Westinghouse Elec. & Mfg. Co. v. Fid. & Deposit Co. of Maryland

• Decision Date: 26 February 1925
• Citation: 146 N.E. 711,251 Mass. 418
• Parties: WESTINGHOUSE ELECTRIC & MFG. CO. v. FIDELITY & DEPOSIT CO. OF MARYLAND.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

251 Mass. 418

146 N.E. 711

WESTINGHOUSE ELECTRIC & MFG. CO.

v.FIDELITY & DEPOSIT CO. OF MARYLAND.

Supreme Judicial Court of Massachusetts, Suffolk.

Feb. 26, 1925.

Exceptions from Superior Court, Suffolk County; A. R. Weed, Judge.

Action of contract by the Westinghouse Electric & Manufacturing Company against the Fidelity & Deposit Company of Maryland to recover balance due from defendant as surety on attachment bond. Finding for plaintiff, and defendant excepts. Exceptions overruled.

L. S. Nicholson, of Boston, for plaintiff.

J. H. Duffy, of Boston, for defendant.

CROSBY, J.

This is an action of contract to recover the balance due from the defendant as surety on a bond, which was given to the plaintiff to dissolve an attachment in a suit brought by it against Stuart-Howland Company. The bond recites that Stuart-Howland Company as principal, and the defendant as surety ‘are holden and stand firmly bound and obliged unto’ the plaintiff ‘in the full and just sum of fifty thousand dollars'; the condition being that ‘if the above-bounden Stuart Howland Company shall pay to the plaintiff in said action the amount, if any, that he may recover therein within thirty days after the final judgment is said action; * * * then the above-written obligation shall be null and void; otherwise it shall remain in full force and virtue.’ In its action against Stuart-Howland Company the plaintiff on December 28, 1922, recovered a final judgment of $96,325.86. On August 23, 1922, Stuart-Howland Company was adjudicated bankrupt. The plaintiff proved against the bankrupt estate the full amount of its judgment, and received a dividend of 5 per cent. thereon, amounting to $4,816.29. On January 31, 1923, the defendant paid the plaintiff on account of the principal of the bond $47,500. On February 6, 1923, the plaintiff was also paid the sum of $20,000 on its judgment by the Fidelity & Casualty Company of New York in full of the penal sum of a bond given to the plaintiff to release another attachment made in the same suit; the last-named company being surety on that bond. The sum so received by the plaintiff, amounting to $72,316.29, left a balance due and unpaid on the judgment of 24,009.57. The plaintiff having been paid by the defendant $47,500 on the bond, brings this suit to recover $2,500, the balance alleged to be due with interest.

The defendant contends that it is entitled to be credited with $2,500, that being 5 per cent. of the penal sum of the bond which was received by the plaintiff as a portion of the dividend on the claim proved by it against the bankrupt's estate, on the ground of subrogation. The defendant made various requests for rulings, all of which in substance were to the effect that the defendant was entitled to be credited with $2,500 so received by the plaintiff, and that if so credited the defendant would have paid the full amount of the penal sum of the bond.

[1] The defendant relies on section 571 of the National Bankruptcy Act (U. S. Comp. St. § 9641), which provides as follows:

‘Whenever a creditor, whose claim against a bankrupt estate is secured by the individual undertaking of any person, fails to prove such claim, such person may do so in the creditor's name, and if he discharge such undertaking in whole or in part he shall be subrogated to that extent to the rights of...