Coast Surety Corp. v. White

California Court of Appeal May 13, 1936 No. Civ. 10938Published

Before: McCOMB

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Holding. The court affirmed the judgment and order, holding that the surety's liability is limited to the bond's face amount and that the principal need not be a party to the action to establish the surety's liability. The court further held that the issue regarding the injunction was moot as the requested date had passed.

Issues

Whether the evidence was sufficient to support the trial court's findings of fact.
Whether the principal on the bond was a necessary party to the action.
Whether the bond covered the specific wrongful acts of the broker.
Whether the modification of the preliminary injunction was erroneous.

Disposition. affirmed

Quotations verified verbatim against the opinion

“A bond furnished pursuant to the requirement of subdivision 3 of section 6 of Act 3814, supra, does not create an unlimited and continuing liability on the surety issuing such bond and the surety cannot be held liable for the aggregate in excess of the amount designated in the bond.”

“One recovery of the full amount constitutes a defense against all pending or future suits, even though such suits are based upon distinct wrongful acts of the principal.”

McCOMB, J.,

pro

tem.

Plaintiff appeals from a judgment in favor of defendant Hazel A. Dunlap and an order obtained by defendant Lulu C. White, modifying a temporary injunction.

The facts are these:

Pursuant to the requirements of subdivision 3- of section 6 of Act 3814, volume 2, Deering’s General Laws, page 1930, plaintiff, as surety, filed with the commissioner of corporations of the state of California a bond in the sum of $5,000 for the benefit of any interested person, providing for the faithful performance by Financial Guarantee Corporation, Ltd., a broker, of all the terms and conditions of the Corporate Securities Act. Thereafter a duly authorized agent of the broker falsely represented to defendant Hazel A. Dunlap, for the purpose of obtaining from her $2,848.06, that (a) they had direct telegraph -wires in communication with New York and were able to get first-hand information upon all stocks and securities, (b) they would invest her money without risk of loss or speculating with her money, and (c) they would add to money deposited with them by her an equal sum for the purpose of investing it in good securities. In fact they returned to defendant Hazel A. Dunlap the sum of $624.99 only.

On May 11, 1934, she commenced an action against plaintiff to recover on the bond which it had executed.

April 26, 1934, defendant Lulu C. White obtained a judgment against plaintiff under its bond for $2,446.52, together with costs in the sum of $280.

June 19, .1934, plaintiff filed the present action in the nature of an interpleader, asking that (1) the court make an order prorating the amount of the bond among the various

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claimants, and (2) defendant Lulu C. White be restrained from executing the judgment she held unsatisfied until an order of proration had been made.

October 6, 1934, the trial court modified a previous injunction restraining defendant Lulu C. White from executing the judgment which she had theretofore obtained by permitting her to levy an execution against plaintiff in the sum of $2,250, and on November 22, 1934, entered judgment in favor of defendant Hazel A. Dunlap in the sum of $2,223.07 and $77.80 costs.

Coast Surety Corp. v. White

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