Stiewel v. American Surety Company

• Decision Date: 31 May 1902
• Parties: STIEWEL v. AMERICAN SURETY COMPANY
• Court: Arkansas Supreme Court

68 S.W. 1021

70 Ark. 512

STIEWEL v. AMERICAN SURETY COMPANY

Supreme Court of Arkansas

May 31, 1902

Appeal from Pulaski Circuit Court, JOSEPH W. MARTIN, Judge.

Affirmed.

STATEMENT BY THE COURT.

The New York Life Insurance Company issued to S. J. Shields a paid up policy of insurance upon his life for the sum of $ 760, which he afterwards assigned to Moses Siegel. Shields died, and the insurance was claimed by Siegel and also by Fannie Shields the widow of S. J. Shields. In this predicament the insurance company offered to pay the insurance to Mrs. Shields if she would procure a bond of indemnity from the American Surety Company to the insurance company to protect it from loss in the event it had to pay the insurance to another. To obtain this bond from the surety company, Mrs. Shields induced Abe Stiewel and Maxwell Coffin to execute a bond of indemnity to the surety company to protect it from loss, and the surety company thereupon executed its bond to the insurance company and the insurance company, upon receiving the bond, paid the insurance to Mrs. Shields.

The bond executed by the surety company to the insurance company is, in substance, as follows, to-wit:

"Know all men by these presents, that we, Fannie Shields, as principal, and the American Surety Company of New York, as surety, are held and firmly bound to the New York Life Insurance Company in the sum of $ 1,520, lawful money of the United States, to be paid to the said life insurance company its successors or assigns."

The condition of the bond being that Mrs. Shields should at all times keep harmless the insurance company against any claim or demand to the proceeds of said policy made and presented by any other party than that made by Mrs. Shields. The bond is signed by Fannie Shields and the American Surety Company. The name of Mrs. Shields is signed by Ed. S. Stiewel, her attorney in fact, and acknowledged by him as such.

The bond of Abe Stiewel and Maxwell Coffin to the surety company is, in substance, as follows, to-wit:

"The American Surety Company of New York having at our request become surety for Edward S. Stiewel and Fannie Shields on a certain indemnity bond of even date herewith in the sum of $ 1,500, given to the New York Life Insurance Company, a copy of which bond is hereunto annexed and made a part of the agreement. Therefore, in consideration thereof, we do hereby jointly and severally undertake and agree that we will at all times indemnify and save the surety company harmless from and against any and all demands arising by reason of or in consequence of its having executed such bond, and before it shall be required to pay the same." This bond is signed by Abe Stiewel and Maxwell Coffin.

After the two bonds were executed the insurance company was compelled by the judgment of a court to pay the insurance money to Siegel, and thereupon the surety company, in accordance with the obligation of its bond, made good the amount to the insurance company. Afterwards the surety company called upon Steiwel and Coffin to repay the amount and, they declining to do so, the surety company commenced this action upon their bond of indemnity to recover the amount it had paid to the insurance company. The defendants appeared and answered. The defense set up, in substance, that they had been induced to sign the bond by representations that Ed. S. Stiewel, as well as Fannie Shields, would sign the bond of indemnity made by the surety company to the insurance company; that they were thus led to believe that they were signing a bond for both Ed. S. Stiewel and Fannie Shields, when in fact Ed. S. Stiewel did not sign the bond his failure to do so being, as they allege, concealed from them until the bringing of this suit.

On the trial there was a verdict and judgment for the plaintiff, from which defendants appealed.

Judgment affirmed.

J. W. House and Menifee House, for appellants.

The failure of one of those mentioned in the bond as sureties to sign it discharges those who did sign. 14 Cal. 422; 22 Ind. 399; 4 La.Ann. 380; Brandt, Sur. & Guar. § 357; 11 Vt. 448; 21 Cal. 586; 37 Mich. 591; 75 Va. 309; 28 Am. Dec. 404; 7 Pet. 435; 1 Mart. 592; 7 Pet. 435; 25 Am. Rep. 706 n.; 4 Cranch, 219; 15 N.J.L. 155; 11 Vt. 447; 3 Wend. 380; 7 Wend. 188. The court erred in refusing the first instruction asked by appellants. 16 Wall. 1; 12 Leigh, 479; Brandt, Sur. § 357; 28 Am. Dec. 677; 68 Am. Dec. 761; 57 Ark. 73; 48 Ark. 441, 446. The court erred in instructing the jury that it must appear that the promise of the signature of Ed. S. Stiewel was a material inducement to the appellants when they signed the bond; and that they must determine whether or not this recital in the bond was a mere clerical mistake. The recital was material, and appellants are entitled to stand on their contract. Brandt, Sur. & Guar. § 79; 52 Mo. 75; 5 Humph. 133; 18 Gratt. 801; 43 Barb. 9; 87 Ind. 567; 66 Ind. 398; 45 Ind. 213; 17 Mass. 603-604; 2 Leigh, 157; 85 Ala. 334.

William G. Whipple, for appellee.

If there was any surety in the case at all, it was appellee, and the appellants, as obligors on the guaranty agreement, would be principals. 2 Pars. Cont. 3; 24 Pick. 252; 62 U.S. 286; 72 Ill. 13; 8 L. R. A. 380; 2 Rand. Com. Pap. § 849; 2 Pars. N. & B. 117, 118. A contract of guaranty is to be liberally construed as to the obligee, and most strongly as against the guarantor. 104 U.S. 159; 10 S. C. Rep. (U. S.) Law Ed. 152; 4 Ark. 199; 19 L. R. A. 456. That construction is preferred which renders the instrument. operative. 7 Wall. 499; 25 U.S. 515; 2 U. S. S. C. (Law. Ed.) 623. Appellants should have read and understood the agreement they signed. 1 Story, Eq. Jur. § 146; Bishp. 247; 61 U. S. App. 712; 33 C. C. A. 121.

OPINION

RIDDICK, J., (after stating the facts.)

This is an action on a bond of indemnity given by the defendants, Abe Stiewel and Maxwell Coffin, to the plaintiff, the American Surety Company, in order to induce it to give another bond to the New York Life Insurance Company. The giving of this bond by the surety company was the condition on which the insurance company had agreed to pay to Mrs. Shields, a sister of Abe Stiewel, the amount due on a certain insurance policy, about which there was some dispute by reason of the fact that another party had set up a claim thereto. The surety company gave the bond, and the insurance company paid the money to Mrs. Shields, but later, another person having recovered judgment against the insurance company on the policy, the surety company had to make good the loss, and now seeks to recover the amount from the defendants as obligors on the bond of indemnity given to it.

The defense set up by the defendants to this action is that they were induced to sign the bond to p...