennings, 139 U. S. 385, (1891).

an,

13

Hardee v. Wilson, 146 U. S. 179, (1892).

Inglehart v. Stansbury, 151 U. S. 68, (1894).

Davis v. Mercantile Trust Company, 152 U. S.

590; (1894). |

Sipperley v. Smith, 155 U. S. 86, (1894).

Beardsley v. Arkansas & Louisiana Ry. Co.,

158 .U. S. 128, (1895).

Gilfillan v. McKee, 159 U. S. 303, (1895).

Wilson v. Kiesel, 164 U. S. 248, (1896).

Garcia v. Vela, 216 U. S. 598, (1910).

Hartford Accident, & Indemnity Co. v. Bunn,

285 U.S. 169 (1932).

There have been eases: which were held not to fall .

within the rule. For example, in Elliot v. Lombard, 292

U.S. 139 (1934), it was held that, since the decree was not

a joint one, but indeed ran primarily against only the main

defendant and secondarily, or conditionally, against the

other defendant, whose absence from the appeal was the

basis of the motion to dismiss, the main defendant could

appeal alone. It will be observed that in the instant case

the judgment.ran equally against Dugas and the Civil

Sheriff, and that here there was a definite final decree

against the Civil Sheriff, whereas. in Elliot v. Lombard the

decree against the secondary defendant was only: contin-

gent.

Much the same thing was true of Todd v. Daniel,

16 Peters, 521 (1842).

Winters v. United States, 207 U. S. 564 (1908) is

readily distinguishable, for there the contention was that

certain defendants, against whom a decree pro confesso

had been taken, were necessary parties to an appeal. The

14

controversy was-as to various pieces of property, right or

title to which was claimed by different defendants ; and the

court considered that there was no common interest so as

to make the decree in truth a joint. one.

_ The facts of Basket v. Hassell, 107 U. S. 602 (1882)

appear so different from ‘the facts in the present case as

to make it inapplicable.

City Bank v. Hunter, 129 U.S. 557 (1889) clearly

‘involved a decree that was in no sense joint.

In Amadeo v. Northern Assurance Company, 201

U.S. 194 (1906), it was held that a motion to dismiss should

not prevail where the omitted parties were shown to have

assigned all their right, title and interest in the controversy

and thus to have no possible concern with its outcome.

While here the Civil Sheriff has no pecuniary in- -

terest in the outcome of this litigation, the fact is that it is

only through him that any decree in the state court, in

favor of Dugas, could be enforced, and there is a final

judgment forbidding the said Civil Sheriff from taking

-action to enforce any decree that might be rendered in the

state courts in favor of Dugas. We are by no means sure.

that if the injunction issued by the District Court had run

_ against the Civil Sheriff only, it would not have been just

as effectual in affording protection to American.

We believe that the motion to dismiss the appeal

was good and that this court should dispose of the con-

troversy by so holding.

Es. ¢

15

II.

ON THE MERITS.

Petitioner has filed, in connection with his petition

in this court, six separate specifications of error, and these

we shall now ‘deal with, in order; but we fear that it will

be very difficult to make a complete separate argument on

each point without great repetition.

Specification of Error Number One.

This specification denies that the supplemental pro-

ceedings in the interpleader suit were ancillary to the orig-

inal interpleader suit.

The sole and only basis on which Dugas filed suit in

the Civil District Court for the Parish of Orleans against

the American and obtained judgment therein against, it, .

