Gist v. Equitable Surety Co.

Tbe following opinion was filed March 2, 1915:

It is claimed that tbe court erred in denying removal of tbe original action from tbe state to tbe federal court. Tbe plaintiffs in tbe original suit, Wm. M. and George W. Gist, at tbe time they commenced action against tbe Johnson-Carey Company were residents respectively of tbe states of Missouri and Illinois and tbe defendant Jobn-son-Carey Company was a corporation created under tbe laws of Delaware, and for tbe purposes of tbe proceeding to remove tbe action to tbe federal court was a citizen and resident of tbe state of Delaware. Before defendant was required to answer it made an application to tbe Columbia *83county circuit court and prayed for “removal of said suit into tbe district court of tbe United States to be beld in tbe district where said suit is pending, viz. district court of tbe United States in and for tbe Western district of Wisconsin.” Tbe bond accompanying tbis application bound tbe obligors upon condition tbat tbe Jobnson-Carey Company enter, in tbe district court for tbe Western district of Wisconsin within tbe time therein specified, a certified copy of tbe record in tbe suit. Tbe face of tbe removal proceedings shows tbat it was an application to remove tbe action from tbe state court to tbe federal district court for tbe Western district of Wisconsin. It is manifest tbat tbe application for removal did not ask to have tbe case removed to tbe federal court of tbe district of tbe residence of either tbe plaintiffs or tbe defendant. Tbe record shows affirmatively tbat tbe case is not one arising under tbe laws of tbe United States and tbat tbe application for removal is based upon tbe diversity of citizenship of tbe parties. Tbe defendant is a Delaware corporation and hence under tbe federal statute for removal of tbe case from state to federal court is deemed to be a resident of tbat state and is accorded tbe same rights as a citizen. It is established by tbe adjudications of tbe federal courts tbat a suit commenced in a state court in a federal district of .which neither plaintiff nor defendant is a resident, though they are residents of different states, cannot be removed to tbe federal court of tbe state wherein tbe action is pending, for tbe reason tbat such federal court bad no jurisdiction of tbe original suit. Ex parte Wisner, 203 U. S. 449, 27 Sup. Ct. 150; Western L. & S. Co. v. Butte & B. C. M. Co. 210 U. S. 368, 28 Sup. Ct. 120; Stewart v. Cybur L. Co. 211 Fed. 343; Gruetter v. Cumberland T. & T. Co. 181 Fed. 248. Tbe citizenship of tbe defendant Jobnson-Carey Company is conclusively presumed to be tbe state of Delaware and under tbe federal removal statute is limited thereto, though it may have been licensed to do business in Wisconsin. St. Louis & S. *84F. R. Co. v. James, 161 U. S. 545, 16 Sup. Ct. 621; Baldwin v. Pacific P. & L. Co. 199 Fed. 291, and cases there cited.

It is strenuously contended that the defendant, the Surety Company, is released from the obligations of the undertaking given by it for the release of the garnishees, upon the ground that the amendment of the plaintiffs’ complaint at the trial' from one on express contract to one on quantum meruit so changed the grounds of liability of the defendants in the case' as to constitute a complete change in the cause of action and thereby released the surety. The rights of a creditor to proceed by garnishment in aid of a recovery on express or implied contract are to be liberally enforced in such proceedings and the undertaking given pursuant to the provisions of sec. 2111, Stats. 1913, is to be liberally construed. Smith v. Lockwood, 34 Wis. 12. The undertaking in terms is an agreement “on demand to pay to the plaintiffs the amount of the judgment, with all costs that may be recovered against such defendant in the action.” The purpose of the statute is to hold the parties to the undertaking for the full amount of the judgment in place of the garnishees, regardless of the amount impounded by the garnishment. The provisions of the statute have always received a liberal construction to accomplish the purpose of the remedy, namely, protection of a creditor to receive payment of the judgment awarded him in the main action. Sutro v. Bigelow, 31 Wis. 521; Smith v. Lockwood, 34 Wis. 12; Wilkinson v. United States F. & G. Co. 119 Wis. 226, 96 N. W. 560. As stated in the Sutro Case respecting the liability of the parties to an undertaking under this statute, “they make his [garnishee’s] liability to the plaintiffs in the action their liability to the extent named in the undertaking; and, identifying themselves in interest with him, agree to abide the results of the litigation so far as he is concerned.” The whole proceeding of substituting the undertaking in place of the garnishee presupposes that all the stops required to be taken in a judicial trial .of the original-*85action in prosecuting it to judgment are authorized as within the scope of such undertaking. It is clear that the right of amending the complaint existed and that the court on the trial of the original action properly amended the complaint from one on express contract to one on quantum meruit. Gist v. Johnson-Carey Co. 158 Wis. 188, 147 N. W. 1079. It is urged that this was a prejudicial proceeding against the sureties. How this operated to the sureties’ prejudice is not manifest. An inspection of the two complaints shows that, the allegations covered and embraced the identical transactions, resting on the same basic claim, namely, compensation for the work and labor performed, at the same price throughout, with this difference, that in the original complaint the agreements in relation thereto were alleged to be express,, while in the amended complaint they were implied, but in their totality and substance they were identical; the only difference being in the way these agreements were evidenced. Under such a state of affairs there is no difference in the substance of the claim made by plaintiffs in their two complaints, and allowance of the amendment was plainly authorized as. within the undertaking of the surety and cannot be held to-have prejudiced its rights. Thomas v. Hatch, 53 Wis. 296, 10 N. W. 393; Tilton v. Cofield, 93 U. S. 163.

The contention that the allegation in the original complaint, that the work and labor for which plaintiffs sought to-recover compensation was performed pursuant to an express contract, when in truth and fact no such contract existed, constituted a misrepresentation in the nature of fraud as to the-surety and should estop plaintiffs from enforcing the undertaking, has no foundation in fact and substance; nor did such allegation in fact induce the giving of the bond. - We have-already adverted to the proposition that the amendment in noway changed the nature of the claim "nor the grounds of recovery. The claim of 1jie original and amended complaints arose out of the same transaction and claimed recovery for-*86tbe same amount and for tbe identical items at tbe same cost. On tbis point tbe allegations in eacb pleading must control, and confining our view to them we discover no material difference in tbe grounds of recovery. “Tbe description of tbe cause of action was changed, but in tbe view of equity, and in point of fact, it was substantially tbe same witb that originally described. Allowing amendments is incidental to tbe exercise of all judicial power, and is indispensable to tbe ends of justice.” Tilton v. Cofield, 93 U. S. 163. Tbe very nature of tbe rights involved to change tbe pleadings precludes any inference of fraud and estoppel in relation thereto. Tbe contention of appellant on tbis point must be rejected as having no merit.

Within tbe rule of Eau Claire Nat. Bank v. Chippewa Valley Bank, 124 Wis. 520, 102 N. W. 1068, tbe plaintiffs were entitled to payment of their judgment in tbe original action upon its entry, and payment thereof by tbe surety who stood in place of tbe garnishees. For delay in such payment plaintiffs are entitled to interest. Tbe court properly awarded tbe recovery of interest against tbe surety.

By the Court. — Tbe judgment appealed from is affirmed.

A motion for a rehearing was denied, witb $25 costs, on May 18, 1915.