Opinion
Nos. 130, 131.
February 4, 1929.
In Error to the District Court of the United States for the Southern District of New York.
Actions by the Fidelity Deposit Company of Maryland, surety on two supersedeas bonds, to recover on the indemnity agreement executed by I. Townsend Burden. Judgments were rendered for the Surety Company, and the defendant brings error. Reversed.
These litigations arose as the result of actions by Frank A. Thompson and Thomas W. Robertson against I. Townsend Burden, Claude W. Jester, George H. Hull, Jr., Stuart L. Craig, James L. Putnam, Richard S. Tobin, Charles E. Miller, and Navarro Securities Company, in the Southern District of New York, to recover from those defendants the reasonable value of certain professional services alleged to have been performed by the respective plaintiffs. The defendants in these actions appeared by separate counsel, to wit: I. Townsend Burden and James L. Putnam, by Chase Mellen; Claude W. Jester and Navarro Securities Company, by Greene Hurd; Richard S. Tobin, by Jay Candler; George H. Hull, Jr., by Harrison, Elliott Byrd; Stuart L. Craig, by Spencer, Ordway Wierum; and Charles E. Miller, by J.W. Davern.
As a result of the trial, judgment was rendered against I. Townsend Burden, James L. Putnam, George H. Hull, Jr., Claude W. Jester, Navarro Securities Company, and Richard S. Tobin, for $8,720.63 in the action by Thompson, and for $6,655.56 in the action by Robertson. Appeals were taken from these judgments by Burden and Putnam, and also by Jester and Navarro Securities Company and by Tobin. Burden and Putnam were represented on the appeals by Chase Mellen; Jester and Navarro Securities Company, by Greene Hurd; and Tobin, by Jay Candler. The judgments were reversed by this court as to Messrs. Burden, Putnam, and Tobin on the ground that they had not authorized or ratified the employment of either of the plaintiffs, and were affirmed as to Jester and Navarro Securities Company on the ground that proof of employment by them was sufficient. The opinion is reported sub nomine Burden v. Robertson (C.C.A.) 7 F.2d 266.
In order to stay execution upon the judgments, Burden made applications in writing to the Fidelity Deposit Company of Maryland for supersedeas bonds. The applications described the bond desired in the Thompson case as "supersedeas bond in U.S. Dist. Ct. So. Dist. of N.Y., Burden et al., plffs. in error, v. Frank A. Thompson, deft. in error," and in the Robertson case as "supersedeas bond in U.S. Dist. Ct. So. Dist. of N.Y., Burden et al., plffs. in error, v. Thomas W. Robertson, deft. in error." Each application was signed by Burden, who himself filled in the blanks with his name, residence, business address, occupation, and references, and contained a clause whereby he agreed "to indemnify the company against all loss, liability, costs, damages, attorney's fees, and expenses whatever, which the company may sustain or incur by reason of executing said bond. * * *"
The defendant Burden is not shown to have had any interest in staying execution for the other defendants. His attorney, Chase Mellen, suggested the Fidelity Deposit Company of Maryland as a good company to furnish the supersedeas bonds, and got the blank forms of indemnity contract from McLean McLean, who were bond brokers engaged in arranging such business.
F. Morris Miller, who acted for the surety company in the matter, sent a messenger to Mellen with a note asking that the latter "deliver to bearer papers in connection with appeal bond," and also "give name of the defendant," evidently meaning Burden, "who refers to Empire Trust Co., etc. (also name of his firm) and names of bank officers to communicate with." The information was furnished and appears in the applications. The bonds were executed and delivered to Mellen, and the applications containing the indemnity clauses and signed by Burden were delivered to the surety company.
There is nothing in the record to indicate that any other of the parties taking the appeal, except Jester and the Navarro Securities Company, furnished any indemnity. The latter two, shortly after the bonds were delivered, signed an application which contained a covenant of indemnity similar to the application signed by Burden. This was done through their attorneys, Messrs. Greene Hurd, who said in a letter to the surety company, inclosing the application:
"We understand that the bonds in these actions were furnished upon the application of I. Townsend Burden, through his counsel, Chase Mellen, * * * and this application is filed with you at Mr. Mellen's request."
