Opinion
No. 39207.
February 5, 1945. Rehearing Denied or Motion to Transfer to Banc Overruled, March 5, 1945.
1. APPEAL AND ERROR: Certiorari: Scope of Review. On certiorari the Supreme Court is limited to the facts as found in the opinion by the Court of Appeals and to the issues presented to that court.
2. APPEAL AND ERROR: Certiorari: Construction of Unambiguous Instrument. The Court of Appeals had the right to construe the bond if its terms were ambiguous, but where there is no ambiguity, there is no room for construction.
3. APPEAL AND ERROR: Certiorari: Principal and Surety: Insurance: Gratuitous Surety: Loss Sustained: Language of Bond Unambiguous. The language of the bond was unambiguous. When the insurance company paid the beneficiary while the insured was still alive it incurred a loss and the bond was breached. And the fact that the liability of a gratuitous surety is strictissimi juris does not change the construction. The opinion of the Court of Appeals was in conflict with decisions that unambiguous language must be given its plain meaning and enforced as written.
OPINION OF COURT OF APPEALS QUASHED.
Henry I. Eager and Michaels, Blackmar, Newkirk, Eager Swanson for relator.
(1) The opinion of the Kansas City Court of Appeals is in conflict with those opinions of this court holding that contracts must be enforced as written by the parties, that their terms must be given effect in their plain, ordinary and popular sense, and that unambiguous contracts cannot be enlarged or changed under the guise of construction. State ex rel. Prudential Ins. Co. v. Shain, 344 Mo. 623, 127 S.W.2d 675; State ex rel. Casualty Co. v. Cox, 14 S.W.2d 600; State ex rel. Mutual Benefit v. Trimble, 334 Mo. 920, 68 S.W.2d 685; State ex rel. Life Ins. Co. v. Trimble, 306 Mo. 295, 267 S.W. 876; Prange v. International Life Ins. Co., 329 Mo. 651, 46 S.W.2d 523; Wendorff v. Mo. State Life Ins. Co., 318 Mo. 363, 1 S.W.2d 99; Martin v. Travelers Ins. Co., 310 Mo. 411, 276 S.W. 380; Caldwell v. Travelers Ins. Co., 305 Mo. 619, 267 S.W. 907; Scales v. Natl. Life Acc. Ins. Co., 212 S.W. 8; Paisley v. Lucas, 346 Mo. 827, 143 S.W.2d 262. (2) Specifically the Kansas City Court of Appeals violated that rule. In holding that plaintiff had suffered no "loss, damage or expense" within the terms of the bond, although it had, solely on account of the bond, made a payment which is now conceded to have been wholly erroneous; and in holding that plaintiff did not prove such "loss, expense or damage." Ancient Order of United Workmen v. Mooney, 230 Pa. 16, 79 A. 233. (3) In holding that only a "prospective" breach of the bond would justify recovery, and that, the payment of the claim having already been made when it was discovered that the insured was alive, no recovery could be had; and this, notwithstanding the clear purpose and intent of the bond to provide reimbursement for this particular payment if the insured proved to be alive. Ancient Order of United Workmen v. Mooney, 230 Pa. 16, 79 A. 233; Masonic Life Assn. v. Crandall, 41 N.Y.S. 497. (4) In disregarding the fact (as shown by the affirmative statements in the opinion) that even if the bond be considered as one of indemnity against loss, as distinguished from one against "liability," nevertheless such a bond is always construed as providing protection against an actual loss incurred, or a payment actually made, as here; even the authorities cited in the opinion show this; Moberly v. Leonard, 339 Mo. 791, 99 S.W.2d 58, and other authorities cited in opinion; and in thus basing its opinion upon a meaningless distinction. (5) In holding that plaintiff's petition stated no cause of action when it sufficiently pleaded the terms of the bond and all of the pertinent facts.
Clarence C. Chilcott for respondents.
