United States Fidelity & Guaranty Co. v. Fultz

• Decision Date: 29 July 1905
• Parties: UNITED STATES FIDELITY & GUARANTY COMPANY v. FULTZ
• Court: Arkansas Supreme Court

89 S.W. 93

76 Ark. 410

UNITED STATES FIDELITY & GUARANTY COMPANY v. FULTZ

Supreme Court of Arkansas

July 29, 1905

Appeal from Ouachita Circuit Court, CHARLES W. SMITH, Judge.

Affirmed.

STATEMENT BY THE COURT.

Appellee D. W. Fultz, recovered a judgment for $ 2,500 in the Circuit Court of Ouachita County against the Minneapolis Fire & Marine Insurance Company on a policy of insurance to him upon his property which was destroyed by fire, and on appeal to this court the judgment was affirmed. 72 Ark. 365. Pending the appeal to this court, appellee brought this suit against said insurance company and the appellants herein as sureties on a bond executed to the State of Arkansas, as required by statute, conditioned for the payment of all claims arising and accruing to persons by virtue of policies of insurance issued by said insurance company.

The bond sued on is in the following form, towit:

"Know all men by these presents: That we, the Minneapolis Fire & Marine Mutual Insurance Company of Minneapolis, Minn., as principal, and the United States Fidelity & Guaranty Company a corporation created and existing under the laws of Maryland, and Sam W. Reyburn and W. B. Scull, of Little Rock as sureties, are held and firmly bound unto the State of Arkansas in the sum of twenty thousand dollars, lawful money of the United States; for the payment of which well and truly to be made we hereby bind ourselves, our executors administrators and assigns, jointly, severally and firmly by these presents.

"Witness our hands and seal this 1st day of March, 1900.

"The conditions of the above obligation are such that:

"Whereas, The said Minneapolis Fire & Marine Mutual Insurance Company has filed its charter and statement, and in other respects conformed to the statutes in such cases made and provided, and

"Whereas, the said company proposes to enter this State (or continue in this State) for the purpose of transacting the business of fire insurance for the period of one year ending March 1, 1901.

"Now, therefore, if the said Minneapolis Fire & Marine Mutual Insurance Company shall promptly pay all claims arising and accruing to any person or persons during said term of one year by virtue of any policy issued by the said company upon the life or person of any citizen of the State of Arkansas, or upon any property situated in the State of Arkansas, when the same shall become due, and shall faithfully comply with and perform all and singular the duties and obligations imposed upon them by reason of an act of the General Assembly of the State of Arkansas, approved March 6, 1899, entitled, 'An Act for the punishment of pools, trusts, and conspiracies to control prices,' and shall pay to the State of Arkansas all such sums of money as shall be adjudged against them for the violation of any of the provisions of said act,' then this obligation shall be void; otherwise to remain in full force and effect."

The bond is shown to have been delivered to the Auditor of State on March 16, 1900, and on that day approved by him and filed in his office.

This insurance company had been doing business in the State during the year previous, and had filed with the Auditor a bond in similar form, with other parties as sureties, dated May 16, 1899, conditioned for the payment of all claims arising and accruing during one year ending May 16, 1900.

The plaintiff's property insured under the policy was destroyed by fire on March 2, 1900; and the policy contained a clause providing that the amount of loss proved thereunder should be payable 60 days after receipt of proof of loss.

Affirmed.

Cantrell & Loughborough, for appellants.

Appellee has sued upon the wrong bond, because:

The bond sued upon was not in force at the date when the plaintiffs' claim arose. The date in the bond does not necessarily control in such a case. Devlin, Deeds, § 182; Brandt, Sur. & Guar. §§ 25, 27; Throop, Public Officers, § 183. The date of delivery and acceptance controls, and the bond takes effect only from that date. Brandt, Sur. & Guar., §§ 93, 526; Throop on Public Officers, § 204; 19 How. 73; 79 Cal. 84; 3 Daly (N. Y.), 398; 114 N.Y. 197; 42 Hun, 646; 19 Md. 309; Gilp. (U. S.) 106; 42 Ark. 392; 22 Iowa 360; 53 Me. 252; 25 Mich. 36; 14 Lea (Tenn.), 1; 81 N.Y. 592; 65 N.C. 409; 11 Gill & Johns. (Md.), 309; 24 Ark. 244.

