R. P. Williams & Co v. United States Fid. & Guar. Co

• Citation: 11 Ga.App. 635,75 S.E. 1067
• Decision Date: 09 October 1912
• Docket Number: (No. 4,270.)
• Parties: R. P. WILLIAMS & CO. et al. v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: United States Court of Appeals (Georgia)

75 S.E. 1067
(11 Ga.App. 635)

R. P. WILLIAMS & CO. et al.
v.
UNITED STATES FIDELITY & GUARANTY CO.

(No. 4, 270.)

Court of Appeals of Georgia.

Oct. 9, 1912.

(Syllabus by the Court.)

1. Principal and Surety (§ 175^*)—Construction of Contract — Action for Breach.

Where, in consideration of the execution of a bond by a surety company, the condition

[75 S.E. 1068]

of which was the faithful performance by the principal of a certain building contract, the principal executed a written instrument as a part of the application for the bond, agreeing to indemnify the surety company "against all loss, costs, damages, charges, and expenses whatever resulting from any act, default, or neglect" of the principal which the surety might "sustain or incur, " the indemnity agreement of the principal was not merged in and extinguished by the bond, but suit for its breach could be brought thereon at any time within the statutory period.

[Ed. Note.—For other cases, see Principal and Surety, Cent. Dig. §§ 505-509; Dec. Dig. § 175.^2-*]

2. Bankruptcy (§ 316*)—Provable Debts— "Sustain or Incur."

The liability of the principal to the surety in the bond, under the indemnity agreement set forth above, does not constitute a claim provable in bankruptcy against the estate of the principal until the surety has actually paid the obligee in the bond the damages sustained by reason of the principal's default. No such damage has been sustained or incurred by the surety, within the meaning of the agreement, until after actual payment.

[Ed. Note.—For other cases, see Bankruptcy, Cent. Dig. §§ 474-476; Dec. Dig. § 316.*

For other definitions, see Words and Phrases, vol. 4, pp. 3527, 3528.]

(Additional Syllabus by Editorial Staff.)

3. Bankruptcy (§ 314*) — "Allowable Debts"—"ProvaIble Debts."

A deed is not allowable in bankruptcy, unless it is provable; but it may be provable, without being allowable. Allowability implies, not only provability, but also validity; and if for any reason the claim is improper, or if there is a good defense to it, it is not allowable, though it may be provable, as a debt.

[Ed. Note.—For other cases, see Bankruptcy, Cent. Dig. §§ 469-473, 478, 483-487, 489, 490; Dec. Dig. § 314.*

For other definitions, see Words and Phrases, vol. 6, pp. 5746, 5747.]

4. Indemnity (§ 1*)—Nature of.

"Indemnity" consists in the obligation or duty resting on one person to make good any loss or damage another has incurred while acting at his request or for his benefit.

[Ed. Note.—For other cases, see Indemnity, Cent. Dig. § 1; Dec. Dig. § l.*

For other definitions, see Words and Phrases, vol. 4, pp. 3539, 3540.]

Error from City Court of Atlanta; H. M. Reid, Judge.

Action by the United States Fidelity & Guaranty Company against R. P. Williams & Co. and others. Judgment for plaintiff, and defendants bring error. Affirmed.

The case as made by the petition was substantially as follows: The defendants entered into a contract for the building of a schoolhouse in the state of Florida. They executed to the trustees of the school a bond in the penal sum of $7,500, conditioned to faithfully comply with all of the terms of the contract. The bond further provided that, if the principals should fail to comply with the conditions of the contract to such an extent that the same should be forfeited, the surety should have the right to assume the contract and to sublet or complete the building, whichever the surety might elect to do; that in the event of a breach of any of the conditions of the bond the surety should be subrogated to all the rights of the principals under the contract, and all deferred payments and all money and property at that time due and payable, or which might thereafter become due and payable, to the principals under the contract, should be credited upon any claim which the trustees might make upon the surety because of the breach of contract. The bond was issued pursuant to a written application made to the surety company by the contractors, in which application they agreed to indemnify the surety "against all loss, costs, damages, charges, and expenses whatever resulting from any act, default, or neglect of ours that said United States Fidelity & Guaranty Company may sustain or incur by reason of its having executed said bond or any continuation thereof." The agreement further provided: "And we further agree, in the event of our being unable to complete or carry on the aforementioned contract, to assign such plant as we may own, or have upon said work, to the said United States Fidelity & Guaranty Company, that it may use the same in the prosecution of said work to completion. We hereby further agree, for ourselves, our heirs, executors, and administrators, to accept the vouchers or other evidence of any losses paid by the United States Fidelity & Guaranty Company under the aforesaid obligation, together with vouchers, or other evidence of payment, of all costs and expenses whatever incurred by the said United States Fidelity & Guaranty Company in adjusting such loss or in completing said contract, as conclusive evidence against us and our individual estates of the fact and extent of our liability under said obligation to the said United States Fidelity & Guaranty Company. And we do further agree, in the event of any breach or default on our part of the provisions of the contract hereinbefore mentioned, that the United States Fidelity & Guaranty Company, as surety on the aforesaid bond, shall be subrogated to all our rights and properties as principals in said contract, and that deferred payment and any and all moneys and properties that may be due and payable to us at the time of such breach or default, or that may thereafter become due and payable to us, on account of said contract, shall be credited upon any claim that may be made upon the United States Fidelity & Guaranty Company under the bond above mentioned." The application, with the agreement made by the contractors therein embodied, was under...