(1) No conflict is shown between the opinion of the Kansas City Court of Appeals and any decision of this court. State ex rel. Valentine Coal Co. v. Trimble, 325 Mo. 277, 28 S.W.2d 1028; State ex rel. Sei v. Haid, 332 Mo. 1061, 61 S.W.2d 950; State ex rel. Kirby v. Trimble, 326 Mo. 675, 32 S.W.2d 569; State ex rel. Fitchner v. Haid, 324 Mo. 130, 22 S.W.2d 1045; State ex rel. Cont. Ins. Co. of the City of N.Y. v. Becker, 77 S.W.2d 100, 336 Mo. 59; State ex rel. Met. L. Ins. Co. v. Allen, 337 Mo. 525, 85 S.W.2d 469; State ex rel. Ben Hur Life Ins. v. Shain, 342 Mo. 928, 119 S.W.2d 236; State ex rel. M.-K.-T. v. Shain, 124 S.W.2d 1141; M.-K.-T. v. Hamarstrom, 59 S.Ct. 1032; State ex rel. Waters v. Hostetter, 126 S.W.2d 1164; State ex rel. K.C. Theological S. v. Ellison, 216 S.W. 967; State ex rel. United Rys. Co. v. Reynolds, 165 S.W. 729, 257 Mo. 19; State ex rel. Arel v. Farrington, 272 Mo. 157, 197 S.W. 912; State ex rel. Met. St. Ry. v. Ellison, 224 S.W. 820, 316 Mo. 865; State ex rel. Union Biscuit Co. v. Becker, 316 Mo. 865, 297 S.W. 783; State ex rel. Schrowang v. Hostetter, 337 Mo. 522, 85 S.W.2d 417; State ex rel. Hoyt v. Shain, 338 Mo. 1208, 93 S.W.2d 992; State ex rel. Kennedy v. Remmers, 340 Mo. 126, 101 S.W.2d 70; State ex rel. K.C. Pub. Serv. Co. v. Shain, 124 S.W.2d 1097; State ex rel. Dunham v. Ellison, 278 Mo. 649, 213 S.W. 459; State ex rel. Vesper-Buick v. Daues, 323 Mo. 388, 19 S.W.2d 700; State ex rel. Dowdon v. Allen, 337 Mo. 260, 85 S.W.2d 63; State ex rel. Superior M. Co. v. Hostetter, 337 Mo. 718, 85 S.W.2d 743; State ex rel. Tungett v. Shain, 340 Mo. 434, 101 S.W.2d 1; State ex rel. Pub. Serv. Comm. v. Shain, 342 Mo. 867, 119 S.W.2d 220; State ex rel. Locke v. Trimble, 298 S.W. 782; State ex rel. Smith v. Allen, 323 Mo. 396, 267 S.W. 843; State ex rel. Manion v. Dawson, 284 Mo. 490, 225 S.W. 97; State ex rel. Met. L. Ins. Co. v. Allen, 339 Mo. 1156, 100 S.W.2d 487; State ex rel. B. of L.F. E. v. Shain, 123 S.W.2d 1; State ex rel. Silverforb v. Smith, 332 Mo. 229, 43 S.W.2d 1054; State ex rel. Am. Surety v. Haid, 325 Mo. 949, 30 S.W.2d 101; State ex rel. Morrison v. Simms, 201 S.W. 910; State ex rel. Wors v. Hostetter, 343 Mo. 945, 124 S.W.2d 1072; State ex rel. Dew v. Trimble, 306 Mo. 657, 269 S.W. 617; State ex rel. Cass v. Seehorn, 283 Mo. 508, 223 S.W. 664; St. Louis County to Use of Miss. Valley Trust Co. v. Menke, 95 S.W.2d 818; State ex rel. Kaiser v. Miller, 316 Mo. 372, 289 S.W. 898; State ex rel v. Trimble, 297 Mo. 104, 247 S.W. 187; State ex rel. Barnett v. Imhoff, 291 Mo. 603, 238 S.W. 122; State ex rel. v. Flynn, 348 Mo. 525, 154 S.W.2d 52; Hauser v. Burge, 120 S.W.2d 314; Am. Const. Fire Assur. Co. v. O'Malley, 342 Mo. 139, 