Surety bond

“ If a surety is under no moral obligation to pay, where he is not legally bound by his contract, his conscience cannot be reached, when the law discharges him from his obligation. The law, as we have before stated, makes a part of every contract; and in case of a joint and several bond, the contract of the parties is, that the estate of the surety shall be discharged by his death, if the obligee elect to hold him jointly, and not severally, liable. ”

“ In the case of a bond given under a statute such as the act of February 28, 1899, there is no single obligee or creditor. The surety is charged with notice that he is entering into what is, in a very proper sense, a public obligation, and one that will be relied upon by persons who can in no manner control the conduct of the nominal obligee, and with respect to whom the latter is a mere trustee, and therefore incapable, upon general principles of equity, of bartering away, for its own benefit or convenience, the rights of the beneficiaries. ”

“ If it was intended by congress to enlarge the scope of the section so as to include other bonds than those given for duties, (as seems to be the necessary inference from the language,) still, it is restricted to 'bonds:' the words are 'whenever the principal in any bond given to the United States is insolvent,' etc., and any 'surety on the bond' pays the money due upon 'such bond,' such surety shall have the like priority, etc., and may bring and maintain a suit upon 'the bond' in his own name, etc. ”

“ It is true that, in cases of fraud, accident, or mistake, equity will relieve as well against the surety as the principal. Thus, in case of a lost bond, equity will set it up against a surety, or where a bond has been made joint, instead of joint and several, by mistake of a scrivener ”

“ Of course the importer is liable, without reference to the bond, for the entire amount of duties. But the surety is only bound by the condition of the bond. That is all the obligation which he assumes; and as it is clear, in this case, that the condition is in the alternative, the bond was discharged by the performance of one of the alternative conditions. ”

“ Declaring the American Surety Company had complied with all of its obligations under the qualifying bond by depositing the full amount of the bond in the court's registry at the time of bringing the suit; and further declaring that company, by reason of such compliance, to be released and discharged from any and all further liability on account of such bond ”

“ Equity then forbids that the statutory security be whittled down indirectly by any promise of indemnity, general or specific. Debtor and surety may not effectually agree that materialmen and laborers shall have less of the general assets as the price of their right to recover on the bond. Through the bond and the statute a new relation has been established with a new set of equities, not subject to destruction at the pleasure of the principal. ”

“ The words 'with freehold sureties' are not to be taken literally, so as to forbid the acceptance of a guardian's bond with one surety, having sufficient property to make it good for the entire amount prescribed by the statute. ”

“ In the case of an official bond, even if its benefits are not incidental, it may well be that the legislative body is of the opinion that actions on the bond should be limited to the government in order to secure unified administration of claims. ”

“ In the interpleader suit there was an actual, complete, and judicially sanctioned payment of the qualifying bond by the surety, and it was on this basis that the surety was discharged from all further liability. While the payment was into the court's registry, and not directly to the claimants, it nevertheless was a lawful and effective payment under the Interpleader Act. In effect, the first decree converted the claims under the bond into claims against the fund paid into the registry ”

“ We are told in effect that the displacement of a lien is an exercise of power more drastic and far-reaching than the marshaling of assets where there has been no agreement for a lien. The distinction might be important if the contest were between the surety and creditors not covered by the bond or between the surety and later assignees of the security so promised. ”

“ On the other hand, the reserved percentage was claimed by the respondents on the ground that the effect of the statute, the contract, and the bond, when read together, was to make the equity of the surety subordinate to theirs. Out of this equity there grew, as they contended, a right or an interest which, even if not a lien in the strict and proper sense, brought kindred consequences along with it. At least a court of equity would not come to the aid of one whose equity was subordinate until claims superior in equity had been satisfied in full. ”

“ We do not construe the legislation concerning surety bonds as having such effect. The cases relied upon dealt with legislation of a different character. Davis v. Pringle, 268 U.S. 315, 45 S.Ct. 549, 69 L.Ed. 974 ”

“ While the priority given the surety by the statute attaches as soon as the obligation upon the bond is discharged, it cannot ripen into enjoyment unless or until the whole debt due the United States is satisfied. This result is in harmony with a familiar rule of the law of subrogation under which a surety liable only for part of the debt does not become subrogated to collateral or to remedies available to the creditor unless he pays the whole debt or it is otherwise satisfied. ”

“ Furthermore, if the attention is to be directed to the precise wording of the bond, it should be noted that it refers to Schott, 'his or their heirs, successors, executors or administrators;' and the Engineering Company may properly be deemed a successor. The argument that the surety's risk ought not to be increased by holding it liable for the default of strangers to the original contract is of no greater force in the case of an assignee than it is in that of the subcontractor. ”

“ As to certain claims, that the creditors are estopped by specific acts from enforcing the liability upon the bond.
(4) As to the claim of the United States Equipment Company, that rental for cars, track, and equipment is not a claim for 'labor and materials' recoverable on bond. ”

“ The circuit court was clearly right in upholding its jurisdiction. As already stated, the contract between the United States and the original contractor, the bond of the surety company, and the contract with the use plaintiff, were all executed prior to the passage of the amendatory act. ”

“ The petitioner executed in favor of the respondent a bond in the sum of $100,000 conditioned upon the payment of pecuniary loss the corporation should sustain through the failure of one Kondor, its treasurer, faithfully to perform his duties as prescribed by the constitution and by-laws, or through his failure to keep intact and absolutely to account for all funds of the corporation. ”

