American Surety Co. of New York v. Blake

• Decision Date: 08 November 1927
• Docket Number: 4892
• Parties: AMERICAN SURETY COMPANY OF NEW YORK, a Corporation, Appellant, v. J. W. BLAKE and GRACE BLAKE, Administratrix of the Estate of P. H. BLAKE, Deceased (Substituted for J. J. BLAKE, Executor of the Estate of P. H. BLAKE, Deceased), Respondents
• Court: Idaho Supreme Court

261 P. 239

45 Idaho 159

AMERICAN SURETY COMPANY OF NEW YORK, a Corporation, Appellant, v. J. W. BLAKE and GRACE BLAKE, Administratrix of the Estate of P. H. BLAKE, Deceased (Substituted for J. J. BLAKE, Executor of the Estate of P. H. BLAKE, Deceased), Respondents

No. 4892

Supreme Court of Idaho

November 8, 1927

ESTATES OF DECEASED PERSONS-CLAIMS AGAINST-FOREIGN CORPORATIONS COMPLYING WITH LAWS ARE SUBJECT TO STATUTE OF LIMITATIONS-APPEAL AND ERROR-PROOF OF MAILING LETTER-SUFFICIENCY-INDEMNITY AGREEMENT-CANCELATION-NOTICE-TIME-PRIMA FACIE EVIDENCE OF-CONSIDERATION-INDEMNITORS-OBLIGATION-DISCHARGE.

1. Foreign corporation, prohibited under Const., art. 11, sec 10, from doing business within state without having agent on whom process may be served, having designated agent in Idaho for service of process under C. S., sec. 4773, held within sections 4778, 4779, and not considered as "out of state," within section 7581, so as to be permitted to file claim against a decedent's estate more than ten months after notice to creditors.

2. While a foreign corporation is not compelled to do business in Idaho, if it does so, within Const., art. 11, sec. 10, and C. S., secs. 4773, 4778, 4779, it becomes subject to the same laws and statute of limitations as a domestic corporation.

3. In action to recover on indemnity agreement, where defendant identified copy of letter sent to plaintiff terminating agreement, since, when copy was offered, plaintiff made no objection to sufficiency of proof of mailing, proof, clothed with presumption surrounding proof of mailing, must be considered sufficient to show mailing and receipt.

4. Where, under agreement of indemnity, defendant indemnitors agreed to furnish plaintiff surety company release of its liability on bond as condition of their release from liability as indemnitors, letter from them to surety as notice to cancel their responsibility in connection with bond held insufficient to absolve them from liability already accrued.

5. Where defendants under indemnity agreement agreed to furnish surety company complete cancelation and release of liability on bond as condition of their release, notice in their letter to surety company canceling any responsibility in connection with bond was sufficient to absolve them from further liability accruing after reasonable time, within which surety could secure its own release by giving notice of withdrawal, under C. S., sec. 314.

6. In action to recover on indemnity agreement in consideration of plaintiff surety company's execution of bond for bank as state depository, and which provided that voucher showing payment by plaintiff was prima facie evidence of indemnitor's liability to plaintiff, introduction in evidence of voucher showing payment made by surety to state on insolvency of bank made prima facie case of indemnitor's liability for full amount of voucher.

7. In action on indemnity agreement executed by stockholders of a bank, in consideration of plaintiff surety company's execution of bond for bank as state depository, so long as bank remained depository, there was sufficient consideration to support agreement, and fact that indemnitors ceased to be stockholders did not relieve them of liability, where it was incumbent on them first to relieve surety company from its liability on bond already assumed.

8. Where stockholders of bank executed indemnity agreement in consideration of plaintiff surety company's execution of a bond for bank as state depository, fact that surety company demanded of bank a new agreement did not release indemnitors in absence of new indemnity, or release of bond already executed, and of liability of surety thereon.

9. Where stockholders of bank executed indemnity agreement in consideration of surety company's execution of bond for bank as state depository, act of surety company continuing bond after notice to state of cancelation held within its rights under terms of indemnity agreement, which covered, not only bond, but alterations, renewals, extensions or modifications.

APPEAL from the District Court of the Second Judicial District, for Clearwater County. Hon. Edgar C. Steele, Judge.

Action on indemnity agreement. Judgment for defendants. Affirmed in part and reversed in part.

As to the defendant estate, judgment affirmed. As to the defendant J. W. Blake, judgment reversed and a new trial ordered. Costs to appellant against the respondent J. W. Blake, and costs to the respondent estate against the appellant.

Guy W Wolfe, for Appellant.

This is a suit upon an indemnity agreement wherein the respondents, in consideration of the execution of a surety bond, agreed "to at all times indemnify and save the surety harmless from and against every claim, demand, liability, etc.," by reason of such suretyship and "any and all renewals and extensions thereof." The contract was in writing and its terms are to be construed as any other contract. (22 Cyc., p. 84; 14 R. C. L. 46.)