was the obligation of the said surety company embodied

- in its qualifying bond given for account of the Lumbermen’s

Reciprocal Association. The limit of that bond being

_ Twenty Thousand Dollars ($20,000.00), the American filed

its interpleader suit in the United States District Court for

the Eastern District of Louisiana. That suit had for its

sole and only purpose the holding of the American’s lia-

bility on account of its said qualifying bond down to the

| amount of the penalty thereof, or $20,000.00. As to the

claim of Dugas, it-expressly set forth, in Article 5 of the

said petition, the facts as to Dugas’ having obtained a

judgment against. it and its having appealed therefrom to

the Court of Appeal for the Parish of Orleans. Conse-

- quently, in so far as Dugas was concerned, that judgment

and that appeal were definitely involved in the suit. The

16

plea of estoppel filed by Dugas in the said interpleader suit,

in which he asked that the bill of interpleader be dismissed

as to him, explicitly set up the judgment obtained by him

in the state court, the appeal therefrom by the American

and the giving, in connection with such appeal, of the ap-

peal bond signed by the New York Casualty Company as

surety. Dugas even attached a copy of the said appeal

bond to his said plea of estoppel. His answer in the inter-

pleader suit reaverred the facts as to the judgment of the

Civil District Court for the Parish of Orleans, the appeal

by the American and the furnishing of the appeal bond,

copy of which was likewise attached to the said answer as

a part thereof. The very purpose of Dugas’ answer was to

avoid being injected into the interpleader suit. It thus

appears that, as to Dugas, the issue presented in the inter-

pleader suit was whether or not the fact that he had ob-

tained a judgment in the state court, from which the Amer-

ican had appealed and furnished a surety bond in connec-

tion with such appeal, precluded the American from im-

pleading him in the interpleader suit. The decree of Sep-

tember 19th, 1932, in said interpleader suit, distinctly

resolved those issues in favor of the American and against

Dugas. That decree is final and no appeal therefrom was

attempted by Dugas or anyone else. Furthermore, we sub-

mit that Dugas, in effect, acquiesced in the decree when he

stipulated that the subsequent distributional report of the

special master should immediately be confirmed by the

court without waiting the usual twenty day delay.

The clear purpose of the interpleader suit and the

clear effect of the decree therein was to hold that, by the

payment into the registry of the federal district court of -

could not proceed against the American, would be to defeat

- Any consideration or discussion of the matter must be with

ne So

17

the full amount of the qualifying bond, the American had

discharged its full duty to all of the defendants in the said

interpleader suit, of whom Dugas was one; and the pur-

pose and effect of the injunction was to prevent the de-

fendants, including Dugas, from instituting or prosecuting

in any state court, or in any other federal court, any suit

or claim against the American growing out of or based on

its said qualifying bond. We submit that the decree was

intended to give and did give the American a full discharge

and acquittance, in so far as concerned Dugas’ suit against

it in the state court; and the injunctive part of the decree

was intended to prevent and did prevent Dugas from taking

any steps to prosecute or attempt to prosecute the saidSuit.

To say that Dugas could, by indirection, proceed

against the New York Casualty Company, the surety on

the appeal bond of the American, while conceding that he

the very purpose of the decree of the Federal Court.

The United States District Court for the Eastern

District of Louisiana acquired and exercised jurisdiction

of this controversy in connection with the interpleader suit.

The decree therein of September 19, 1932, upholding that -

jurisdiction as to all parties, including Dugas, and resolv-

ing the-issues presented by Dugas and the other parties

thereto, is not before this court for review and is beyond |

any question a final judgment binding on all parties thereto.

full realization of this fact as a premise.

EERO a Shae RES BAD AR ina ten er ee

18

The necessary effect of the suit subsequently brought

in the State Court by Dugas against the New York Cas-

ualty Company as surety on. the appeal bond of the Ameri-

can was to deal with the subject matter of what had already

the outstanding permanent injunction of that tribunal.

If, therefore, there was any doubt or uncertainty as to the

interpretation or effectiveness of the relief granted by the

federal court, it was within the power of that court to

effectuate its previous decree by entering any additional

decree necessary to protect its jurisdiction and to carry out

the underlying purpose of the decree.

In discussing the question of a supplemental bill in

aid of a former decree, this court said, in Root v. Wool-

worth, 150 U. S. 401 (1893), beginning at page 410:

“Tf the bill in the present case could be properly con-

sidered as an ejectment bill, the objection taken

thereto by the defendant would be fatal to the pro-

ceeding; but instead of being a bill of this character

it is clearly a supplemental and ancillary bill, such

as the court had jurisdiction to entertain. Shields v.

Thomas, 18 How. 253, 262; Thompson v. Maxwell,

95 U.S. 391, 399; Story’s Eq. Plead., Sections 335,

338, 339, 429.

“Tt is well settled that a court of equity has juris-

diction to carry into effect its own orders, decrees,

and judgments, which remain unreversed, when the

subject-matter and the parties are the same in both

proceedings. The general rule upon the subject is

thus stated in Story’s Equity Pleading (9th ed.),

Sec. 338:

‘A supplemental bill may also be filed, as well

after as before a decree; and the bill, if after a

decree, may be either in aid of the decree, that it

been adjudicated by the federal court and was covered by

19

may be carried fully into execution; or that proper

directions may be given upon some matter omitted

in the original bill, or not put in issue by it, or by

the defence made to it; or to bring forward par-

ties before the.court, or it may be used to impeach

the decree, which is the peculiar case of a supple-

mental bill, in the nature of a bill of review, of

which we shall treat hereafter.. But where a sup-

plemental bill is brought in aid of a decree, it is

merely to farry out and to give fuller effect to

that decree, and not to obtain relief of a different

kind on a different principle; the latter being the

province of a supplementary bill in the nature of

_ a bill of review, which cannot be filed without the

leave of the court.’