113 S.W.2d 795; St. Louis v. Gleason, 93 Mo. 33, 8 S.W. 348; Ex parte McLaughlin, 105 S.W.2d 1020; Wells v. Thomas Garland, Inc., 39 S.W.2d 409; State ex rel. Prudential Ins. Co. v. Shain, 344 Mo. 623, 127 S.W.2d 675; Burrus v. Cont. Life Ins. Co., 225 Mo. App. 1129, 40 S.W.2d 493. (2) The opinion of the Kansas City Court of Appeals follows the decisions of this court and correctly declares the law and its application of the facts of this case. State ex rel. Prud. Ins. Co. v. Shain, 344 Mo. 636, 127 S.W.2d 675; Nofsinger v. Hartnett, 84 Mo. 549; Providence v. Broderick, 104 F.2d 614; Webster's New International Dictionary (2d Ed.); Caldwell v. Travelers' Ins. Co., 305 Mo. 619, 267 S.W. 907; State ex rel. Mills Lumber Co. v. Trimble, 327 Mo. 899, 39 S.W.2d 355; Pickering v. Hartsock, 221 Mo. App. 868, 287 S.W. 819; Webb Kunze Constr. Co. v. Gilsonite, 281 Mo. 629, 220 S.W. 857; J.E. Blank v. Lennox Land Co., 351 Mo. 932, 174 S.W.2d 274; Huddleston v. Same, 11 S.W.2d 1065; State ex rel. Maryland Cas. Co. v. Hughes, 349 Mo. 1142, 164 S.W.2d 274; Natl. Surety Co. v. Roth, 232 S.W. 737; Mathews v. Modern Woodmen of Am., 236 Mo. 326, 139 S.W. 151; State ex rel. Zimmerman v. Schaper, 152 Mo. App. 538, 134 S.W. 671; State ex rel. Jacobs v. Elliott, 157 Mo. 609, 57 S.W. 1081; Fullerton Lumber Co. v. Calhoun, 89 Mo. App. 209; Godfrey v. Kansas City L. P. Co., 247 S.W. 451; Lange v. Freeman, 13 S.W.2d 1092; Cochrane v. Stewart, 63 Mo. 426; Hurst v. Randall, 68 Mo. App. 507; Smith v. Warren, 88 Mo. App. 285; Central States Grain Co-Operative, Inc., v. Nashville Warehouse Elevator Corp., 48 F.2d 138; Howell v. Commissioner of Internal Revenue, 69 F.2d 447; Union Indemnity Co. v. Vetter, 40 F.2d 606; 27 Am. Jur., sec. 21, p. 457; Maloney v. Nelson, 39 N.E. 82; Conqueror Zinc Lead Co. v. Aetna Life Ins. Co., 133 S.W. 156; State ex rel. Western Automobile Ins. Co. v. Trimble, 249 S.W. 902; Staggs v. Gatham Min. Mill. Co., 235 S.W. 511; Central States v. Nashville W. E. Corp., 42 F.2d 138; State v. Cordaro, 241 N.W. 448; 31 C.J. 431; Title Guaranty, etc., Co. v. Turnes, 183 Ill. App. 23; 31 C.J. 437; State ex rel. Phillips v. Green, 112 Mo. 108, 90 S.W. 403; Burrus v. Continental Life Ins. Co., 225 Mo. App. 1129, 40 S.W.2d 493; Croghan v. Savs. Trust Co., 231 Mo. App. 1161, 85 S.W.2d 239; State ex rel. Central States Life Ins. Co. v. McElhinney, 232 Mo. App. 107, 90 S.W.2d 124; John Deere Plow Co. v. Cooper, 230 Mo. App. 167, 91 S.W.2d 145; Beers v. Strimple, 116 Mo. 179, 22 S.W. 620; Nofsinger v. Hartnett, 84 Mo. 552; Trust Co. v. Tindle, 272 Mo. 681, 199 S.W. 1025; Southern Real Estate Finance Co. v. Banker's Surety Co., 273 Mo. 293, 184 S.W. 1030; Adel v. Dalton, 341 Mo. 