The bond is not retrospective. Throop, Public Officers, § 204; Brandt, Sur. & Guar. §§ 93, 526; 195 Ill. 445; 41 Mich. 225; 5 Pet. 373; 15 Pet. 187; 126 Mass. 320; 89 Mo. 470; 19 How. 73; 166 U.S. 572; 27 Am. & Eng. Enc. Law, 442; 56 Miss. 648; 79 Cal. 84. This is shown by the language of the bond, which plainly relates to the future. 3 Cranch, 399; 15 Pet. 187, 206; 5 Rose's Notes, 106; 91 Tex. 113, 121; 42 Hun, 646; 2 McLean, 405; 9 Daly, 398; 114 N.Y. 119. As to when plaintiffs' cause of action accrued, see: Century Dict. verbo "accrue"; 10 Wis. 433-5; Bouvier, L. Dict. verbo "accrue"; Anderson's L. Dict. Id; 59 Hun, 145; 52 C. C. A. 663. The liability of a surety will not be extended by implication. Brandt, Sur. & Guar. § 106; 7 Wheat. 680; 163 Ill. 467; Mech. Pub. Off. § 282. The new bond did not take effect until May 16, 1900. Brandt, Sur. & Guar. § 617; 107 Mich. 151; 24 Fed. Cas. 1250; 80 Me. 362; 4 Hen. & M. (Va.) 208; Mechem, Public Officer, § 268; Throop, Public Officers, § 207; 62 Ark. 135.

Gaughan & Sifford and Smead & Powell, for appellee.

The bond plainly makes appellant liable as surety during the year ending March 1, 1901. A bond is construed like any other written contract, and appellant must be held to the plain meaning of its undertaking. 51 Ark. 205; 71 Ark. 185; 91 U.S. 50; 56 L. R. A. 926. An instrument is presumed to have been signed on the day when it bears date. Reynolds, Stephens, Ev. c. 2, art. 85; 10 Gray. 66, 68; 5 Denio, 290, 293; 3 Whar. Ev. §§ 977, 988, 1312. The bond was retrospective. 11 S.W. 995; 23 Mo.App. 293; 34 F. 202, 19 How. 73; 13 Mass. 177; 97 Mass. 533.

MCCULLOCH, J. BATTLE, J., absent.

OPINION

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

It is contended by appellants that they are not liable, for the reason that the bond was not in force when the fire occurred. This is the sole question presented by the appeal.

The statute on the subject which was in force when the bond was executed is found in Sandels & Hill's Digest (having since been amended), and is as follows:

"Section 4124. All fire, life and accident insurance companies now or hereafter doing business in this State shall, in addition to the duties and requirements now prescribed by law, annually give a bond to the State of Arkansas, with not less than three good and sufficient sureties, to be approved by the Auditor of the State, in the sum of twenty thousand dollars, conditioned for the prompt payment of all claims arising and accruing to any person during the term of said bond by virtue of any policy issued by any such company, individual or corporation upon the life or person of any citizen of the State or upon any property situated in this State, and such bond shall be annually renewed."

"Section 4127. Any insurance company failing to comply with the provisions of this act shall not be entitled to transact any business in this State; and any such company or any person acting for such company who shall attempt to transact any business in this State until the provisions of this act shall be complied with shall be guilty of a misdemeanor, and upon conviction shall be fined in any sum not less than twenty nor more than one hundred dollars."

"Section 4130. When any insurance company shall have complied with all the provisions of this chapter, it shall be the duty of the Auditor of State to issue to said company a certificate to that effect, which shall entitle it to do business in this State," etc.

The question first presented, is, when did the claim arise and accrue, within the meaning of the statute and terms of the bond, so as to create liability on the part of sureties on the bond of the company? Did that contingency occur when the property was destroyed, or when the amount of the loss became payable according to the terms of the policy?

A consideration of the language of the statute leads to the conclusion that the liability of the sureties is fixed when the loss by fire occurs, and not from the date when the amount becomes payable. The happening of that contingency fixes the liability of the principal in the bond upon its policy, and nothing remains to be done but to ascertain and adjust the amount of the loss. The liability is fixed when the loss occurs, though payment does not become due until sixty days later. It follows that the liability of the sureties becomes fixed with that of the principal, and ripens into a mature cause of action when default is made by the principal in the payment according to the terms of the policy. This is the conclusion reached by the United States Circuit of Appeals for the Eighth Circuit, in the case of Union Cent. Life Ins. Co. v. Skipper, 115 F. 69, in construing this statute and a bond executed in compliance therewith. Judge THAYER, speaking for the court said: "We may either assume that the word 'and' is used in the statute as it frequently is, in a disjunctive sense, and that the Legislature intended to make the obligors in such bonds as the one sued upon liable for any loss where either the death occurs, or the loss becomes payable by the terms of the policy, during the lifetime of the bond. Or we may assume that the words 'arising and accruing' mean the same thing; one word being used as explanatory of the other; the intent being to say that the obligors in such bonds shall be liable to pay all losses that 'arise or accrue' by reason of deaths which occur during the period covered by the bond....