Aetna Indemnity Co. v. City of Haverhill
| Decision Date | 24 November 1905 |
| Docket Number | 603. |
| Citation | 142 F. 124 |
| Parties | AETNA INDEMNITY CO. v. CITY OF HAVERHILL. |
| Court | U.S. Court of Appeals — First Circuit |
Boyd B Jones (George W. Buck, on the brief), for plaintiff in error.
Essex S. Abbott, City Sol., for defendant in error.
Before LOWELL, Circuit Judge, and ALDRICH and BROWN, District Judges.
This is an action of contract brought by the city of Haverhill defendant in error, against the Aetna Indemnity Company plaintiff in error, as surety upon two bonds given by Glines the city's treasurer, for the faithful performance of his duties in the years 1902 and 1903, respectively. Glines was a defaulter. By direction of the court the jury found a verdict for the city. The case comes before this court upon numerous exceptions and assignments of error which present a single question, viz., was the court below justified in directing the verdict?
The execution of the bonds was admitted, and the breach of their conditions. The answer set up that the city applied to the company for the delivery of the bonds; that at the time of the application, and in order to induce the company to execute and deliver them, the city made to the company certain materially false representations concerning Glines, by which the company was induced to execute the bonds; that the city then concealed from the company certain material facts for the purpose of inducing the company to execute and deliver the bonds, and, that the company was thereby induced to execute and deliver them; that, on discovering the falsity of the aforementioned representations, the company tendered back the premiums, notified the city 'that it claimed the bonds had been obtained by fraud,' rescinded the agreement, and demanded their return. The evidence showed false representations by Glines made in the application to the company. The latter conceded that a surety is liable on a bond which he has been induced to execute by the fraud of some person other than the obligee or his agents, but contended that where the bond is procured by the obligee, and the surety is induced to execute it by the fraud of some one acting in the obligee's behalf, then the surety is not bound.
Assuming without deciding, that the laws of Massachusetts authorize a city to procure, of its own motion and in its own behalf, a bond guarantying it from loss through its treasurer; assuming further, though the assumption would deprive the bond of nearly all practical value, that a city, in procuring the bond, may accredit its treasurer, the very official whose honesty is to be guaranteed, so as to be bound by his representations, yet we are of opinion that in the case at bar the city must prevail. There is no evidence that it procured the execution of this bond on its own behalf, or did anything more than approve the bond which the treasurer gave in compliance with Massachusetts Rev. Laws, c. 25, Sec. 72, and pay the surety's charge as authorized by chapter 26, Sec. 23. The instrument in question was not an insurance policy taken out by the city to protect itself from...
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Post v. Maryland Cas. Co.
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...denied 187 U.S. 648, 23 S.Ct. 847, 47 L.Ed. 348, was to the same effect. As suggested by Judge Lowell in ?tna Indemnity Co. v. City of Haverhill, 142 F. 124, 125 (C.C.A. 1), such bonds would have little practical value if an obligee is to be bound by dishonest representations by the very pe......