Equitable Surety Co. v. Illinois Surety Co.

94 S.E. 882, 108 S.C. 364, 1918 S.C. LEXIS 152

• Court: Supreme Court of South Carolina
• Decided: January 22, 1918
• Docket: 9867
• Status: Published

Opinion

The opinion of the Court was delivered by

Mr. Justice Watts.

This is an appeal from an order of Judge Shipp, overruling a demurrer interposed by the appellant to the complaint of the respondent.

1, 2 The defendant by exception 1 expressly and by other exceptions inferentially takes the position that the Court had no jurisdiction over the appellant, and, therefore, really has no jurisdiction in this cause. Under section 2724, vol. I, Code of Laws, this surety company (being a foreign company, and the law would be the same if it were a domestic company) could only do' business in this' State by consent and approvál of the Governor, Insurance Commissioner and Secretary of State, provided it complied with the law of force regulating foreign insurance companies, all of which were made applicable to surety companies. Section 2675, vol. I of the Code, provides:

“All and every such foreign corporation carrying on business or owning property in this' State shall be subject to the laws of the same in like manner as corporations chartered under the laws of the State.”

Section 2674 provides for the administration of assets of foreign corporations. Section 2814 of the Code provides how the affairs of a corporation in reference to the prosecution or defending suits for the purpose of settlement of their affairs when they cease to do business in the State for the reasons therein specified. (The Reporter will report in full these sections. He will also report sections 2701 and 2705 of volume I of Code, which requires the deposit withthe insurance commissioner of a bond or approved security and the conditions of the bond and the appointment of the commissioner as its attorney to accept service, etc.)

Under the statutory law of this State the Illinois Surety Company in filing its bond with the Insurance Commissioner with'the appellant as surety complied with the law as authorized the Illinois Surety Company to do business in this State, and that business continued as long as it had outstanding policies in this State, and until all claims against the company had been settled, and that the service of the process in this case was service on the Illinois Surety Company, even though it was insolvent, and even though it had a receiver in another State. Pollock v. Association, 48 S. C. 74, 25 S. E. 977, 59 Am. St. Rep. 695. This exception is overruled.

Exception 2 is overruled.

3 The receiver is not a necessary party. Pollock v. Asso ciation, 48 S. C. 74, 25 S. E. 977, 59 Am. St. Rep. 695; Frink v. Fire Insurance Co., 90 S. C. 547, 74 S. E. 33, Ann. Cas. 1913d, 221.

Exceptions 3 and 4 are overruled.

4 The allegations of the complaint allege proper and full demand' upon both the Illinois Surety Company and the appellant. The contract of appellant by its terms and language constituted an agreement to pay any judgment entered,’ and, under the statute giving the right to a judgment creditor to bring suit on such bond, and making no provision for demand, was unnecessary, but the demurrer admits to be true the allegations of the complaint, and it alleges demand was made. Bank v. Strother, 28 S. C. 516, 6 S. E. 313; Machine Co. v. Browning, 68 S. C. 24, 46 S. E. 545.

Exception 5 is overruled.

5 Payment by the surety subrogated the surety to all the rights' and privileges of such plaintiff in a judgment or decree against the principal debtor, and to all the securites, equities, rights, remedies and priorities held by such creditor. Code of 1912, sec. 3942; Brandt on Suretyship (2d ed.), sec. 309; Muller v. Wadlington, 5 S. C. 345; Garvin v. Garvin, 27 S. C. 472, 4 S. E. 148. Whatever rights the creditors in judgment had against the bonds filed with the insurance commissioner were by virtue of the statutory laws of this State transferred to the plaintiff upon payment by it of the judgment. The judgment creditors formally and duly assigned to the plaintiff all of their rights, equities and interests under the judgment to plaintiff.

The construction asked for that the plaintiffs in the original actions were nonresidents of this State, and plaintiff could not obtain the benefit of the statutory provisions, and that the judgments were obtained in a foreign Court, to wit, the United States District Court, is untenable and narrow, and not worthy of serious consideration. One of the creditors was at the time of the contract and is now a resident of Aiken, S. C.; the judgment was obtained in the District Court of the United States sitting in Columbia. The contract of suretyship upon which the original judgment was obtained* was given to the United States government for the performance of a contract within this State, to wit, the-building of a postoffice at Aiken, S. C. It was given under the provisions of act Cong. August 13, 1894c, 280, 28 Stat. 278, as amended by act Cong. February 24, 1905c, 778, 33 Stat. 811 (U. S. Comp. St. 1916, sec. 6923), which gave to subcontractors and materialmen a right to bring suit in the name of the United States against contractors on such bonds. The same statute expressly limited the jurisdiction of such suits to the United States Court for the district and State where the contract was to be performed.

6 The United States Court was certainly a Court of competent jurisdiction in this State to dispose of the suit. Both the acts of Congress provide for lien of judgments obtained in the United States Court and when to be recorded under'State laws. The Federal statute (Act Cong. August 1, 1888c, 729, 25 Stat. 357 [U. S. Comp. St. 1916, secs. 1606, 1607]), and the State law (section 3935, vol. I, Code of Laws). This exception is overruled.

Judgment affirmed.

Messrs. Justices Hydrick, Fraser and Gage concur. Mr. Ci-iiee Justice Gary did ngtsit in this case.