“ Rep. 298. The liability here accrued at least as early as the commencement of the suit. The Surety Company contends that the amount each claimant was to receive was not made definite until it was actually decided by the court of appeals. But the claims were all for liquidated amounts; and in no instance was the amount in dispute. The controversy was merely as to which of the claimants should be entitled to share in the liability under the bond. The Surety Company might have paid into court at the commencement of the suit an amount equal to the penalty of the bond. ”

“ But, if you come to the conclusion that the dicovery was not made until the middle or latter part of May, then, in view of the situation of the plaintiff, you may reasonably come to the conclusion that he exercised proper diligence in sending the notice.' We perceive no error in these instructions. They are entirely consistent with the terms of the contract. Much stress was laid, in argument, upon the words 'which may involve loss' in the above extract from the bond. ”

“ This is an action against the Illinois Surety Company on a bond given by one Schott under Act of Congress, February 24, 1905 (33 Stat. at L. 811, chap. 778, Comp. Stat. 1916, § 6923) , to secure performance of his contract for work on the Naval Training Station at Chicago. [1] It is brought for the benefit of persons who furnished labor or materials. The bond provides:
'The condition of the above bond is such, that if the said above bounden principal, W. H. Schott, his or their heirs, successors, executors or administrators . . . ”

“ In the United States one cannot sell himself as a peon or slave -- the law is fixed and
established to protect the weak-minded, the poor, the miserable. Men will sometimes sell
themselves for a meal of victuals or contract with another who acts as surety on his [sic] bond to
work out the amount of the bond upon his [sic] release from jail. Any such contract is
positively null and void and the procuring and causing of such contract to be made violates
these statutes. ”

“ Young. [7] There a bond had been given to the Corporation of Washington, a municipality by the manager of a lottery 'truly and impartially to execute' his duties. Without the city's consent, the holder of a winning ticket sued on the bond. This Court said:
'No person who is not the proprietor of an obligation, can have a legal right to put it in suit, unless such right be given by the legislature; and no person can be authorized to use the name of another, without his assent given in fact, or by legal intendment.'
In Howard v. ”

“ If it be her own, she can keep it remarkably well; but if it be the property of someone else, she appears to consider it as a loan which must not be allowed to accrue interest. I have tried the effect of imparting to a woman whom it affected but slightly, and to a man whose life would be altered in some degree by it, a piece of news under the bond of secrecy—a bond which expired at a given date. ”

“ But every one of us who holds a policy in a life insurance company, or whose house or furniture is insured against fire, or who has a deposit in a bank or savings institution, or who has a national-bank note in his pocket is as much interested in the value of our National bonds and in a certain sense as much a bond holder as the owner of a bond himself; for if the value of the bonds is attacked and impaired the security of your investment goes, to that extent, by the board. ”

“ I cannot too highly recommend trust provisions in wills, where it is sought to make allowances to children or others; the use of the income for a time or for life, instead of an absolute gift of the principal, has in many cases a most beneficial result. In the selection of an executor, my judgment is that it is better to have one than two, and unless that one is a corporation of high standing and ample capital, I would always require a bond. This works no hardship, for bonds are readily obtainable by reputable persons.
“A codicil is a supplemental will. ”

“ Whenever a man makes a proposal to carry the mail for four years on a certain route, that proposal must be accompanied with a bond in a certain amount, and certain men must sign that bond as sureties, and then a certain postmaster must certify to the solvency of the sureties, the sureties having made oath as to the value of their property. Now, understand that perfectly. It is not the bond that a man gives after his bid has been accepted. It is a bond that he gives to show that his bid is in good faith. ”

“ A stranger might well choose to bestow upon a surety a benefit and a preference, from considerations purely personal, in order to make good to him exclusively any loss to which he might be subjected in consequence of his suretyship for another. In such a case, neither co-surety nor creditor could, upon any ground of priority in interest, claim to share in the benefit of such a benevolence. ”

“ A very large quantity of 41⁄2, 5 and 6 per cent. bonds are held by banks, by insurance companies, trust companies, savings institutions and in trust for widows and orphans. Thus they form an important part of the securities upon which these institutions are based. They are among their most reliable and most available assets. Probably most of us do not own a United States bond in the world. ”

“ Those questions were: 1. Whether the obligation of the receiver and his sureties, being without seal, was a bond within the act of Congress of May 10th, 1800, which provided that a receiver of public moneys for lands of the United States 'shall, before he enters upon the duties of his office, give bond, with approved security . . . for the faithful discharge of his trust.' 2 Stat. ”

“ When an assignment of securities is made by the principal to the surety for indemnity merely, an implied trust is raised in favor of the creditor, which he may enforce on the maturity of the debt, whether the surety has been damnified or not, and whether the surety or principal, either or both, are insolvent. The assignment of the security by the principal to his surety is an appropriation of funds for the ultimate discharge of the debt for which he is holden. The surety has a right to apply the security directly to the debt. ”

“ No sane person would have bought a bond with such an obligation resting upon him whenever he called for payment of principal or interest. If such was the duty of the holder, it was always his duty. It could not be performed once for all. ”

“ The relationship between the insured and the insurer is governed, to a very large extent, by the law of agency.
SURETYSHIP AND GUARANTY.—Suretyship has been defined as an accessory agreement by which one binds himself for another who is already bound. A surety is a person who is liable to perform any act, that his principal is bound to perform, in the event that his principal fails to perform as agreed. Where there is more than one surety, the parties are known as co-sureties. ”

“ In general, surety companies are authorized to guarantee performance of contracts and to execute bonds and undertakings required by the courts. One tendency is noticeable in recent years. The kind of suretyship, we have been referring to, is generally that in which the surety is an individual, who undertakes his task for no consideration, and for that reason, as we have said, the courts construe the contract of suretyship strictly in favor of the surety. ”