National Sur. Corp. v. First Nat. Bank of Midland

• Decision Date: 31 January 1968
• Docket Number: No. 5914,5914
• Citation: 424 S.W.2d 27
• Parties: NATIONAL SURETY CORPORATION, Appellant, v. The FIRST NATIONAL BANK OF MIDLAND, Texas, Appellee. . El Paso
• Court: Texas Court of Appeals

Page 27

424 S.W.2d 27

NATIONAL SURETY CORPORATION, Appellant, v. The FIRST NATIONAL BANK OF MIDLAND, Texas, Appellee.

No. 5914.

Court of Civil Appeals of Texas.

El Paso.

Jan. 31, 1968.

Rehearing Denied Feb. 14, 1968.

Shafer, Gilliland, Davis, Bunton & McCollum and James M. O'Leary, Odessa, for appellant.

Turpin, Smith, Dyer, Hardie & Harmon and William C. Morrow, Midland, for appellee.

OPINION

CLAYTON, Justice.

Appellant's motion for rehearing in this cause is hereby granted and the original opinion in this cause handed down on November 15, 1967 is hereby withdrawn, and the following opinion is hereby substituted therefor.

This is an appeal from a summary judgment in a suit filed by The First National Bank of Midland, Texas, appellee, against National Surety Corporation, appellant. The suit was for recovery of $1,500.00 attorney's fees paid by appellee to defend against a suit brought against it and others by one Mrs. Oatie Beavers, alleging that she was the owner and holder of six first mortgage bonds of The Crestview Baptist Church of Midland, Texas; that she had made demand upon appellee and the church for payment of the matured and accrued interest coupons on the bonds and was refused by appellee, and paying for judgment for such matured interest, plus damages in the principal amount of said bonds, and 10% Additional as attorney's fees. In that suit the First National Bank of Middland filed a general denial and alleged that the bonds involved were in fact counterfeit and the signatures thereon were forgeries. The Bank subsequently filed its motion for summary judgment which was granted, and the Bank was dismissed from the suit, but paid $1,500.00 as a reasonable attorney's fee to the law firm which represented it. In the present suit it alleged that the appellant National Surety Corporation, which had issued to the Bank a Bankers Blanket Bond in which it had agreed to indemnify and hold harmless said bank from and against any losses sustained and discovered as set forth in said bond, had, although after demands, refused to pay or indemnify the Bank for the said attorney's fees. It was stipulated that appellee First National Bank had paid nothing to Mrs . Oatie Beavers as a result of her suit, but that appellee had paid the $1,500.00 attorney's fees for its defense in said cause of action.

In the present suit both appellant and appellee filed motions for summary judgment. The court sustained the motion of appellee and granted it a judgment against appellant for the $1,500.00 plus interest and costs. The basis of such judgment is not shown, but no mention was made of any forgery or counterfeiting of said bonds. Appellant National Surety Corporation filed this appeal in which, as a sole point, it charged error on the part of the court in sustaining appellee's motion for summary judgment and granting it judgment in the amount of the attorney's fees. Appellant relies on the wording of the Bankers Blanket Bond under the heading:

'COURT COSTS AND ATTORNEYS' FEES

'(Applicable to all Insuring Clauses now or hereafter

forming a part of this Bond)',

Under which heading it is provided:

'The Underwriter will indemnify the Insured against court costs and reasonable attorneys' fees incurred and paid by the Insured in defending any suit or legal proceeding brought against the Insured to enforce the Insured's liability or alleged liability on account of any loss, claim or damage which, if established against the Insured, would constitute a valid and collectible loss sustained by the Insured, under the terms of this bond. Such indemnity shall be in addition to the amount of this bond. In consideration of such indemnity, the Insured shall promptly give notice to the Underwriter of the institution of any such suit or legal proceeding; at the request of the Underwriter shall furnish it with copies of all pleadings and other papers therein; and at the Underwriter's election shall permit the Underwriter to conduct the defense of such suit or legal proceeding, in the Insured's name, through attorneys of the Underwriter's own selection. In the event of such election by the Underwriter, the Insured shall give all reasonable information and assistance, other than pecuniary, which the Underwriter shall deem necessary to the proper defense of such suit or legal proceeding.'

Appellant then contends:

'* * * Under the foregoing provisions, as well as the other provisions in the bonds, which measure the appellant's obligations, it is only where the liability of the insured is established in fact that the bonding company is obligated for the insured's attorney's fees. Where it is not established that the insured actually sustained a 'valid and collectible loss' under the terms of the bond, appellant is not liable.'

Contending that the bond is for indemnity against Loss only, appellant then quotes from the preamble of the said bond:

'* * * NATIONAL SURETY CORPORATION * * * agrees to Indemnify and hold harmless The First National Bank, Midland, Texas * * * from and Against any losses sustained and discovered as hereinafter set forth .' (Emphasis added).

Appellant cites us to Continental Casualty Co. v. First Nat. Bank, 116 F.2d 885, 135 A.L.R. 1141 (5th Cir., 1941), but we deem the obligation of the surety company under its bond in the cited case to the different from that in the present case. Also cited are: Fidelity & Deposit Co. v. Maryland v. Reed, 150 S.W.2d 836 (Tex.Civ.App., 1941); Home Indemnity Company v. Gonzalez, 383 S.W.2d 857 (Tex.Civ.App., 1964); (n.r.e.); 9 Appleman Insurance Law and Practice, sec. 5711, p. 586. 64 Tex.Jur.2d 445, Words and Phrases, defines 'Indemnity against loss' as follows:

'Indemnity against loss is distinguished from indemnity against liability in that an undertaking against loss or damage amounts to a guaranty of reimbursement on a payment by the indemnitee, whereas an undertaking against...