Aetna Cas. & Sur. Co. v. Fleischman Wine & Liquor Co.

• Decision Date: 07 January 1936
• Citation: 269 N.Y. 614,200 N.E. 23
• Parties: AETNA CASUALTY & SURETY CO. v. FLEISCHMAN WINE & LIQUOR CO., Inc.
• Court: New York Court of Appeals Court of Appeals

269 N.Y. 614

200 N.E. 23

AETNA CASUALTY & SURETY CO.

v.FLEISCHMAN WINE & LIQUOR CO., Inc.

Court of Appeals of New York.

Jan. 7, 1936.

Action by the AEtna Casualty & Surety Company against the Fleischman Wine & Liquor Company, Incorporated. From an order of the Appellate Division, First Department (245 App.Div. 718, 281 N.Y.S. 1013), affirming an order of the Special Term, granting a motion by defendant for reargument of a motion by plaintiff for summary judgment, and upon such reargument denying such motion, plaintiff appeals, and questions are certified.

Questions answered, and order of Appellate Division and that of Special Term reversed, and motion granted.

Appeal, by permission, from an order of the Appellate Division of the Supreme Court in the First Judicial Department entered June 20, 1935, which unanimously affirmed an order of Special Term granting a motion by defendant for reargument of a motion by plaintiff for summary judgment, and upon such reargument denying such motion. The action was brought to recover upon an indemnity agreement given to plaintiff, the surety, by defendant, the principal, on a bond filed pursuant to the Alcoholic Beverage Control Law (Consol. Laws, c. 3-B). Defendant was licensed in December, 1933, under such law, to traffic in liquor and/or wine at wholesale, at 1714 Church avenue, borough of Brooklyn, and, pursuant thereto, the above-mentioned bond was filed with the State Alcoholic Beverage Control Board. The conditions of the bond were, in substance, that defendant would not suffer or permit any violation of the Alcoholic Beverage Control Law, or of the rules of such board. In consideration of the issuance by plaintiff of the above-mentioned bond, defendant executed an agreement to indemnify plaintiff against all liability, losses, damages, disbursements and expenses which plaintiff should sustain or incur as a result of executing the bond. The indemnity agreement further provided that defendant should be liable for all such payments made in good faith in the belief that plaintiff was liable therefor, whether or not they were actually necessary. After notice and a hearing, defendant's license was, on March 1, 1934, revoked by the State Alcoholic Beverage Control Board on the ground that the defendant had made false statements in the application for its license. On March 23, 1934, the board notified plaintiff that defendant's license had been revoked, and made demand upon plaintiff for the full amount of the bond; and on June 12, 1934, the plaintiff paid the full amount thereof to the people of the state of New York. Before and after making such payment, plaintiff demanded of defendant the amount thereof, and the defendant having refused to pay the same, the plaintiff, on July 19, 1934, commenced this action to recover upon the indemnity agreement. The defendant, for a second affirmative defense, alleged, among other things, that there had not been an adjudication by a court of competent jurisdiction that defendant had violated the Alcoholic Beverage Control Law; that no fine had been legally imposed upon defendant for the violation of which defendant was charged by the Alcoholic Beverage Control Board (see sections 83 and 97 of the Alcoholic Beverage Control Law, Laws 1933, c. 180); that, therefore, defendant's bond had not been forfeited; and that, by reason of the above, plaintiff was a volunteer in making payment under the bond to the board, and was not entitled to be indemnified by defendant.

The following questions were certified:

‘1. Under the law of the State of New York is it necessary for the State Alcoholic Beverage Control Board to bring suit and to recover judgment on a bond issued under the Alcoholic Beverage...