Rio Grande Oil Co. v. Seaboard Surety Corp. of America

33 P.2d 887, 139 Cal. App. 164, 1934 Cal. App. LEXIS 554
CourtCalifornia Court of Appeal
DecidedJune 8, 1934
DocketCiv. No. 7847
StatusPublished
Cited by4 cases

This text of 33 P.2d 887 (Rio Grande Oil Co. v. Seaboard Surety Corp. of America) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rio Grande Oil Co. v. Seaboard Surety Corp. of America, 33 P.2d 887, 139 Cal. App. 164, 1934 Cal. App. LEXIS 554 (Cal. Ct. App. 1934).

Opinion

CONREY, P. J.

In an action against Eureka Petroleum Corporation, plaintiff filed a complaint in two counts for the several sums of $9,671.10 and $6,158.65, making a total demand of $15,829.75, besides interest. Both demands arose out of a contract of date October 18, 1927, and were for unpaid balances due for gasoline sold and delivered to the defendant under said contract. After filing the original complaint, an attachment was levied against property of the defendant. Thereupon, for the purpose of obtaining release of said attachment, the defendant herein executed an undertaking in the sum of $19,000, whereby it promised “that in ease the plaintiff recover judgment in the action, we will on demand pay to plaintiff the amount of whatever judgment may be recovered in said action, together with the percentage, interest and costs”. The plaintiff having recovered judgment in the action in the sum of $18,032.20, which judgment was not paid, plaintiff brought this action to recover on the bond. The judgment herein, from which the defendant Seaboard Surety Corporation of America appeals, is a judgment entered pursuant to an order granting a motion for judgment on the pleadings, after answer filed by the defendant.

The principal contention of appellant is that it was exonerated from the penalty of its undertaking by reason of amendments to the complaint in the original action, made after the bond was executed, whereby the liability of the surety was changed. Turner v. Fidelity & Deposit Co. of Maryland, 187 Cal. 76 [200 Pac. 959], was an action similar [166]*166to.the case at bar, where the same kind of defense was presented. After making a statement of the principal rules governing cases of this kind, including a reference to leading cases on the subject, the court said: “The weight of authority, however, seems to sustain the rule that unless the amendments are such as to substitute new or different parties, or to state a new and independent cause of action, the sureties or guarantors are bound by the judgment.

“It is generally held that where a surety whose obligation discharges from attachment the assets of the debtor upon which the attaching creditor had a right to rely for security of his claim, such surety ought not to be exempted from liability unless the obligation with reference to which he contracted has been essentially changed without his consent. Having made himself responsible for ‘any judgment recovered in the action’, it would be unduly limiting his agreement to permit him to plead successfully an amendment that did not alter the ‘nature and character’ of the original claim.” Further on in the opinion the court said: “The obligation which it was sought to enforce against the principal through the suit and judgment demanded was the payment of the liability arising under the contracts set out in the original complaint. There was no alteration • or modification of that contractual liability óf the defendant. The plaintiff was not estopped by his original complaint from making any corrections or supplying any omissions by amendment which were proper or necessary to fully set forth the liability of the defendant under the contract sued on. The surety entered upon its contract to guarantee payment of the judgment, any judgment on the cause of action, with presumptive understanding that the original complaint might be amended to cover any damages which had occurred prior to commencement of suit from a breach of the contracts which constituted the cause of action, though omitted from the original complaint. (Bierce v. Waterhouse, 219 U. S. 320 [55 L. Ed. 237, 31 Sup. Ct. 241, see, also, Rose’s U. S. Notes].)

“If the liability of the release bond had been predicated upon a judgment on the precise facts pleaded in the original cause of action, then such complaint would be the measure of the liability, but the surety contracted upon the basis of whatever judgment was obtained in the action, and it will [167]*167be presumed to have taken into consideration tbe possibility of changes by amendment in the extent and nature of the liability incident to the cause of action.” And, finally, with reference to the right of a surety to rely upon the strict terms of its contract the court said: “In this ease the Surety Company stands upon a purely technical defense, and while it is true that the rule is in its favor that it may rely upon the strict terms of its contract, there is no reason in law or equity why the same liberality of construction and interpretation of those terms should not be applied as in construing any other contract. In the matter of the obligations of corporations organized to execute surety bonds and securities as a business there is a growing disposition in the courts to hold such sureties to their obligations unless there has been some material departure from the conditions of the agreement. (21 R. C. L., p. 1160; Ann. Cas. 1912B, 1087.) ”

The law being thus clearly stated we have only to determine upon its proper application to the facts of the ease at bar. Since the judgment rendered herein is a judgment on the pleadings in a case where the complaint states a good cause of action, necessarily the judgment is based upon a decision that the answer filed by the defendant does not state a defense to the action. The theory of the defense relied upon by the defendant is that the cause of action upon which the plaintiff recovered judgment in the prior action “is not the same cause of action alleged by plaintiff in its original complaint pursuant to which this defendant filed its undertaking under release of attachment as surety for said Eureka Petroleum Corporation”. In support of this defense the answer herein sets forth the original complaint, and also the amended complaint in the former action, and alleges that the judgment in that action was rendered on said amended complaint. For the purposes of the present decision we must assume that the facts of the case are truly alleged in the answer herein; that is to say, that the judgment in the former action was based on said amended complaint, and that the defendant did not consent to nor did it have any knowledge of the filing of said amended complaint at the time of the filing thereof. The allegation in the answer, “that the judgment recovered by the plaintiff herein against the Eureka Petroleum Corporation is not the judgment which this defendant in its undertaking under[168]*168took and agreed to pay”, is a statement of a conclusion of law which may or may not be correct. It presents the very question which we are called upon to decide, and is controlled by the contents of the original complaint and the amended complaint in said former action. Thus we are called upon to examine the causes of action stated in the first complaint and compare them with the amended complaint. So far as this defense is concerned, before we can hold that the judgment against the surety on the bond should be reversed, we must first be convinced that said former judgment was founded upon a cause or causes of action essentially or substantially different from the causes of action in the first complaint or, in other words, that the amended complaint stated “a new and independent cause of action” not included in the first complaint.

On October 18, 1927, plaintiff and the Eureka Petroleum Corporation entered into a written contract for the sale by the plaintiff to said corporation of gasoline to be delivered from time to time at the agreed price of ten cents per gallon.

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Bluebook (online)
33 P.2d 887, 139 Cal. App. 164, 1934 Cal. App. LEXIS 554, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rio-grande-oil-co-v-seaboard-surety-corp-of-america-calctapp-1934.