## Facts

- Cunningham contracted as the principal contractor on a school construction project for the San Antonio Independent School District.
- Aetna issued a performance bond as surety for Cunningham, and Cunningham agreed in the bond application to indemnify Aetna for losses arising from the suretyship.
- Cunningham failed to complete the construction contract.
- Aetna paid $32,000 to the school district to cover the default and sought to recover that amount from Cunningham.
- Aetna pleaded two theories for the same $32,000: (1) contractual indemnity and (2) fraud based on an alleged materially false written financial statement that induced Aetna to issue the bond.
- At trial, Cunningham conceded liability on the indemnity theory; the litigated dispute centered on whether Cunningham committed fraud.

## Issues

1. Whether a plaintiff who receives the full monetary recovery requested, but is denied judgment on a fraud theory that could change the judgment’s legal consequences, is a “party aggrieved” entitled to appeal.
2. Whether potential bankruptcy consequences and related preclusion concerns can supply sufficient aggrievement to permit appeal despite full monetary recovery.

## Decision

- The Fifth Circuit held that Aetna could appeal the adverse determination on its fraud claim even though it obtained a judgment for the full $32,000 on the indemnity theory.
- The court reasoned that the measure of relief is not limited to the amount awarded; the “quality” of the judgment and its legal consequences may differ depending on the theory of recovery.
- The court declined to decide, as premature, the effect of any bankruptcy discharge on either type of judgment or whether the no-fraud finding would have preclusive effect in bankruptcy-related proceedings.
- The court concluded it was sufficient that Aetna plausibly claimed entitlement to a judgment with different legal attributes, making it an aggrieved party for appellate purposes.

## Legal Principles

- Only an aggrieved party may appeal, but aggrievement can exist even when the appellant prevailed in the amount awarded.
- A party may be aggrieved by denial of a claim when the alternative theory would produce a judgment with materially different legal consequences (the “quality” of the judgment), not merely a different dollar recovery.
- Appellate standing may exist where the denied theory could affect future rights or defenses (including, potentially, bankruptcy-related consequences), even if those consequences are not resolved on the merits in the appeal.

## Conclusion

The court permitted a prevailing plaintiff to appeal because denial of its fraud theory could change the judgment’s legal consequences, establishing that aggrievement can turn on the judgment’s character as well as its amount.


Aetna Cas. & Sur. Co. v. Cunningham, 224 F.2d 478 (5th Cir. 1955)