Hartford Acc. & Indem. Co. v. Cassidy Com'n Co. of Oklahoma, Inc.
| Decision Date | 29 November 1993 |
| Citation | 956 F.2d 278 |
| Parties | NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of |
| Court | U.S. Court of Appeals — Tenth Circuit |
Before JOHN P. MOORE, TACHA and BRORBY, Circuit Judges.
After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.9. The case is therefore ordered submitted without oral argument.
Hartford Accident & Indemnity Company (Hartford) commenced this action under 28 U.S.C. § 2201 seeking a declaration that it is not liable to defendant Ken Sandoz in its capacity as surety on certain livestock dealer bonds. The district court granted summary judgment for Hartford and Sandoz appeals. We affirm.
The pertinent facts are stipulated. Cassidy Commission Company of Oklahoma, Inc. (Cassidy) is registered as a dealer in livestock under the Packers and Stockyards Act, 7 U.S.C. §§ 181-231 (the Act). As required under the Act, see 7 U.S.C. § 204, Hartford, in 1977, issued to Cassidy livestock dealer bonds which the parties refer to as the Conditions No. 1 Bond and the Conditions No. 2 Bond. The Conditions No. 1 Bond incorporates the language of the implementing regulation, see 9 C.F.R. § 201.31(a), and provides, in part, as follows:
Applicable if Principal SELLS on commission: (1) If the said Principal shall pay when due to the person or persons entitled thereto the gross amount, less lawful charges, for which all livestock is sold for the accounts of others by said Principal, then this bond shall be null and void, otherwise to remain in full force and virtue....
The Condition No. 2 Bond also incorporates the language of the implementing regulation, see 9 C.F.R. § 201.31(b), and provides, in part, as follows:
Applicable if Principal BUYS on commission or as a dealer: (2) If the said Principal shall pay when due to the person or persons entitled thereto the purchase price of all livestock purchased by said Principal for his own account or for the accounts of others, and if the said Principal shall safely keep and properly disburse all funds, if any, which come into his hands for the purpose of paying for livestock purchased for the accounts of others, then this bond shall be null and void, otherwise to remain in full force and virtue....
On December 1, 1988, Donald Kniss, a Cassidy employee, contacted Sandoz in Arizona by telephone. During the course of their conversation, Sandoz agreed to purchase and resell to Cassidy 230 head of cattle. The purchase price agreed to by Sandoz and Kniss was $98.50 per hundredweight, and the resale price was $99.00 per hundredweight, a difference of $.50 per hundredweight or a total difference of $496.28. Prior to the purchase and resale, Sandoz did not receive any descriptive material relative to the cattle, and the parties concede that the cattle never existed.
Sandoz issued a check to Kniss for $97,784.98 on December 1. The check was sent by airplane to Oklahoma City. It was picked up at the airport, endorsed by Kniss and deposited on December 1 or 2 in Cassidy's bank account. On December 2 and December 17, Cassidy issued checks to Sandoz for $98,281.26, which constituted the resale price agreed to by Kniss and Sandoz. Cassidy stopped payment on both checks and Kniss was discharged in January 1989.
The sole question presented in this case is whether Cassidy's livestock bonds provide coverage for the December 1 transaction. Interpretation of a bond is an issue of law which we review de novo. See Heins v. Ruti-Sweetwater, Inc. (In re Ruti-Sweetwater Inc.), 836 F.2d 1263, 1266 (10th Cir.1988). Because the bonds in question in this case are required by statute, we review the bonds in light of the statute. See Adair State Bank v. American Casualty Co., 949 F.2d 1067, 1072 (10th Cir.1991).
The purpose of the bond requirement of the Act is to safeguard producers of cattle against the losses they would suffer if they sold their livestock to insolvent or defaulting purchasers. Travelers Indem. Co. v. Manley Cattle Co., 553 F.2d 943, 945 (5th Cir.1977). By building confidence in the financial stability of livestock dealers, the Act seeks to stabilize and encourage the production of beef and other livestock. Id.
We agree with the district court that the Conditions No. 1 Bond has no application to the December 1 transaction. As ...
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