454, 107 S.W.2d 1071; Gillen v. Bayfield, 329 Mo. 681, 46 S.W.2d 571; LaClede Construction Co. v. Tudor Iron Works, 169 Mo. 137, 69 S.W. 384; Cal Hirsch Sons Iron Rail Co. v. Paragould M.R. Co., 148 Mo. App. 173, 127 S.W. 623; Malloy v. Egyptian Tie Timber Co., 207 Mo. App. 465, 247 S.W. 467; 13 C.J., pp. 326, 339. Illinois Fuel Co. v. M. O. Railway Co., 8 S.W.2d 843; Hartford Accident Indemnity Co. v. Delta Pine Land Co., 169 Miss. 196, 150 So. 205; Solace v. T.J. Moss Tie Co., 142 S.W.2d 1079; School Dist. of St. Joseph v. Security Bank of St. Joseph, 325 Mo. 1, 26 S.W.2d 785; State ex rel. Southern Surety Co. v. Haid, 49 S.W.2d 329; St. Louis v. Maryland Casualty Co., 122 S.W.2d 20; State to Use of Southern Bank v. Atherton, 40 Mo. 209; Wolthausen v. Trimpert, 105 A. 687; 31 C.J. 431; Burlington County R. Co. v. N.J. Rapid Transit Co., 77 N.J.L. 737, 73 A. 504; Warwick v. Hutchinson, 45 N.J.L. 61, (affirmed 46 N.J.L. 200); Johns v. Wartham, 188 Ill. App. 406; Drake v. Sherman, 179 Ill. 362; State v. Paul's, 21 Mo. 51; Underwood v. Century Realty Co., 220 Mo. 522, 119 S.W. 400, 25 L.R.A. 1173; Lindell v. Robes, 40 Mo. 249; American Law Institute, Restatement of the Law of Contracts, sec. 74; 12 Am. Jur., pp. 13, 14; Lubne v. Mutual Life Ins. Corp. of New York, 276 Mo. 118, 207 S.W. 320; Town of Canton v. McDaniel, 188 Mo. 207, 86 S.W. 1092; Cravens v. New York Life Ins. Co., 50 S.W. 519; Crohn v. Order of United Travelers of America, 170 Mo. App. 273, 156 S.W. 472; Peak v. International Harvester Co. of America, 194 Mo. App. 128, 186 S.W. 574; Sutherland on Damages (4th Ed.), sec. 480; Loewenthan v. McElroy, 168 S.W. 813; Moberly v. Leonard, 339 Mo. 791, 99 S.W.2d 58; Smith v. Mann, 88 Mo. App. 285; Bray v. Culp, 219 S.W. 129; Nee Insurance Co. v. Baldrich, 185 N.W. 468; Duke v. Taylor, 240 N.W. 319; Central Trust Co. v. Louisville Trust Co., 100 F. 545; Ancient Order of United Workmen v. Mooney, 79 A. 233; Harris v. Taylor, 150 Mo. App. 291, 129 S.W. 995; Moore v. Title Trust Co., 151 Mo. App. 256, 131 S.W. 477; 27 Am. Jur. 457; Stag Mining Co. v. Mo. Fidelity Cas. Co., 209 S.W. 321; Steckdaub v. Wilhite, 211 S.W. 915; Most v. Massachusetts Bonding Ins. Co., 196 S.W. 1064; Reynolds v. Lathwell, 272 S.W. 1032; Kneisley Lumber Co. v. Edwards B. Stoddard Co., 131 Mo. App. 15, 109 S.W. 840.
This is an original proceeding in certiorari to review respondents' opinion in the case of The Prudential Insurance Company of America against John M. Goldsmith to recover on a disappearance bond executed by him as a surety. The judgment of the trial court was in favor of relator. That judgment was reversed by the respondents' opinion which is reported in 181 S.W.2d 201.