“Under this principle Morton could undoubtedly

have brought the bill to carry into effect the decree

rendered in his favor against Root, and it is equally

clear that his assignee, or privy in estate has a right

to the same relief that Morton could have asserted.

On this subject it is stated in Story’s Equity Plead-

ing, Section 429: ‘Sometimes such a bill is exhibited

by a person who was not a party, or who does not

claim under any party to the original decree ; but

~who claims in a similar interest, or who is unable

to entertain the determination of his own rights,

till the decree is carried into execution. Or it may

be brought by or against any person claiming as as-

signee of a party to the decree.’’ The appellee in the

present case occupies that position, and he should

not, any more than Morton, to Whose rights he has

succeeded, be put to the necessity of instituting an

original or independent suit against Root, and re-

litigate the same questions which wete involved in

the former proceeding.

“The jurisdiction of courts of equity to interfere

and effectuate their own decrees by injunctions or

writs of assistance in order to avoid the relitigation

of questions once settled between the same parties,

20

is well settled. Story’s Eq. Jur. Sec. 959; Kershaw

v. Thompson, 4 Johns. Ch. 609, 612; Schenck v. Con-

over, 13 N. J. Eq. (2 Beasley) 220; Buffum’s case,

13 N. H. 14; Shepherd v. Towgood, Tur. & Rus. 379;

Davis v. Bluck, 6 Beav. 393. In Kershaw v. Thomp-

son, the authorities are fully reviewed by Chancellor

Kent, and need not be reexamined here.”

In the earlier case of Thompson v. Maxwell, 95 U.S.

391, (1877), we find, beginning at page 399:

“Tested, therefore, by any law of procedure which

may be invoked in its support, the bill in this case,

considered as a bill of review, seeking to reverse,

modify, and reconstruct the decree of September,

1866, cannot be sustained. Nevertheless, the gen-

eral purpose which it evidently had in view—the

quieting of the title to the land in question—is one

towards which a court of equity is always liberally

disposed, as tending to promote the peace of society

and the security of property. And if, instead of

seeking to reverse the decree of September, 1866

(which, for like reasons of public policy, as appli-

cable to the security of judgments that have passed

into rem adjudicatam, is not allowable), the bill had

‘sought to carry that decree more effectually into

execution, it would have been free from legal objec-

tions, and equally conducive to the object in view.

Bills for the purpose named are well known in equity

proceedings. Lord Redesdale says: |

‘Sometimes, from the neglect of parties, or some —

other cause, it becomes impossible to carry a de-

cree into execution without the further.decree of

the court. This happens, generally, in cases where

parties having neglected to proceed upon the de-

cree, their rights under it become so embarrased

by-a variety of subsequent events that it is neces-

sary to have the decree of the court to settle and

ascertain them. Sometimes such a bill is exhibited

by a person who was not a party to the original

+

21

decree, but claims a similar interest, or is unable

to obtain the determination of his own right till

the decree is carried into execution. Or it may be

brought by or against a person claiming as as-

signee of a party to the decree. The court in these

cases in general only enforces, and does not vary,

the decree; but on circumstances it has sometimes

considered the directions and varied them in case

of mistake; and it has even on circumstances re-

fused to enforce the decree; though in other cases

the court, and the House of Lords upon an appeal,

seem to have considered that the law of the decree

‘ought not to be examined on a bil! to carry it into

execution.’ Redesdale’s Treatise, 95, 96.

“It seems to us that the remedy here described by

such high authority is applicable to the case at bar.

The decree of September, 1866, has never been car-

ried into effect by any act done. since it was made.

It directed that Maxwell should. pay the money

stipulated for by the compromise, and that the de-

fendant should“execute deeds of conveyance. But

the parties seem to have assumed that their previous

acts performed in May, 1866,.were a sufficient com-

gliance with the directions of the decree. Yet the

decree does not take notice of this fact.

“Now, in order to execute this decree, or to deter-

mine whether it has or has not been substantially

executed, and to determine and declare the effect

of such execution upon the rights of all concerned,

and thus remove any cloud from the title arising

from the imperfection of. the proceedings, it was

perfectly competent for the parties to file a bill con-

ceived and constructed to that end. The bill in this

case, as originally filed, before it was conyerted by

amendment into a bill of review, and abating the

allegations of error in the original ‘decree, approxi-

mated to the character of such a bill as might have

been sustained. The proofs show a case which, in-

our judgment, supports the conclusions of the de-

22 P

cree, to the effect that the terms of compromise made

by the adult parties to the suit (including the

mother and guardian of the infant heirs of Alfred

Bent) were advantageous to the said infants, and

were so considered and accepted by the court in their

behalf. But, so far as the present decree undertook

to reverse and ‘modify the decree of September,

1866,, we think it is clearly erroneous. Still, al-

‘though we feel obligated to reverse the present de-

cree, we’ doynot think that the bill should be abso-

lutely dismigsed. And, as the whole question be-

tween the parties has been fully litigated on the

proofs, it would be unreasonable to require that

these should be taken over again.”

