Western Sur. Co. v. Horrall
Decision Date | 01 April 1975 |
Docket Number | No. 11704,11704 |
Citation | 533 P.2d 543,111 Ariz. 486 |
Parties | WESTERN SURETY COMPANY, a South Dakota Corporation, Appellant, v. Patricia HORRALL, a divorced woman, Appellee. |
Court | Arizona Supreme Court |
George Sorenson, Jr., Phoenix, for appellant.
Meyer & Vucichevich by Rad L. Vucichevich and J. Terence Fox, Phoenix, for appellee.
Jurisdiction of this case is taken pursuant to Rule 47(e)(5), Rules of the Supreme Court, 17A A.R.S.
The appellee, Patricia Horrall, previously had recovered a judgment against Frontier Motors, Inc., for $25,000 compensatory and $10,000 punitive damages. Horrall had been unlawfully struck by an agent of Frontier. In this action, Horrall is attempting to hold Western Surety Company liable for the judgment based on a surety bond issued to Charles McConnell. McConnell was an officer of Frontier, an Arizona corporation, and was not a party in either action.
A.R.S § 28--1305 requires that a surety bond be secured by one seeking a motor vehicle license to sell used cars as a condition precedent to obtaining the license. Pursuant to this statute, Western issued a surety bond to McConnell as the sole named principal. The application for the used motor vehicle dealer license and the license itself were, however, issued to Frontier Motors, Inc. The issue is whether Western can be held liable for a judgment against Frontier on the basis of a surety bond issued to McConnell.
Suretyship contracts are construed according to the same rules applicable to other contracts. Cushman v. National Surety Corp. of New York, 4 Ariz.App. 24, 417 P.2d 537 (1966); Restatement, Security § 88. If a company agrees to be a surety for a particular principal, the contract is understood to be only for that named principal. Any material change in the obligation not assented to by the surety as one of the parties to the contract will discharge the surety from liability. This rule is applicable when there is a change of principals. In Bianco v. Fireman's Fund Indemnity, 72 Ariz. 181, 232 P.2d 386 (1951), it was said that the liability of a surety can only arise out of a bond contract made with the principal and it does not extend to activities of the principal in conjunction with others. If a surety undertakes responsibility for the performance of another, it does not then mean to undertake responsibility for the actions of the named principal performed jointly with a third person. This...
To continue reading
Request your trial-
National Bank of Washington v. Equity Investors
...contract law. United States Leasing Corp. v. DuPont, 69 Cal.2d 275, 444 P.2d 65, 70 Cal.Rptr. 393 (1968); Western Surety Co. v. Horrall, 111 Ariz. 486, 533 P.2d 543 (1975); Restatement of Security § 88 (1941); Grand Lodge of the Scandinavian Fraternity of America v. United States Fidelity a......
- Schneider v. Macari
-
U.S. Fidelity & Guaranty Co. v. Bross
...firm, even where the bond was issued to one partner individually. The decision of our Supreme Court in Western Surety Company v. Horrall, 111 Ariz. 486, 533 P.2d 543 (1975), is contrary to appellees' contention. In that case, Western Surety Company, pursuant to A.R.S. Sec. 28-1305, 1 issued......
-
AMFAC Distribution Corp. v. Union Rock & Materials Corp.
...to be surety for a particular principal, the contract is understood to be only for that named principal. Western Surety Company v. Horrall, 111 Ariz. 486, 533 P.2d 543 (1975). We must decide, therefore, where the loss should be borne as between the landowner, Union Rock, who apparently has ......
-
TABLE OF AUTHORITIES
...v. Superior Court, 159 Ariz. 223, 766 P.2d 96 (App. 1988)................................................ 223Western Sur. Co. v. Horrall, 111 Ariz. 486, 533 P.2d 543 (1975).......................................... 167, 174, 198Western Technologies v. Sverdrup & Parcel, 154 Ariz. 1, 739 P.2......
-
TABLE OF AUTHORITIES
...2-1; 4-8W. Land & Cattle Co. v. Nat’l Bank of Ariz., 28 Ariz. 270, 236 P. 725 (1925) 9-1, 2W. Sur. Co. v. Horrall, 111 Ariz. 486, 533 P.2d 543 (1975)................................. 11-4W.D. Long v. Corbet, 181 Ariz. 153, 888 P.2d 1340 (App. 1994)....................... 8-22Wagner, FTC Inf......
-
601 Construction of Bonds
...Arizona Supreme Court affirmed this holding in 1975 by quoting with approval the rule announced in Cushman. Western Sur. Co. v. Horrall, 111 Ariz. 486, 533 P.2d 543 (1975). The same rule was also applied in Hilburn v. General Elec. Credit Corp., 8 Ariz. App. 10, 442 P.2d 547 (1968). See als......
-
11.4 Discharge of Guarantor by Modification of Obligation.
...of the original obligation without the guarantor’s consent discharges the guarantor. Western Sur. Co. v. Horrall, 111 Ariz. 486, 533 P.2d 543 (1975). Cf. Restatement (Third) Suretyship and Guaranty § 41 (1996) (guaranty is discharged if the modification creates a substituted contract or imp......