Merritt v. J. A. Stafford Co.

Opinion

FILES, P. J. This appeal raises the question of the amount which can be recovered under an appeal bond.

In the underlying damage action, on March 11, 1964, Merritt recovered [824]a judgment against J. A. Stafford Company for $434,441.68 for personal injuries suffered in a truck accident; and Merritt’s employer, Sterling Transit Co., Inc., recovered $21,255.93 against Stafford for property damage. Stafford was partially protected by liability insurance written by Reserve Insurance Company, with limits of $100,000 for personal injury and $25,000 for property damage.

Stuyvesant Insurance Company was the reinsurer of Reserve.

Stafford appealed from the judgment, and on May 22, 1964, Stuyvesant Insurance Company filed an “Undertaking Under Section 942 C.C.P.” which recites that Stuyvesant obligates itself “under said statutory obligations” in the sum of $181,883.90.1

Section 942 of the Code of Civil Procedure (now § 917.1) provided for the stay of a money judgment, pending appeal, upon the giving of an undertaking by a corporate surety for one and one-half times the amount of the judgment or order. In this case $181,883.90 is exactly one and one-half times the portion of the judgment for which the insurance companies were liable.

In September 1964 Merritt and Stafford entered into an agreement whereby, for a separate consideration, Merritt agreed not to levy execution against Stafford pending the appeal.

The judgment in the damage action was affirmed in an unpublished opinion, and the remittitur was filed October 13, 1965. In January 1966 Merritt made a motion for judgment on the appeal undertaking, alleging that no part of the judgment had been paid. The motion was denied by the superior court, and Merritt appealed.

The Supreme Court reversed. (Merritt v. J. A. Stafford Co. (1968) 68 Cal.2d 619 [68 Cal.Rptr. 447, 440 P.2d 927].) In explaining the reasons for enforcing an undertaking furnished by an insurance company to cover only a portion of the judgment, the Supreme Court said at pages 625, 626: “We have concluded that a bond furnished by a liability insurer to stay the [825]