Wilson v. Alexander, 276 Fed. 875 (1921), a de-

cision of the Circuit Court of Appeals for the Fifth Circuit,

grew out of a bill filed in the federal court in Texas assail-

ing the validity of a certain bond issue and making all par-

ties at interest defendants. Wilson, the holder of the bonds,

filed a cross bill seeking a foreclosure under the deed of

trust. At such foreclosure the property was bought in by

Wilson. Some seven years later Alexander, who had

pledged the bonds to Wilson, brought a suit in the state |

courts in Texas to obtain possession of the ‘property, Alex-

ander having been a party to the original suit in the fed-

eral court. What then happened was set out as follows

at page 878 of the opinion:

“Wilson thereupon filed, in the United States Dis-

trict Court for the Northern District of Texas, a

bill, styled a supplemental cross-bill and bill of re-

‘vivor, entitled in the said cause of McCornick &

- Co., Bankers, v. Texas Loan & Trust Company, et

-\ al. reciting the former proceedings in said cause

and the decree entered therein, alleging that by said

decree it was adjudged that Alexander was fore-'

x

23

closed from asserting any ownership of, claim to, or

interest in said property, or any part thereof, and

that the deed made to said Wilson by the Texas Loan

& Trust Company was in satisfaction of said decree

in said cause. He prayed an injunction against the

prosecution of so much of said state court suit as -

attempted to disregard or overthrow the decree in

said cause above recited, and that said decree be

construed and enforced, so as to forever bar Alex-

ander from in any wise asserting any ownership of,

claim to, or interest in s&id property, or any part

thereof, or from asserting in said state court, or

otherwise, that he has any claim thereto.”

The district court granted, only to a limited extent, the

relief sought by the bill. The Circuit Court of Appeals af-

firmed the judgment, in so far as it upheld the bill and

reversed it in so far as it failed to uphold it, stating at

pages 879-880: : :

“Tf it be true that the proceeding filed by Alexander

in the state-court attacks, in a substantial respect,

the effect of the decree rendered in the United States

court on June 7, 1912, there can be no doubt of the

jurisdiction of the United States court to entertain

proceedings to construe and give full effect to its

decree, and to protect one holding under’a deed

made in accordance therewith. A case of such a

character is not affected by Judicial Code, Sec. 265

(Rev. St. Sec. 720), prohibiting the enjoining by a —

United States court of a proceeding in a state court

except under a law relating to proceedings in bank-

ruptcy., In such case the United States court is

protecting its previously acquired jurisdiction, which

‘has resulted in a decree giving rights which are at-

tacked by subsequent proceedings brought in a state

court.

“A striking illustration of this is afforded by the

case of Gunter, Attorney General, etc., v. Atlantic

Coast Line, 200 U. S. 278, 26 Sup. Ct. 252, 50 L.

24

Kd. 477. In a former suit, brought by parties in

privity with the Atlantic Coast Line Railway, a

decree ‘was rendered adjudging that a railroad had

a contract with the state exempting it from certain

taxation. The state had become a party to said suit.

For at least 25 years thereafter no further attempt

was made to tax the property so declared exempt.

Thereafter another attempt was made, and suits to

collect such taxes were instituted in the state courts.

Thereupon the defendant in said state court suits

began proceedings in the United States circuit court

for the District of South Carolina, filing a bill as

ancillary to the former case, terminated for more

than 25 years, setting up that the decree therein was

res judicata as to the existence of the tax exemption,

that the suits in the state courts sought to relitigate

said question, and prayed an injunction. After

holding that the state of South Carolina was a party

to the original suit in the United States court, the

court held an injunction would properly issue to

enjoin the further progress of the suits in the state

courts, and that in such a case section 720 of the

Revised Statutes did not apply. Gunter v. Atlantic

Coast Line, 200 U. 8. 2738, 292, 26 Sup. Ct. 252, 50

L. Ed. 477.”

_As to any suggestion that the supplemental bill

herein should have been denied because not filed at the same

term of court within which the original interpleader decree

was. entered, we cite McCutchen v. Union Trust Company,

271 Fed. 586 (1921) (writ denied, 256 U. S. 699) ; decided

by the Circuit Court of Appeals for the — Circuit, in

which the court said at page 593:

“The fact that the terms of court at which the fore-

closure decree and the order for the receivers’ sale

were entered had expired is not important. The de-

cision of the state courts, giving to the order an ef-

fect not contemplated when it was made, and in- |

25

volving also the foreclosure decree according to

Hardin’s contention, occurred subsequently.. It was

proper to bring the subsequent situation so created

to the attention of the court below by supplemental

bill.” :

Following a federal court decision in a certain mat-

ter, two suits were brought in the state courts and two in

the federal courts seeking to relitigate certain points in-

volving the subject matter of a previously decided suit in

the federal court. Thereupon, a supplemental bill was

filed to enjoin the plaintiffs in these new suits. In this

matter, oterling v. Gredig, 5 Fed. Supp. 329, the relief

sought was granted. The following language was used

~ at page 332:

“Complainants seek, in this suit, to enforce and ef-

fectuate the decree. They allege that respondents,

by the prosecution of the pending suits, are seeking

to render the decree void and ineffectual, and to un-

settle and annul what has been there settled. And

that the filing and prosecution of said suits have,

and will continue to have, the effect of clouding the

title of the trustees and the city to the properties;

of embarrassing, hindering, delaying and impeding

them in the proper administration thereof; and that

said suits are vexing and harassing to complainants,

and are subjecting them, and -will continue to sub-

ject them, to the necessity of expending considerable

sums of money in the payment of costs, expenses and

attorneys’ fees in and about the defense -of said

suits; will compel complainants to submit to a mul-

tiplicity of suits to therein relitigate what has al-

ready been litigated, adjudicated, and settled in their

favor by such decree, and that complainants are

being deprived, and will be déprived, of the practical

benefit and value of the decree in their favor, and

deprived of the protection and eriforcement of the

right, title, and interest acquired by such decree.

26

“These allegations I find to be true.

“Tt follows that complainants are entitled to the

relief asked.”

| In Local Loan Company v. Hunt, 292 U. S. 234

( 1934), Hunt borrowed Three Hundred Dollars from the

Loan Company, and, as security, executed an assignment

of wages to be earned. Later Hunt filed a voluntary peti-

tion in bankruptcy, was adjudged a bankrupt and order was

entered discharging him from all provable debts and claims.

Thereafter, the Loan Company brought suit in the state

courts against Hunt’s employer to enforce the assignment

in regard to wages earned after adjudication. Thereupon

Hunt went into the bankruptcy court and asked that the

Loan Company be enjoined ‘rom prosecuting or attempt-

ing to enforce its claim under. the wage assignment. The

bankruptcy court entered a decree as ae In affirming

it, this court said.at page 239:

“The pleading by which respondent invoked the juris-

diction of the bankruptcy court ig the present case

is in substance and effect a supplemental and an-

cillary bill in equity, in aid of and to effectuate the

adjudication and order made by the same court.

That a federal court of equity has jurisdiction of a

bill ancillary to an original case or proceeding in

the same court, whether at law or in equity, to secure

or preserve the fruits and advantages of a judg-

ment or decree rendered therein, is well settled.

Root v. Woolworth, 150 U. S. 401,.410-412; Julian

v. Central Trust Co., 193 U. S. 98, 112-114; River-

dale Mills v. Manufacturing Co., 198 U. S. 188, 194

et .eq.; Freeman v. Howe, 24 How. 450, 460. And

this, irrespective of whether the court would have

_ jurisdiction if the proceeding were an original one.

27

The proceeding being ancillary and dependent, the

jurisdiction of the court follows that of the original

cause, and may be maintained without regard to the

. citizenship of the parties or the amount involved,

’ and notwithstanding the provisions of Sec. 265 of

the Judicial Code (R. S. Sec. 720), U.S. C., Title 28,

Sec. 379. Julian v. Central Trust Co., supra, 112;

Dietzsch v. Huidekopef, 103 U. S. 494, 497; Root v.

Woolworth, supra, 413; M’Donald v. Seligman, 81

Fed. 753; St. Louis, I. M. & S. Ry. Co. v. Bellamy,

211 Fed. 172, 175-177; Brun v. Mann, 151 Fed. 145,

150.”

Other decisions which support our contentions are:

Shields v. Thomas, 18 Howard, 253 (1855);

Healey Ice Machine Company v. Green, 184

Fed. 515 (CC. N. C. 1911);

Osage Oil & Refining Co. v. Continental Oil

Co., 34 Fed. (2) 585 (C, C. A. 10, 1929);

Ross v. Miller, 252 Fed. 697 (C. C. A. 4, 1918);

McCabe v, Guaranty Trust Company, 243 Fed.

