United States v. American Surety Co. of New York

• Decision Date: 07 March 1932
• Docket Number: No. 241.,241.
• Citation: 56 F.2d 734
• Parties: UNITED STATES v. AMERICAN SURETY CO. OF NEW YORK.
• Court: U.S. Court of Appeals — Second Circuit

56 F.2d 734 (1932)

UNITED STATES v. AMERICAN SURETY CO. OF NEW YORK.

No. 241.

Circuit Court of Appeals, Second Circuit.

March 7, 1932.

Salvador J. Capecelatro, of Utica, N. Y., for appellant.

Oliver D. Burden, U. S. Atty., of Syracuse, N. Y. (B. Fitch Tompkins, Asst. U. S. Atty., of Syracuse, N. Y., of counsel), for the United States.

Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

SWAN, Circuit Judge.

This suit is upon a bond executed by the appellant as surety and Utica High Class Perfumes & Toilet Waters, Inc., as principal. It was given to enable the principal obligor to obtain from the prohibition authorities a permit to use specially denatured alcohol for the manufacture of its products at its place of business in the city of Utica. The giving of such a bond is provided for in article 114 of Regulations 61 enacted pursuant to section 13 of title 3 of the National Prohibition Act (27 USCA § 83). No question has been raised as to the validity of the bond, or the amount of the judgment if any is recoverable. Cf. United States v. Zerbey, 271 U. S. 332, 340, 46 S. Ct. 532, 70 L. Ed. 973; United States v. Engelberg, 2 F.(2d) 720 (D. C. W. D. Pa.).

The bond was in the penal sum of $10,000, and upon the following condition: "* * * The condition of this obligation is such that if there be no material false statement in the application for such permit, and the said principal shall not violate the terms of such permit, and shall transport, store, and use such denatured alcohol in accordance with the law and regulations made pursuant thereto, and shall in all respects fully and faithfully comply with all provisions of law now or hereafter enacted and all regulations promulgated thereunder respecting such transportation, storage, and use, and shall pay for all such denatured alcohol illegally or unlawfully diverted, lost, or unaccounted for in violation of such permit and law and regulations at the rate of $4.50 per wine gallon, and in addition thereto shall pay all penalties and fines imposed, then this obligation to be void; otherwise to remain in full force and virtue."

Plaintiff's complaint charges as a breach of the condition that the perfume company withdrew 1,240 wine gallons of specially denatured alcohol in January, 1925, and illegally diverted, lost, or failed to account for the same. It alleges that thereby the obligors became liable to make payment to the plaintiff at the rate of $4.50 per wine gallon, a total of $5,580, and their failure to pay this sum after demand. The appellant's answer admitted execution of the bond and refusal to pay the sum demanded, and denied all other material allegations. The answer also set up as a separate defense that the principal had been adjudged a bankrupt upon an involuntary petition filed on January 29, 1925, and that plaintiff had filed its claim in the bankruptcy proceedings and the same had been disallowed. Upon the conclusion of the plaintiff's case, the appellant offered no evidence except a transcript of the bankruptcy proceedings relating to the disallowance of plaintiff's claim. A verdict was found for the plaintiff, and judgment was entered thereon.

The appellant first challenges the correctness of admitting in evidence a document which was offered by plaintiff as an admission by the perfumery company of its receipt of the 1,240 wine gallons of denatured alcohol in question. Article 116 of Regulations 61 requires a user of specially denatured alcohol to file with the collector of the proper district on or before the 10th day of each month a report on a prescribed form covering transactions for the preceding month. The document to which objection was made is such a report, subscribed and sworn to on behalf of the perfumery company by its secretary on February 2, 1925. The authority of the secretary to make reports of this character was proven by a resolution of the directors; and the argument that such authority was terminated by the appointment of a receiver in bankruptcy is entirely groundless. Such receivership did not affect the authority of corporate officers as to antecedent matters. Cf. In re Dressler Producing Corp., 262 F. 257, 260 (C. C. A. 2). The alcohol mentioned in the report never came into the possession of the receiver. If, as plaintiff sought to prove, it was delivered to the perfumery company in January, 1925, the latter came under a duty to account for it in accordance with the regulations. Indeed, the making and filing of the report in question was one of the very duties performance of which was guaranteed by the bond. It is well-established law that...