The essential facts found by the respondents are: Relator issued three policies of insurance upon the life of James A. Goldsmith. The largest policy named Nellie Goldsmith, mother of insured, as the beneficiary. The other two policies were of the industrial type, containing a so-called "facility of payment" clause. Each of these policies was payable only [655] upon receipt of "due proof of the death of the insured." In 1932, since the insured had not been heard from for more than seven years, a presumption of his death arose, and a claim was made upon the relator by the mother of the insured. Relator had doubts that the insured was dead, but offered to pay the claim upon condition that it be furnished a bond. Nellie Goldsmith offered her son (defendant) and daughter as sureties thereon, and plaintiff accepted. The bond was executed on March 3, 1933, and full payment of the policies as a death claim was made by relator to Nellie Goldsmith by checks dated March 20 and 21, 1933. In March, 1941, defendant wrote relator that his brother was alive and asked to be "released" from the bond. The relator verified the fact that insured was alive and at various times requested reimbursement for the money it had paid on the policies both from the principal and sureties. These requests were refused.
The policies provided for extended insurance, paid up, and cash surrender values. The last amounted to the sum of $546.63 at the time the policies were paid. Insured had never elected any option under the policies and had never made any claim under the policies. He could change the beneficiary at any time in the largest policy.
The bond was executed upon a form furnished by the relator, and it provided:
"Whereas, the said The Prudential Insurance Company of America (plaintiff) is about to pay to the said bounden Nellie Goldsmith the sum of One Thousand Four Hundred Ninety. ($1,490.00) Dollars, . . . said payment being made by said Company without requiring due proof of death provided for by the terms of said policies, but in reliance upon the truth of representations made to it by the said Nellie Goldsmith . . . that the said James A. Goldsmith is dead.
"Now, therefore, the condition of this obligation is such that if it shall hereafter be proven to the satisfaction of the said Company that the said James A. Goldsmith is alive, and if upon demand made the above bounden parties, or any or either of them, their heirs, executors, administrators, and assigns shall fully indemnify and save harmless said Company from all loss, expense and damage by it incurred by reason of said payment then this obligation shall be null and void, otherwise to remain in full force and virtue in law."
The only breach of the conditions of the bond alleged in relator's petition is that relator was proved to be alive and that Nellie Goldsmith, and her sureties, refused, upon demand, to repay relator the amount of money paid by it to Nellie Goldsmith.
It was the defendant's contention that relator's petition failed to state a cause of action, that his demurrer to the evidence should have been sustained, and that the trial court erred in entering judgment against him.
In ruling the case, respondent reversed judgment of the trial court, holding that the petition failed to state a cause of action. The reasons assigned were that the bond was ambiguous and since the defendant was a gratuitous surety, the bond should be strictly construed in his favor; that in "construing bonds of this character it is always the rule that it will not be given a retroactive effect unless, by its terms, it provides that it is to have such effect; . . ." and that "There is a distinction between a bond providing for indemnity against loss, expense and damage, and one for indemnity against liability. If there is an ambiguity in the terms of the bond it will be construed in favor of defendant and as providing indemnity against loss, expense and damage, plaintiff [relator] having provided the form." Respondents' opinion further said that "Plaintiff [relator] does not allege, or attempt to prove, any loss, damage or expense suffered by it, within the meaning of the bond. The petition fails to state a cause of action, and the court should have rendered a judgment for the defendant."
"`On a writ of certiorari to an appellate court, the determination of error, under our decisions, is limited to the finding of a conflict between the Court of Appeals' opinion and the latest ruling opinion of this court on the subject, either as to a general principle of law announced, or as to a ruling under a like, analogous, or similar state of facts. The purpose of certiorari is to secure uniformity in opinions and harmony in the law. State ex rel. Vulgamott v. Trimble, 300 Mo. 92, 253 S.W. 1014.' State ex rel. Himmelsbach v. Becker, 337 Mo. 341, 85 S.W.2d 420, l.c. 421.