845 (C.C. A. 2, 1917);

Lamb v. Cramer, 285 U.S. 217 (19382);

Lamb v. Schmitt, 285 U. S. 222 (19382);

Sand Springs Home v. Title Guarantee & Trust

Co., 16 Fed. (2d) 917 (C.C. A. 8, 1926);

Baush Machine Tool Company v. Aluminum

Company of America, 63 Fed. (2d) 778 (C.

C. A. 2, 1933);

Hickey v. Johnson, 9 Fed. (2d) 498 (C.C. A. 8,

1925).

The propriety of a supplemental bill in aid of a

previous judgment, such as herein filed, is well recognized

by the text writers. Story’s Equity Pleadings, Ninth Edi-

tion, Chapter 8, pages 292, et seq., deals with this subject

28

and we find ia Section 336, beginning at page ZYY, the |

following: | |

“Tn the next place, when new events or new matters

have occurred since the filing of the bill, a supple-

mental bill is, in many cases, the proper mode of

bringing them before the court; for, generally, such

facts cannot be introduced by way of amendment

to the bill. But, here, we are to understand, that

such new events, or new matters, do not change the ~

rights or interests of the parties before the court

(for then, properly speaking, the bill is not simply

a supplemental bill), but they merely refer to and

support the rights and interests already in the bill.

A supplemental bill may also be brought, not-only to

insist upon the relief already prayed for in the

original bill; but upon other relief different from

that which was prayed for by the original bill, where

facts which have since occurred may require it.

Thus, if pending a bill to restrain proceedings at

law upon a bill of exchange, the holder should obtain

a judgment in the suit at law, the plaintiff in equity

may file a supplemental bill, stating the facts, and

praying for repayment and an indemnity.”

2 Hughes Federal Practice, Section 1226, page 394,

reads:

“The function of a supplemental bill in aid of a

decree is merely to give fuller effect, or carry out .

that decree, and not to obtain relief of a different

kind on a different principle. As assignee, or privy

in estate, has the same right to relief as the one in

whose favor the decree was made. A federal court,

having entered a decree removing a cloud from the

title to a parcel of real estate and declaring the

title vested in A in interest and estate, has juris-

diction of a supplemental and ancillary bill brought

by A’s successor to carry that decree into effect.”

See also Cyclopedia of Federal Procedure, Vol. 4,

Section 1157, pages 336, et seq.

29

It seems to us that what we did was very much

along the lines contemplated by Equity Rules 34 and 35,

which read as follows:

“Rule 34—SUPPLEMENTAL PLEADING.—Upon

application of either party the court or judge, may,

upon reasonable notice and such terms as are just,

permit him to file and serve a supplemental plead-

ing, alleging material facts occurring after his for-

mer pleading, or of which he was ignorant when it

was made, including the judgment or decree of a

competent court rendered after the commencement

of the suit determining the matters -in controversy

or a part thereof.” :

“Rule 35. BILLS OF REVIVOR AND SUPPLE-

MENTAL BILLS—FORM—It shall not be neces--

sary in any bill of revivor or supplemental bill to set

forth any of the statements in the original suit, un-

less the special circumstances of the case may re-

quire it.”

For the foregoing reasons, we believe that the Cir-

cuit Court of Appeals and the District Court were right in

‘holding that the supplemental proceedings herein were an-

cillary to the original interpleader suit and were within

the jurisdiction of the District Court.

Specification of Error Number Two.

This assignment raises the contention that the right

established in favor of the American by the original.inter- -

pleader decree was not inconsistent with Dugas’ right to

enforce, against the New York Casualty Company as surety

on the state court of appeal bond, his judgment against the

American on his claim for workman’s compensation.

30

o

We repeat that the only basis of any claim which

- Dugas could assert against the American was the obliga- .

tion embodied in its qualifying bond. It was that very

obligation which was sought to be determined and was

determined by the United States District Court in its de- -

cree in the interpleader suit; also, is it clear that said de-

cree was entered in the face of Dugas’ contention that his

having obtained a prior judgment in the state court and

the American having appealed therefrom, prevented his

being impleaded in,the Federal Court. The Federal Court,

by its decree, concluded that the American had discharged

any. and all obligations due under its qualifying bond. That

qualifying bond was the sole basis of the judgment in the

state court which was, therefore, satisfied. To permit a

recovery against the surety on the appeal bond would de-

feat the very purpose of the decree in the interpleader suit,

as it would necessarily mean that the American would have

to reimburse its surety, and, thus, in a left-handed way,

be forced to pay out more than the amount of its qualify-

ing bond.

