Oppenheim v. National Sur. Co.
| Decision Date | 12 November 1924 |
| Docket Number | 11312. |
| Citation | 231 P. 1076,105 Okla. 223,1924 OK 1017 |
| Parties | OPPENHEIM v. NATIONAL SURETY CO. |
| Court | Oklahoma Supreme Court |
Rehearing Denied Jan. 2, 1925.
Syllabus by the Court.
A contract of "guaranty" is a collateral undertaking and presupposes an original contract; while a contract of "indemnity" is original and independent. In a contract of "indemnity," the undertaking is to make good and save harmless the person, with whom the contract is made, upon an obligation of such person to a third person while, in a contract of "guaranty," the obligation is to answer for the debt, default, or miscarriage of another to the person with whom the contract is made.
Additional Syllabus by Editorial Staff.
Bond protecting surety company from loss by reason of bond executed by it for lessee under coal lease, conditioned on payment by lessee of royalties under lease, held a contract of "indemnity," under Rev. Laws 1910, § 1074, and not a "continuing guaranty" under section 1041.
Commissioners' Opinion, Division No. 2.
Appeal from District Court, Pittsburg County; A. C. Brewster, Judge.
Action by the National Surety Company against Sam Oppenheim. Judgment for plaintiff, and defendant appeals. Affirmed.
W. H Fuller, Geo. M. Porter, and John L. Fuller, all of McAlester, for plaintiff in error.
A. C. Markley, of McAlester, for defendant in error.
The Ph nix Coal Company, as lessee, had a government coal lease upon certain land in Pittsburg county, and the lessee was required to execute a bond to the United States in the sum of $10,000 for the payment of royalties under said lease. On April 1, 1914, the defendant, Oppenheim, executed a bond to the plaintiff, National Surety Company, to the effect that the plaintiff would be held harmless from all demands and losses by reason of its executing said bond for the lessee. In May, 1914, the lessee executed a bond to the United States in the sum of $10,000, to pay all royalties becoming due on the coal lease with the defendant, Oppenheim, and the plaintiff, National Surety Company, as sureties thereon. On January 25, 1919, the plaintiff was required to pay, and did pay, to the United States Indian Agency at Muskogee, the sum of $1,395.20, royalties that the lessee had failed to pay to the United States.
The action was commenced by the plaintiff, National Surety Company, against the defendant, Oppenheim, on the bond executed April 1, 1914, by the lessee and the defendant to save the plaintiff harmless from all demands by reason of the surety bond executed for the lessee. The record shows that, at the time the defendant executed the bond in question to the plaintiff, he was the secretary and treasurer of the Ph nix Coal Company, and that he sold out his interest in the company and notified the plaintiff to cancel and release him from said bond prior to the time any of the royalties became due, which the plaintiff paid. At the conclusion of the defendant's evidence, the court sustained a demurrer thereto and directed a verdict for the plaintiff in the sum sued for.
The principal assignment of error, and the one that disposes of the case here on appeal, is that the bond sued on is a continuing guaranty and that the defendant's liability thereunder ceased when the defendant notified the plaintiff to cancel said bond and to release him from further liability thereon.
The defendant contends that the bond comes within the meaning and purview of section 1041, R. L. 1910, defining a "continuing guaranty" to be:
"A guaranty relating to a future liability of the principal, under successive transactions, which either continues his liability or from time to time renews it after it has been satisfied, is called a continuing guaranty."
The plaintiff contends that said bond is one of "indemnity," within the meaning and purview of section 1074, R. L. 1910, as follows:
"Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person."
If said bond is a continuing guaranty, the defendant was released therefrom when the notice was received by the plaintiff from the defendant revoking it. Section 1042, R. L. 1910.
In sustaining the demurrer to the evidence of the defendant, the trial court necessarily took the view that the bond in question was one of indemnity instead of a continuing guaranty, and we concur in this view. A "guaranty" is a promise to answer for the debt, default, or miscarriage of another. Section 1026, R. L. 1910. "Guaranty" is a collateral agreement and presupposes an original contract the guarantor guarantees payment or performance by the principal. To...
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