Kilgore v. Union Indemnity Co.

• Decision Date: 05 March 1931
• Docket Number: 6 Div. 851.
• Parties: KILGORE v. UNION INDEMNITY CO.
• Court: Alabama Supreme Court

132 So. 901

222 Ala. 375

KILGORE v. UNION INDEMNITY CO.

6 Div. 851.

Supreme Court of Alabama

March 5, 1931

Appeal from Circuit Court, Walker County; R. L. Blanton, Judge.

Action on contract by the Union Indemnity Company against S.D Kilgore. From a judgment for plaintiff, defendant appeals. Transferred from Court of Appeals.

Affirmed.

Sowell & Gunn, of Jasper, for appellant.

London Yancey & Brower and Jim C. Smith, all of Birmingham, for appellee.

BOULDIN J.

The action is by the surety on an official bond against the principal to recover attorneys' fees incurred and paid by the surety in defense of damage suits brought against principal and surety on the bond.

The action is based on an indemnity covenant or agreement incorporated in the application to the bonding company, and which reads: "*** in consideration of the Union Indemnity Company executing the bond herein applied for or any continuation thereof I do hereby covenant, promise and agree to pay the premium or fees hereinafter agreed upon viz., Fifty Dollars ($50.00) per annum in advance, and to pay the said Company any and all loss, costs, charges, suits damages, counsel fees and expenses of whatever kind or nature, which said company shall or may for any cause, at any time, sustain or incur, or be put to, for, or by reason, or in consequence of said Company having entered into or executed," etc.

This agreement is more than an indemnity against legal liability, such as involved in liability insurance. Cases involving indemnity recoverable under general principles of law growing out of the relations of parties, or out of general covenants to hold harmless, etc., are only valuable as they afford analogy in the principles recognized and applied.

The agreement here is stated in broad terms, and must be construed to give effect to the intent, and to accomplish the purposes in view.

The attorneys' fees to be incurred by the surety are not limited to suits well founded or probably well founded in fact. Legal services are naturally required to ascertain the facts and to meet the allegations made.

Neither are they limited to cases well founded in law. The party sued is entitled to legal advice on the question of his legal liability on the face of the complaint, and to services in presenting the proper issue of law in defense. For example, one of the suits in which the surety incurred an attorney's fee was brought under the Homicide Act. Under the law, as declared by this court, the surety on an official bond is not liable for punitive damages, growing out of the malfeasance of the principal or those for whose acts he is liable. Phillips v. Morrow, 210 Ala. 34, 97 So. 130; Wilson v. Orr, 210 Ala. 93, 97 So. 133; Hain v. Gaddy, 219 Ala. 363, 122 So. 329.

But the surety, in the exercise of ordinary prudence, was not required to remain silent, and take the chances on a judgment by default, and the further legal complications to follow.

True, as appellant argues, great hardship may fall on the principal by the bringing of groundless suits. Still, if they must be defended, the question is whether he has assumed the burden of expense incurred or does it rest upon the surety.

The complaint set forth the contract, the bringing of certain suits against the surety, giving their nature and names of parties, the employement of counsel to defend the same, the sums paid as attorneys' fees for such services, and that such sums were reasonable in amount. This was sufficient. No further necessity to incur attorneys' fees need be averred.

It appears without dispute that the sheriff, the principal in the bond, employed competent counsel to defend the suit on behalf of himself and the surety, and they did interpose such defense. He did not, however,...