The Louisiana Civil Code expressly provides that

the surety who pays the debt of his principal is entitled to

reimbursement from him. Article 3052 of the Louisiana

Civil Code reads: :

“Recourse of Surety Against Principal Debtor. The

surety who has paid the debt, has his remedy against

the principal debtor, whether the surety has been

given with or without the knowledge of the debtor.

“This remedy takes place both for the principal and

interest, and for the costs which the surety may

have been sentenced to pay; but with regard to the

costs, the remedy of the surety begins only from the

31

day he has given notice to the principal debtor, that

‘a suit was commenced against him.”

Article 3058 provides:

“Subrogation of Surety. With regard to that rem-

edy, the surety has the same right of action and the

same privilege of subrogation, which the law grants

to codebtors in solido.” |

The reference in the article last quoted to the rights of

codebtors in solido is to Article 2161, which, in so far as

relevant, provides:

“Subrogation takes place of right * * * for the

benefit of him who, being bound with others, or for

others, for the payment of the debt, had an interest

in discharging it.”

_ Two, among many, Louisiana decisions recognizing

the right thus given to the surety against his principal are

Brown v. Staples; 138 La. 602, 608 (1915), and Martel v.

Rovira, 164 La. 1099, 1102-3 (1928). Asa matter of fact,

the same rule has been generally recognized: Aetna Life

Insurance Company v. Middleport, 124 U. S. 534 (1888);

Henningsen v. United States Fidelity and Guaranty Com-

pany, 208 U.S. 404 (1908). The Aetna ease is particularly

appropriate, in so far as the subrogation feature is con-

cerned, because of the statement in it that the doctrine of

subrogation is derived from the civil law and that, there-

fore, the Louisiana cases are especially applicable.

Specification of Error Number Three.

This assignment reads:

“That the said Circuit Court of Appeals erred in

holding that the appeal bond was an incident of the

suit brought by petitioner against respondent for

32

the full amount of his claim and was a means of _

effecting the enforcement of that claim.”

When Dugas obtained a judgment against the

American in the State Court and the American elected to

appeal from such judgment, -it was necessary under the

law of Louisiana to furnish an appeal bond. We do not

see how it can be said that the bond so given was not an

incident of the suit in the State Court. The purpose of the

bond was to guarantee to Dugas the appellee, that, if stc-

cessful in the appellate court, he would collect his judg-

ment. However, the surety agreed to be liable only in the

‘event the appellant did not respond; and since it has been

determined that the appellant has in the interpleader pro-

ceedings in the federal court discharged its full duty to

Dugas it must logically follow that the surety on the appeal

bond given in the State Court has no further liability.

When an unsuccessful litigant seeks a review by an appel-

. late court of the judgment-of the trial court, the appeal

bond he gives is the price he must pay for preventing the

judgment creditor from executing pending determination

of the appeal (in the case, as here, of an appeal with stay)

and getting the review. The appeal bond is in no sense a

separate or independent undertaking, but merely an inci-

dent-in the suit. |

‘Specification of: Error Number Four.

This assignment complains of the action-of the Cir-

cuit Court in holding that the liability under the appeal

bond was a liability on account of the qualifying bond, and

_ that it came within the scope of the decree discharging re-

spondent from all liability on the qualifying bond.

= ear e - re « ee ee er eee) rere a)

Fw} Sus ea :

33

Considering that the sole basis of Dugas’ judgment

in the state court against the American was the qualifying

bond of the American, it seems not unnatural to recognize

that fact. What seems to be running through counsel’s

mind is the idea that once a-judgment was obtained in the

t state court against the American, the claim under the quali-

fying bond passed out of the picture. It must not, how-

ever, be overlooked, that if this was true, Dugas had no

right to any recovery in the interpleader suit, which cer-

tainly related only to the qualifying bond. Clearly, the ’

District Court in its decree in the interpleader suit denied

this very contention of Dugas and held that the judgment

he had obtained in the state court was cognizable in the

interpleader suit. In this connection it is not to be over-

looked that the giving, by the American, of an appeal bond

in the state courts was strongly stressed in the interpleader

suit, and that any contentions by Dugas in regard thereto

were denied. The present matter does not grow out of an

appeal from the original decree in the interpleader suit.

That decree -is final and cannot now be reviewed. The

question is whether, in spite of the finality of that decree,

its purpose is to be defeated by a subsequent suit in the

state court against the surety on the appeal bond of the

American. The District Court held that, in order to pro-

tect the enforcement of its original decree in the inter-

pleader suit, it was warranted in enjoining Dugas from

frittering away that decree by attempting to hold the surety

on the appeal bond. The Circuit Court of Appeals was,

most assuredly, correct in upholding the action of the Dis-

trict Court in this regard.

se

34

_ Specification of Sever Number Five.

