Metropolitan Casualty Ins. Co. v. United States, 7558.

• Decision Date: 21 December 1936
• Docket Number: No. 7558.,7558.
• Citation: 87 F.2d 144
• Parties: METROPOLITAN CASUALTY INS. CO. OF NEW YORK v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

87 F.2d 144 (1936)

METROPOLITAN CASUALTY INS. CO. OF NEW YORK v. UNITED STATES.

No. 7558.

Circuit Court of Appeals, Ninth Circuit.

December 21, 1936.

John Lichty, of Portland, Or., for appellant.

Carl C. Donaugh, U. S. Atty., and J. Mason Dillard, Asst. U. S. Atty., both of Portland, Or.

Before GARRECHT, DENMAN, and HANEY, Circuit Judges.

GARRECHT, Circuit Judge.

This is an appeal from a judgment in favor of the United States of America on a bond wherein appellant, Metropolitan Casualty Insurance Company of New York, was surety and which was given to secure the performance of the contract involved in this action.

On the 18th day of June, 1926, J. M. Bedford, doing business as Crystal Creek Logging Company, entered into a contract with the superintendent of the Klamath Indian Reservation wherein he agreed that prior to March 31, 1936, he would cut, log, and pay for certain timber upon lands described in the said contract lying within the boundaries of said reservation, the quantity of timber being estimated at 30,000,000 feet board measure.

Bedford agreed to cut and remove not less than 5,000,000 board feet prior to March 1, 1928, and not less than 5,000,000 board feet thereafter in each twelve-month period until the area was entirely logged. The schedule of prices to be paid was incorporated in the contract and the manner in which the logging should be carried on was set forth in detail. The closing paragraph of the contract is in the following language: "It is further understood and agreed that this contract shall be null and void and of no effect until approved by the Secretary of the Interior and until the latter shall approve a bond of the Purchaser in the penal sum of ten thousand dollars ($10,000) conditioned on the faithful performance of all the terms of this contract and the regulations attached hereto."

Bedford, the purchaser of the timber, applied to appellant, which is and was a surety company engaged in the business of acting as a surety on such obligations for the execution by that company as surety of a bond, with Bedford as principal, upon a form prepared by the Department of the Interior.

The bond was executed by him as principal and the company as surety upon the 21st day of September, 1926, and was delivered to and filed with the Department of the Interior. This bond, after formal recitations of the execution of the contract by Bedford, concludes as follows:

"Whereas, said Assistant Secretary of the Interior did on the 12th day of May, 1926, duly accept said proposal, and the proposal thereupon became a binding contract.

"Now, therefore, if the above-bounden Crystal Creek Logging Company, unincorporated, J. M. Bedford, sole owner, his heirs, executors, administrators, successors, and assigns, shall faithfully conform to and observe all the laws and regulations made and which shall be hereafter made for the governing of trade and intercourse with the Indians, and in no respect violate the same, and conduct all timber operations in accordance with said regulations, and all provisions of the contract entered into with Superintendent, Klamath Indian Reservation, representative of the said Assistant Secretary of the Interior and in no respect violate said regulations or contract, or either of them, then, and in that event, this obligation shall be null and void; otherwise it shall remain in full force and effect."

The penalty of this bond was the sum of $10,000.

Thereafter, pursuant to the contract, Bedford commenced logging operations upon the land under contract, but proceeded in a desultory manner, and up to and including the month of June, 1928, he had logged only 1,742,450 board feet from the tract, whereas the contract required him to have logged 5,000,000 board feet by that time, and he was further required by the terms of the contract to thereafter log a minimum of 5,000,000 board feet each year.

In June of 1928 Bedford had abandoned logging operations and thereafter failed to remove any timber from the tract. During the following year notice was repeatedly given to the appellant, Metropolitan Casualty Insurance Company, of Bedford's default under his contract, and by letter of June 10, 1929, the surety was notified that Bedford had abandoned the contract and the penalty of the...