"On certiorari we are limited to the facts as found in the opinion by the court [656] of appeals and to the issues presented to that court. State ex rel. Silverforb v. Smith (Mo. Sup.), 43 S.W.2d 1054." State ex rel. Emery, Bird, Thayer Dry Goods Co. v. Shain et al., 348 Mo. 650, 154 S.W.2d 775, l.c. 776.
Relator does not contend that we have ruled a like, analogous or similar state of facts, but does contend that respondents' opinion does contravene our decision as to a general principle of law, in that respondents, in construing the bond in question, failed to give the language found in the bond its plain, ordinary, and usual meaning and, therefore, it is not open to construction.
If the terms of the bond are ambiguous, then the respondents had a right to construe it even if such construction is erroneous, because we have never construed a like or similar bond. "The Court of Appeals, like ourselves, has `jurisdiction' to decide wrong as well as to decide right." State ex rel. Kansas City Theological Seminary v. Ellison et al., 216 S.W. 967, l.c. 969, 970. On the other hand, if the bond by its terms is unambiguous, then respondents' opinion in construing the bond and giving it a different construction from its plain meaning conflicts with our rulings where we held that the words and phrases in all documents must be given their plain, ordinary, and usual meanings. Worthington Drainage District v. Township of Elm, Putman County, 339 Mo. 270, 96 S.W.2d 374; Paisley v. Lucas, 346 Mo. 827, 143 S.W.2d 262. Where there is no ambiguity, there is no room for construction. Unequivocal language in a written document must be given its plain, ordinary, and usual meaning. State ex rel. Prudential Insurance Company of America v. Shain et al., 344 Mo. 623, 127 S.W.2d 675.
The language in this bond is unambiguous. It provides that the bounden parties shall fully indemnify and save harmless relator from "all loss, expenses and damage it [relator] incurred by reason of said payment," if the insured be proved to be alive and demand was made by relator. There is no doubt that the insured was proved to be alive after the execution of the bond and the payment of the money by relator to Nellie Goldsmith. In fact, it is conceded by all parties he was alive. The relator did not owe Nellie Goldsmith anything on these life insurance policies until James A. Goldsmith, the insured, died, and only then upon due proof of his death. Nellie Goldsmith represented to relator that the insured was dead. This representation was later proved to be false. When relator paid her the policies on the representation that the insured was dead it sustained a "loss." In other words, the relator did not owe Nellie Goldsmith anything on the policies at the time the payment was made. When one pays his obligation, he sustains no loss; but if one pays a sum of money on a false representation that he owe that sum, then he has sustained a loss.
We agree with respondent that the liability of a gratuitous surety is strictissimi juris, and in construing his liability on such a bond, the rule is that it will not be given a retroactive effect unless, by its terms, it provides that it is to have such effect. See State to Use of Lancaster v. Jones, 89 Mo. 470, 1 S.W. 355; State ex rel. Chatham National Bank v. Finn, 98 Mo. 532, 11 S.W. 994, 14 Am. St. Rep. 654. However, the language of this bond did give it a retroactive effect. Note the following clause: "the above bounden parties . . . shall fully indemnify and save harmless said company from all loss . . . by it incurred by reason of said payment . . ." (Italics ours.) The word "incurred" is used in the past tense, giving it a retroactive effect. The use of the words "by reason of said payment" means the loss relator sustained by paying Nellie Goldsmith the sum of One Thousand Four Hundred Ninety ($1,490.00) Dollars that relator did not owe.
Respondents were correct in ruling the bond to be an indemnifying bond against damage and not liability; but as we have already said, the relator sustained a loss when it paid Nellie Goldsmith One Thousand Four Hundred Ninety ($1,490.00) Dollars on these policies when the insured was alive. The bond was breached when it was proved that James A. Goldsmith, the insured, was alive and relator made a demand under the bond. Relator's petition, therefore, did state a cause of action.
In giving the language of the bond such a construction that it did not have a retroactive effect, the respondents caused conflict with our decisions that unambiguous language must be given its plain meaning and enforced as written. Respondents' opinion should be quashed. It is so ordered. All concur.