This assignment challenges the holding of the Cir-

cuit Court of Appeals, that the proceeding against the

surety on the appeal bond, was an indirect method of pro-

ceeding against the American on its qualifying bond.

- Indubitably, the sole-basis of liability asserted

against the American was the statutory qualifying bond

executed by it, and that liability was, therefore, the founda-,

tion of the judgment of the state court against the Ameri- i

can in connection with ‘the appeal from which the appeal

bond of the New York Casualty Company was given. If,

therefore, the New York Casualty Company, the surety on

the said appeal bond, be made to pay Dugas, the New York

Casualty Company will look to the American for protec-

tion, and, so the-American will have to reimburse the New

York Casualty Company. If this is not an indirect method

of proceeding, by Dugas, against the American, it is dif-_

"ficult to know what.would be. It would be a doing, by

indirection,-of the very thing that the original injunctive

decree of the Federal District Court in the: interpleader

suit was intended to prevent.

‘Specification of . Error Number Six.

This assignment raises the point that the Circuit

Court of Appeals erred in holding that the. decree of the

district court did not go beyond giving due effect to the

final. decree in. the interpleader suit. .

The underlying proposition has, necessarily, already

been argued in connection with discussion of. the other as- -

signments and we shall, therefore, deal with it very briefiy. ae

J

Saale

35

The purpose and effect of the decree of the district

court of September 19, 1932, was to recognize the fact that

the American had discharged its full duty in connection

with its qualifying bond and to enjoin the various defend-

ants, including Dugas, from taking any other action to

realize on any claim against that bond. Obviously, the

judgment which Dugas had in the state court against the

American grew out of and was based solely on the said

qualifying bond. To permit Dugas to enforce the said

judgment, by proceeding against the New York Casualty

Company, the surety on the appeal bond, while conceding

that he cannot proceed against the American, would be an °

indirect method of holding the American, for the simple

reason that the New York Casualty Company would have

an absolute right to reimbursement by the American. Be-

sides, to permit a recovery against the New York Casualty

Company would, we submit, be against equity and good

conscience and would, most assuredly, be to set at naught

the underlying purpose of.the decree of the Federal District

Court of September 19, 1932. |

CONCLUSION.

Stripped of immaterial details, the bare contention

of the petitioner herein is that he should be allowed to col-

lect from the New York Casualty Company his claim

against the American, concededly based solely on the quali- -

fying bond given by it for account of the Lumbermen’s

Reciprocal Association, which said claim was recognized by

the judgment of the Civil District Court for the Parish of

Orleans, from which judgment the Ameritan appealed to

the Court of Appeal for the Parish of Orleans, and fur-

36

nished an appeal bond signed’ by the New York Casualty

Company, as surety. This contention loses sight of the

fact that, after the taking of the said appeal, the American

deposited the full amount of its said qualifying bond in the

registry of the United States District Court for the East-

ern District of Louisiana and interpleaded the various

claimants against the said bond, including Dugas, who

vigorously resisted the attempt to interplead him on account

of the judgment which he had already obtained in the state

courts and the appeal bond therein given by the American.

The United States District Court held that Dugas was

properly interpleaded and adjudicated on his claim against

the American growing out of its said qualifying bond, defi-

nitely holding that the American had, in the interpleader

proceedings, completely discharged its full liability to the

various claimants, including Dugas, and enjoined them

from taking any steps to assert or prosecute their claims

elsewhere against the American. If Dugas was dissatisfied

with the judgment of the Federal Court of September 19th,

1932, he had the right to appeal therefrom. Not only was

no such appeal taken, but, by stipulating that the later dis-

tributive decree of April 20, 1933, ‘should be entered with-

out the usual delays, Dugas acquiesced in the decision of the

Federal Court which was, of course, adverse to his conten-

tions. There being no further claim on the part of Dugas

against the American, he should not be allowed to assert a

claim against the surety on the appeal bond of the American

in the State Court, which appeal bond was but an incident

to his main claim against the American, which was satis-

fied and discharged by the interpleader proceedings in the

Federal Court. Therefore, the Federal District Court was

37

right in enjoining Dugas from attempting to collect from

the New York Casualty Company and the Circuit Court of

Appeals was right, on the merits, in affirming that judg-

ment. .

In conclusion, we ask that the case be remanded to

the Circuit Court with instructions to dismiss the appeal,

and in the alternative we submit the judgment should be

affirmed. ;

Respectfully submitted,

VICTOR LEOVY,

HENRY H. CHAFFE,

HARRY McCALL,

JAS. HY. BRUNS,

Attorneys for American Surety Company —

of New York, Respondent.