Zane v. Citizens' Trust & Surety Co.

Citations

• 117 F. 814
• 55 C.C.A. 38
• 1902 U.S. App. LEXIS 4470

Syllabus

<p>1. Principal and Surety—Indemnifying Bond—Liability—Exoneration.</p> <p>Plaintiff trust company contracted to indemnify M. against loss from the failure of Z. to erect certain houses on land sold by M. to Z. Z. gave a mortgage to M. to secure a part of the purchase price and money loaned to be used in the construction of the buildings, which money M. procured from S., assigning as security therefor the note and mortgage given by Z.; and, in order to secure the performance of the contract by Z., defendant executed a bond, sued on, for the benefit of the plaintiff surety company. Held, that the fact that plaintiff surety company executed its policy of indemnity to S„ assignee of the mortgage, instead of to M., was no defense to the action on the bond given by defendant for loss sustained by Z.’s failure to erect the buildings, since such loss was in fact sustained in exoneration of its liability to M.</p> <p>8. Same—Consolidation of Companies—Effect.</p> <p>Where a surety company was bound to indemnify against a contractor’s failure to erect buildings, and took a bond from defendant to secure such liability, the fact that plaintiff company thereafter transferred its assets to another company, the latter assuming its liabilities, and borrowed money from the latter with which to complete the buildings on the contractor’s default, did not preclude it from enforcing defendant’s liability on its bond.</p> <p>8. Same.</p> <p>Where an indemnitor had taken a bond from defendant to secure its liability for the failure of a contractor to erect certain buildings, it was no defense to an action on defendant’s bond for loss sustained by such indemnitor that, on the default of a subcontractor for preliminary work, he refused to acquiesce in the arrangement of the contractor for superseding such subcontractor; it not appearing that plaintiff had any right to interfere with such contractor, or that the subcontractor’s default had any natural connection with the failure of the cont