Carroll v. National Surety Co.

• Decision Date: 06 February 1928
• Docket Number: No. 4601.,4601.
• Citation: 24 F.2d 268,58 App. DC 3
• Parties: CARROLL v. NATIONAL SURETY CO.
• Court: U.S. Court of Appeals — District of Columbia Circuit

58 App. DC 3, 24 F.2d 268 (1928)

CARROLL v. NATIONAL SURETY CO.

No. 4601.

Court of Appeals of District of Columbia.

Submitted January 6, 1928.

Decided February 6, 1928.

Milton Strasburger, of Washington, D. C., for appellant.

F. De C. Faust and C. F Wilson, both of Washington, D. C., for appellee.

Before MARTIN, Chief Justice, ROBB, Associate Justice, and SMITH, Judge of the United States Court of Customs Appeals.

MARTIN, Chief Justice.

Carroll appeals from a judgment rendered against him as surety upon an indemnifying bond.

The National Surety Company, as plaintiff below, declared that on June 30, 1920, a company known as A. Taylor & Co., Inc., entered into a written contract with the United States, agreeing to collect and bale the waste paper accumulating in certain public buildings, and to remove and pay for the same at the rate of $1.622 per 100 pounds, and that plaintiff concurrently executed a bond in the sum of $6,000, as surety for the contracting company, conditioned that the latter should fully and faithfully perform the terms of the contract; that, in order to induce the plaintiff to become surety upon the bond, the defendant, Harry C. Carroll, together with one A. Taylor and one Edward Clark, executed and delivered to plaintiff their joint and several bond, called a third party indemnity agreement, conditioned to indemnify plaintiff from and against all liability for loss, cost, and damage of whatever kind, which plaintiff might sustain by reason of its suretyship upon the bond of the contracting company, or in defending any action brought in connection therewith, or in obtaining or attempting to obtain release from any liability thereunder. The plaintiff averred that the contracting company failed to perform the waste paper contract according to its terms and effect, and thereby became liable to the United States for damages in a sum exceeding $4,000, but refused to pay the same, or any part thereof, whereby the plaintiff, as surety, became liable to the United States for such damages; that thereupon the United States instituted an action at law against the contracting company and the plaintiff as surety upon its bond, demanding damages in the sum of $5,272.47, because of the breach of contract aforesaid; that the plaintiff, having no defense to the action, and being liable for the damages aforesaid, was obliged to pay and did pay to the United States the sum of $4,000 as a compromise sum in settlement of the damages aforesaid, such sum appearing to it to be not more than the amount of damages sustained by the United States, and being a sum less than the United States would have recovered had plaintiff defended the action and suffered a judgment to be recovered against it; that this sum was paid for the purpose of settling the demand in suit and procuring the discontinuance of the action, and the same was a loss, cost, and damage sustained by plaintiff by reason of its suretyship aforesaid; that no part of the sum thus paid by it had been repaid. Wherefore plaintiff prayed judgment.

A copy of the "third party indemnity agreement" sued upon herein is annexed to the declaration and marked Exhibit B. It contains the following provisions, to wit:

"(4) That the surety or sureties executing any such bond or bonds shall have the right, and such surety or sureties are hereby authorized, but not required, * * *

"(f) To adjust, settle, or compromise any claim, demand, suit or judgment upon any such bond or bonds, unless the indemnitors shall request such surety or sureties to litigate such claim or demand, or to defend such suit, or to appeal from such judgment, and shall, simultaneously with such request, deposit with such surety or sureties collateral satisfactory to it or them, sufficient to pay any judgment or judgments rendered, or that may be rendered, with interest, costs, expenses, and attorney's fees. * * *

"(6) That liability hereunder shall extend to and include the full amount of any and all money paid by the surety or sureties executing any such bond or bonds in settlement or compromise of any claims, suits, and judgments thereunder in good faith under the belief that it or they were liable therefor, whether liable or not, as well as of any and all disbursements on account of costs, attorney's fees, and expenses as aforesaid, which may be made under the belief that such were necessary, whether necessary or not.

"(7) That in the event of payment, settlement, or compromise of liability, loss, costs, damages, attorney's fees,...