State Sec'y Of Agriculture v. Commercial Cas. Ins. Co.

• Decision Date: 13 April 1944
• Docket Number: Nos. 27, 28.,s. 27, 28.
• Citation: 131 N.J.L. 475,37 A.2d 37
• Parties: ALLEN, State Secretary of Agriculture, v. COMMERCIAL CASUALTY INS. CO.
• Court: New Jersey Supreme Court

131 N.J.L. 475

37 A.2d 37

ALLEN, State Secretary of Agriculture,

v.COMMERCIAL CASUALTY INS. CO.

Nos. 27, 28.

Court of Errors and Appeals of New Jersey.

April 13, 1944.

COPYRIGHT MATERIAL OMITTED.

Appeal from Supreme Court.

Action by Willard H. Allen, Secretary of Agriculture of the State of New Jersey, against Commercial Casualty Insurance Company to recover on a bond filed pursuant to statute by a licensed purchaser of milk. From a judgment holding that agreements of certain milk producers to indemnify surety on licensee's bond against loss were not illegal, plaintiff appeals, and from that portion of judgment awarding plaintiff recovery in the full amount of the bond plus interest, defendant cross-appeals.

Judgment affirmed and cause remanded with directions.

CASE, DONGES, and HEHER, Justices, and RAFFERTY and THOMPSON, Judges, dissenting in part.

Edward W. Currie, Asst. Atty. Gen., for appellant.

Lum, Fairlie & Wachenfeld, of Newark (Charles S. Barrett, of Newark, of counsel), for respondent.

PERSKIE, Justice.

The questions requiring decision on the appeal and cross-appeal from the judgment entered in the Supreme Court stem from an action by the Secretary of Agriculture against the surety on a bond filed pursuant to statute by a licensed purchaser of milk. R.S. 4:12-1 et seq., N.J.S.A.

The facts which give rise to these questions were submitted to the learned trial judge (the late Judge Palmer) without a jury on an agreed state of facts.

From the facts so stipulated, and the record submitted, we learn that Elmer Kleppinger, trading as Farmer's Exchange Company, having complied with the statutory requirements (R.S. 4:12-2 to R.S. 4:12-4, N.J.S.A.), was granted a license, by our Secretary of Agriculture, plaintiff below, entitling Kleppinger to conduct the business of buying milk from producers of this state at his station or place at Belle Mead, N. J., for the period commencing July 1, 1939 and ending on June 30, 1940. R.S. 4:12-5, N.J.S.A.

By one of the requirements of the statute, Kleppinger was obliged to file with the Secretary of Agriculture a surety bond in a sum not less than one and one-half times his estimated monthly ‘indebtedness * * * to the persons from whom he may purchase * * * milk * * *.’ 4:12-4. He filed such a bond in the sum of $5000, and the Commercial Casualty Insurance Company, a corporation of this state, defendant below, became surety thereon.

Kleppinger bought milk from the producers in this state but defaulted in his payments for his purchases. Claims were filed with the Secretary of Agriculture by some 39 producers pursuant to statute totalling $7013.49. R.S. 4:12-7, N.J.S.A. The claims were audited by the Secretary of Agriculture who demanded the full amount of the bond from the surety company. R.S. 4:12-8, N.J.S.A.

The defendant surety company refused to pay anything on account of the claims of the thirteen producers, whose claims totalled $2808.69, upon the ground that they had executed an indemnity agreement with it under the terms of which these claimants agreed ‘At all times (to) indemnify’ it ‘and to hold and save it harmless from and against any and all liability, damages, loss * * *.’ Fourteen additional producers signed the indemnity agreement, but they filed no claims with the Secretary of Agriculture.

The defendant surety company likewise refused to pay in full the claims of those who did not sign this indemnity agreement, whose claims totalled $4203.80; it is, and was, willing to pay them the percentage (.71291%) which $5000-the amount of the bond-bears to $7013.49-the total amount of all claims-i. e., it is willing to pay them .71291% of $4203.80, which amounts to $2996.94.

Upon these facts, the late Judge Palmer determined that the indemnity agreement was not illegal and void, as urged by the Secretary of Agriculture, as contravening public policy; and that the Secretary of Agriculture was entitled to the full amount of the bond plus interest, viz., $5495.75, which sum he was directed to distribute in accordance with the provisions of the statute. R.S. 4:12-8, N.J.S.A.

Neither side is satisfied. The plaintiff, Secretary of Agriculture, appeals from the determination that the indemnity agreement did not contravene public policy and the defendant surety company appeals from the determination that it is liable for the full amount of its bond rather than the amount which it claimed ($2996.94) was due thereon.

1. We too are of the mind that the indemnity agreement was not contrary to public policy.

Much has been written by text writers and by the courts as to the meaning of the phrase ‘public policy.’ All are agreed that its meaning is as ‘variable’ as it is ‘vague,’ and that there is no absolute rule by which courts may determine what contracts contravene the public policy of the state. The rule of law, most generally stated, is that ‘public policy’ is that principle of law which holds that ‘no person can lawfully do that which has a tendency to be injurious to the public or against public good * * * ’ even though ‘no actual injury’ may have resulted therefrom in a particular case ‘to the public.’ It is a question of law which the court must decide in light of the particular circumstances of each case.

The sources determinative of public policy are, among others, our federal and state constitutions, our public statutes, our judicial decisions, the applicable principles of the common law, the acknowledged prevailing concepts of the federal and state governments relating to...