The surety bond having been breached, the vital question in the case is whether or not the indemnity agreement was effective when the surety paid the loss under its bond. (National Surety Co. v. Campbell, 108 Wash. 596, 185 P. 602; National Surety Co. v. Blumauer, 247 F. 937.)

The indemnity contract cannot be canceled, rescinded or abrogated except in accordance with its terms. (14 R. C. L., p. 60, sec. 18; Morrow v. Campbell, 7 Port. (Ala.) 41, 31 Am. Dec. 704.)

The notice of election to cancel the surety bond being withdrawn before the ninety-day period fixed by the statute, no cancelation of the bond was effected. (C. S., secs. 311, 314 and 326; 32 Cyc., p. 86.)

The indemnitors are not released by an act of their principal which does not vary their contract or the relations of the parties. (Roach v. Summers, 87 U.S. 165, 22 L.Ed. 252.)

Foreign corporations complying with the laws of Idaho and doing business within the state are yet nonresidents of the state, the only effect of the compliance being, to create an agency upon whom personal service of process in actions arising within the state may be made. (C. S., secs. 4773, 4775-4778.)

Such a corporation otherwise is entitled to the rights and privileges granted a natural person residing without the state. (Boyer v. Northern P. Ry. Co., 8 Idaho 74, 66 P. 826, 70 L. R. A. 691; Bergner & Engel Brewing Co. v. Dreyfus, 172 Mass. 154, 70 Am. St. 251, 51 N.E. 531; Jennings v. Idaho Ry. etc. Co., 26 Idaho 703, Ann. Cas. 1916E, 359, 146 P. 101, L. R. A. 1915D, 115.)

Cox & Martin, for Respondent Grace Blake, Admx.

Statutes limiting the time for presentation of claims in probate are statutes of limitation. (Pulliam v. Pulliam, 10 F. 53; Woerner's Am. Law of Administration, 2d ed., p. 912, par. 400.)

Foreign corporations which have complied with local laws may plead and are subject to local statutes of limitation. (C. S., secs. 4778, 4779, 6622, 7581; McCabe v. Illinois Central Ry. Co., 13 F. 827; Tiller v. St. Louis & S. F. R. Co., 189 F. 994; Southern Ry. Co. v. Mayes, 113 F. 84, 51 C. C. A. 70; Pennsylvania Co. v. Sloan, 1 Ill.App. 364; Thompson v. Texas Land & Cattle Co. (Tex.), 24 S.W. 856; Ilse v. Aetna Indemnity Co., 69 Wash. 484, 125 P. 780; Bank of America v. Whitney Central Nat. Bank, 261 U.S. 171, 43 S.Ct. 311, 67 L.Ed. 594.)

A. H. Oversmith, for Respondent J. W. Blake.

A guarantor's liability may be released through laches. ( In re Kelley, 173 Mich. 492, Ann. Cas. 1914D, 848, 139 N.W. 250.)

A surety is a favorite of the law and should be held only where his liability is fixed by the most strict law. (City of Pocatello v. Fargo (on rehearing), 41 Idaho 432, 242 P. 297; United States v. Bayly, 39 App. D. C. 105, 41 L. R. A., N. S., 422.)

Letters of the bank alone were sufficient notice to the appellant of the change of stockholders in the Fidelity State Bank. ( General Motors Acc. Corp. v. Gandy (Cal. App.), 248 P. 999; Bridgeport State Bank v. Union Warehouse & Milling Co., 137 Wash. 190, 242 P. 13.)

Under the terms of the indemnity agreement it was incumbent upon appellant to show that the guarantors requested the continuation of the bond by the payment of the annual premium. (National Surety Co. v. Campbell, 108 Wash. 596, 185 P. 602.)

TAYLOR, J. Wm. E. Lee, C. J., and Givens and T. Bailey Lee, JJ., concur.

OPINION

TAYLOR, J.--

Plaintiff, American Surety Company of New York, appellant, brought this action to recover upon an indemnity agreement executed by defendant J. W. Blake and P. H. Blake, then stockholders, and president and cashier, respectively, of Fidelity State Bank of Orofino, in consideration of plaintiff's execution of a bond for the bank as a state depository. The bank became insolvent upon April 8, 1921, and plaintiff, upon July 2, 1921, paid the state of Idaho $ 1,291.40, which it seeks to recover.

P. H. Blake having died, a claim was presented against his estate prior to decree of distribution but more than ten months after publication of notice to creditors. This claim was disallowed as not filed in time and barred by C. S., sec. 7581. The defendant made two defenses: First, that the indemnity agreement was not in effect when the insolvency occurred; and, second, as to the estate, the bar of the statute of limitations.

The court found that the indemnity agreement was not in effect, and that the plaintiff, a foreign corporation, having designated an agent in Idaho for service of process, and otherwise complied with the constitution and laws of Idaho as a foreign corporation doing business in Idaho, was not entitled to be considered as "being out of the state" within the purview of C. S., sec. 7581, and thus file its claim more than ten months after notice to creditors.

Plaintiff was stipulated to be a foreign corporation lawfully...