Am. Sur. Co. of N.Y. v. City St. Improvement Co.

At the close of the argument Sloss, J., delivered the opinion of the court, Shaw, J., and Lawlor, J., concurring:

The plaintiff, American Surety Company of New York, became the surety on a bond in the sum of ten thousand

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dollars, given to release an attachment issued in an action brought by the City Street Improvement Company against the Edgemar Realty Syndicate to recover money claimed to be due under a contract for certain street improvements. "While that action was pending, the Edgemar Realty Syndicate, became insolvent and forfeited its charter for failure to pay the license-tax. Subsequently the plaintiff in the former action, City Street Improvement Company, brought the case on for trial and took judgment without any one appearing in opposition. The Surety Company knew, of course, when it gave the bond, that the action was pending, and it had knowledge of the fact that the case was set for trial some days before it came on for hearing.

It now comes in by a bill in equity and seeks to set aside the judgment and to be permitted to assert the defense of the Edgemar Realty Syndicate to the original action, it being alleged in the bill that there was a meritorious defense. The court below sustained a demurrer to the complaint, and gave judgment in favor of the defendants. The plaintiff appeals.

The ruling on the demurrer was properly made. The complaint is entirely devoid of any allegations tending to show fraud, mistake, or collusion, and in the absence of a showing of one of these grounds for relief, a court of equity will not set aside a judgment regularly obtained and entered. The complaint is also subject to the objection that it shows upon its face that the plaintiff was guilty of laches. A period of over two years elapsed between the filing of the complaint in the former action and the taking of judgment, and during all of this time the Surety Company took no step to protect its interests. Furthermore, the Surety Company waited a period of almost six months after the entry of the judgment against the Edgemar Realty Syndicate before seeking the relief asked for in this action. During this interval, the situation of the property formerly owned by the syndicate had changed in such a manner that the creditor—the City Street Improvement Company—has lost all possible chance of recovery on its claim from any source other than the bond.