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ASSOCIATED CONSTRUCTORS v. PAONESSA

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District Court of Appeal, Second District, Division 1, California.

ASSOCIATED CONSTRUCTORS, Inc., v. PAONESSA et al.*

Civ. 11451

Decided: July 19, 1938

Edward Flam, of Los Angeles, for appellants. Ralph D. Paonessa and Hal Hughes, both of Los Angeles (G. Vernon Brumbaugh, of Los Angeles, of counsel), for respondents.

Respondents recovered judgment upon a cross-complaint against Associated Constructors, Inc., plaintiff in a superior court action, in the sum of $2,500, plus costs. Thereafter Associated Constructors, Inc., appealed from such judgment and appellants Fisch offered themselves as sureties upon an undertaking to stay execution pending the outcome of the appeal. Respondents objected to the sufficiency of the sureties and to the form of the undertaking on appeal, and on November 15, 1933, their objections were sustained by the court. On the same day appellants filed another undertaking in proper form which was also excepted to by respondents and the matter set for hearing on November 22, 1933. Appellants attempted to justify as such sureties but failed to do so, and the hearing was continued until 2 o'clock of that day and the execution stayed until that hour. At that time a new undertaking to stay execution was filed in which the Coast Surety Corporation, a corporation then qualified to execute surety bonds, was named as surety. The surety to this last-named undertaking justified, was accepted by respondents and the undertaking filed staying execution pending said appeal.

On December 16, 1935, respondents filed affidavit and notice of motion for an order requiring a new undertaking in the place and stead of the undertaking of the Coast Surety Corporation on the ground that said company had become insolvent and was in the hands of the state insurance commissioner, and that the rights of the said judgment creditors would be prejudiced unless a further undertaking was had. Appellants were not made parties to this proceeding, and notice of said motion was not served upon them. However, the record herein shows that the matter was placed “off calendar” on April 2, 1936.

Subsequently, the judgment of the superior court was affirmed upon appeal, and on May 26, 1936, an ex parte motion for summary judgment was made by respondents against the appellants Fisch and the Coast Surety Corporation, as sureties on the two undertakings. On May 27, 1936, pursuant to said motion, judgment for the sum of $2,520, plus costs and interest, was entered against the surety company and appellants. On October 27, 1936, appellants filed notice of motion under section 473 of the Code of Civil Procedure to vacate and set aside said summary judgment on the ground that it was entered through inadvertence and was invalid and void as to them, for the reason that they failed to qualify upon the undertaking in which they were named sureties, and were not parties to the undertaking in which the Coast Surety Corporation was surety. In opposition to the motion to vacate the summary judgment, there was filed an affidavit of one of the respondents alleging that at the hearing on November 22, 1933, as to the sufficiency of appellants, “it was ascertained that the Associated Constructors, Inc., a corporation, was the alter ego of Harold Fisch. That thereafter the said Harold Fisch did procure an undertaking to stay execution upon which the Coast Surety Company was the surety.” It was further alleged that at the time of the making of application for such undertaking, the appellants Fisch did execute to the Coast Surety Corporation a trust deed upon certain real property owned by the said appellants.

From the order denying the motion to vacate the summary judgment, appellants Fisch have appealed urging (1) that the court erred in denying said motion because they cannot be considered as sureties upon the undertaking upon which they failed to justify where a subsequent undertaking by other sureties was qualified, accepted and approved; and (2) that the court erred in not holding that they were released from liability by the failure and neglect of the judgment creditors to pursue the remedies which existed against the surety company upon the subsequent undertaking, thereby losing rights which would inure to the benefit of appellants as prior sureties.

It is now settled law in this state that the failure of sureties to justify after exceptions taken to their sufficiency does not relieve them from liability upon their undertaking to stay execution pending an appeal, and they are bound by a judgment taken against them for the amount specified in said undertaking. McColgan v. Scoble, 2 Cal.2d 285, 289, 40 P.2d 483.

The cardinal rule that a surety cannot be held beyond the express terms of his contract finds expression in section 2836 of the Civil Code, and various paraphrasings of the rule are to be found in the decisions. The condition of each of the two bonds or undertakings in the instant action is identical, to-wit: that judgment may be entered against the surety upon motion of the judgment creditor, in the event the judgment debtor does not pay the judgment appealed from within thirty days after the filing of the remittitur from the appellate court in the court from which said appeal is taken.

There is nothing in the record indicating an intention that the surety company bond should supersede appellants' undertaking or that the liability of appellants terminated when the surety company's undertaking was filed. Likewise the record is silent respecting any intention to exonerate appellants of their liability on their undertaking.

Sureties, who are bound for a common principal to insure the performance of the same duty or obligation, are cosureties, although they are bound by different instruments. 50 C.J. 280; U.S. Fidelity & Guaranty Co. v. Naylor, 8 Cir., 237 F. 314; Powell v. Powell, 48 Cal. 234.

In the Powell Case, supra, action was brought against two different sureties upon two executor's bonds, one given when letters testamentary were issued and the other given subsequently pursuant to an order to sell real estate, both bonds conditioned that the executor should faithfully execute the duties of his trust. A demurrer was sustained to the complaint on the ground that several causes of action had been improperly united. The court there held that “the condition of each of the two bonds by the executor is identical; the burden of the sureties the same, and their consequent liability inter sese to contribution clear. * The sureties who are sued, * though executing separate bonds, assumed a common burden, and as being sureties on separate instruments, may be properly joined as co-defendants in the action.”

The Naylor Case, supra, at page 316, holds that “The test of cosuretyship is a common liability for the same debt or burden. This liability may arise at the same time or at different times, out of the same writing or out of many writings. A common interest and a common burden alone are required to create the relation, and to enable the cosurety who has paid more than his due proportion to claim contribution from those who have paid less than their just proportion of the common liability. ‘If several persons, or several sets of persons, become sureties for the same duty or debt, of, to, and for, the same persons, though by different instruments, at different times, and without a knowledge of the obligations of each other, they will be bound to mutual contribution.’ 2 Wait's Actions and Defenses, 297; 4 Pomeroy's Equity Juris. § 1418.”

Appellants further urge that they were exonerated by the failure of the judgment creditors to file a claim with the state insurance commissioner in connection with the liquidation of the Coast Surety Corporation and thereby enable them to participate in a possible dividend of the assets of that company. In this regard, appellants have made no showing that such claim was not filed, nor have they established that such dividend has been paid or will be paid.

The order appealed from is affirmed.

YORK, Presiding Justice.

We concur: DORAN, J.; WHITE, J.

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