When Mellen called up McLean McLean to arrange for the bonds, he appears to have told them that he represented Burden and Putnam, and that Greene Hurd represented Jester and Navarro Securities Company; but there is no evidence that McLean McLean were anything except brokers acting at the request of Mellen, or that they represented the surety company as agents.
The bonds in double the amount of the judgments were furnished by the surety company to Mellen, who filed them in the District Court. But there is no proof that Burden ever saw either of them.
After reciting the appeals by Burden, Putnam, Jester, Navarro Securities Company, and Tobin, these bonds each contained the following provision:
"Now, the condition of the above obligation is such that, if the above-named appellants shall prosecute said writ of error to effect, and answer all damages and costs if they fail to make the said plea good, then the above obligation to be void; otherwise, to remain in full force and virtue."
It thus appears that the surety company furnished supersedeas bonds on behalf of all parties appealing, though they only had the indemnity agreement signed by Burden and the one signed by Jester and Navarro Securities Company.
As a result of the affirmance of the judgments as against Jester and the Navarro Securities Company, the surety company was obliged to pay the judgments in each action, with interest, because it had agreed in the bonds to do this if any of the defendants who had appealed failed to do it, and Jester and Navarro Securities Company had neglected to satisfy the claims. Though the judgments were reversed as to Burden, the surety company sought in the present action to recover against him the sums it had paid, on the ground that he had agreed to indemnify it for any loss, and that each bond was furnished in fulfillment of his application and indemnity agreement.
The trial judge directed verdicts, upon the motion of the surety company, for the total amount of the several judgments rendered in the original actions, with interest. These judgments are now before us on writs of error.
Charles S. Aronstam, of New York City, for plaintiff in error.
Thomas E. White, of New York City, for defendant in error.
Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.
The obligations of Burden are to be ascertained from the terms of his applications. They were for supersedeas bonds, and it may be and indeed is argued that any such bonds, though to secure all the defendants, who appealed, would meet the terms of his applications. But such is an unreasonable interpretation of the acts of the parties. Burden was under no obligation to the other defendants, and had no reason that is apparent to furnish indemnity for them. He testified that all the other defendants, whose interests were hostile to his, were represented by separate attorneys, and he said that a representative of these others, and not of himself, employed Thompson Robertson, who were suing to recover the value of their legal services. That he should intentionally secure against execution parties having interests adverse to himself is unlikely, and that he secured them negligently is not a result called for by the terms of his application.
It is contended that the words "supersedeas bond in U.S. Dist. Ct. So. Dist. of N.Y., Burden et al. Plffs. in error, * * *" meant a bond to secure all the plaintiffs in error. In no part of the applications were the names of the other plaintiffs in error given, and still less was there anything to indicate that the applications were for bonds securing any party but Burden. The words "et al." were merely descriptive of the action in which the bond was to be given.
It may be that, if Burden had himself accepted bonds securing the other persons, there would have been a practical construction by the parties of their relations which would have required us to hold that the applications were for bonds to secure all the defendants who took an appeal. But it is quite a different matter to say that the acceptance of the bonds by Burden's attorney could have this effect. While an attorney has wide powers in the conduct of suits, even to the extent of consenting to the submission of a pending cause to arbitration (Holker v. Parker, 7 Cranch, 436, 3 L. Ed. 396; Alexandria Canal Co. v. Swann, 5 How. 83, 12 L. Ed. 60; Judson v. United States [C.C.A.] 120 F. 637; Gorham v. Gale, 7 Cow. [N.Y.] 739, 17 Am. Dec. 549; Williams v. Tracey, 95 Pa. 308 ), yet he has no implied authority to execute a contract of indemnity or to sign an appeal bond on behalf of his client (Luce v. Foster, 42 Neb. 818, 60 N.W. 1027; White v. Davidson, 8 Md. 169, 63 Am. Dec. 699; Ex parte Holbrook, 5 Cow. [N.Y.] 35; Schofield v. Felt, 10 Colo. 146, 14 P. 128; Clark v. Courser, 29 N.H. 170).
If he has no authority implicit in the relation of attorney and client to execute such agreements, how can authority to bind his client to pay the debt of a codefendant be implied from an employment to secure his own client against an execution? The ample authority implied from the relation of attorney and client relates to the conduct of suits and to means which are proper to the end in view. A supersedeas bond securing other defendants is not such a means, for it could benefit Burden in no way that is apparent. Inasmuch as his attorney had no implied power to accept the bonds as a fulfillment of the applications which Burden had executed, so far as they secured other parties, we cannot regard the acceptance of these bonds as adding anything to the liability which proper interpretation of the applications imposed upon Burden. We do not regard the situation as like the case where A offers to pay $200 for a horse and his agent accepts a white horse in fulfillment of the bargain when A intended to buy a black horse. A "supersedeas bond" has no such general meaning in the circumstances as the word "horse" in the illustration. The supersedeas bonds applied for were bonds for the benefit of Burden, and not to secure others as well. The analogy of the horse would be closer, if the horse accepted was accompanied by an agreement that others than the buyer should have the right to drive the animal half the time.
It does not follow from what we have said that Burden was under no liability when he signed the applications and the supersedeas bonds were filed. He had applied for bonds securing himself only. If bonds securing others were furnished, these bonds were to that extent outside of the terms of the applications; but, so far as they secured Burden, they were within their terms. Two of the other plaintiffs in error signed agreements of indemnity like his own, and, to the extent of the judgments rendered against them, they would be liable under these agreements. We cannot see that the provisions in the bonds affecting others bound Burden, nor can we regard the provisions for his own benefit as outside of the terms of his agreements of indemnity.
If the surety company expected Burden to furnish indemnity for the other appellants, it should have obtained from him applications clearly setting forth obligations so burdensome, so entirely opposed to his own interest, and so contrary to the legal interpretation of contracts of suretyship where the liability is strictissimi juris. National Banking Association v. Conkling, 90 N.Y. 116, 42 Am. Rep. 405, note. If the surety company is right in the position it takes, Burden, though victorious, would have been much better off, had he never appealed. Such a conclusion is not required by the written documents, and is too harsh to be accepted.
Judgment reversed.
The application was an offer to pay the surety's loss on the bond in consideration of its execution. It became a unilateral contract when the surety performed, and the sole question is whether the promise then made was to pay any loss, or only a loss caused by Burden's failure to pay the judgment against himself. I grant that the written description in the offer might have covered only the judgment against Burden; I do not understand it to be disputed that it might equally have covered the joint judgment. The surety knew nothing about Burden's relations to the other defendants, or what might induce him to stand as an indemnitor for them. All it knew was that Burden asked for a bond and promised to stand behind it.
What judgment did Burden mean to secure, the joint or the several? The surety certainly supposed that he meant the joint judgment, because it gave such a bond, and it is absurd to suppose that it meant to be partially unindemnified; the transaction was strictly a business one. Had Burden accepted the bond himself, is it conceivable that he might later have said that it did not correspond with the offer? He had appeared satisfied with it, and the surety must have supposed that he was. A man's intent is not what he privately means, but what his conduct indicates. On the other hand, the promise was intended to cover the bond accepted, for, as I have said, the transaction had none but a business motive. To hold otherwise would be to limit the promisor's performance to only a part of what he must have understood the promisee to expect. One certainly may not exonerate himself from the natural understanding of his conduct by such mental reservations.
Now, it is true that Burden did not himself accept the bond, but left the application with his attorney and deputed him to accept it. That, however, necessarily included the power to pass upon whether it was what he wanted. The attorney's authority did not depend upon the relation of attorney and client; it followed from the intention to be imputed from the facts. The attorney was authorized to do for Burden what Burden must have otherwise done for himself. His acts concluded Burden as much as though Burden had himself been the actor.
I think that the judgment should be affirmed.