Bridges v. Price

California Court of Appeal Dec 12, 1928 No. Docket No. 6567.Published

Before: Dooling

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Holding. The court held that a surety bond referencing an outdated statute should be construed as referring to the current amended statute, and that the bond's coverage for the "faithful performance of all obligations" in securities transactions rendered the surety liable for the broker's failure to perform.

Issues

Whether a surety bond containing a mistaken reference to an outdated statute is enforceable under the current amended statute.
Whether the 1925 amendment to the Corporate Securities Act expanded the surety's liability to include the failure to perform obligations in securities transactions.
Whether the acceptance of a promissory note by the plaintiff discharged the surety's obligation.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The bond was a statutory bond, and the law in force at the date of its giving is a part of it as effectually as if such provisions were in words inserted in it.”

“The reference to the statute as amended in 1923 is so obviously a mistaken reference to the statute as amended in 1925 that it must be so read”

“Price having failed in the faithful performance of his obligation in the sale and purchase of securities for Bridges, appellant became liable to Bridges upon its bond.”

DOOLING, J., pro tem.

This is an appeal by defendant Continental Casualty Company from a judgment in favor of plaintiff upon a broker’s bond given by appellant under the provisions of the Corporate Securities Act (Stats. 1917, p. 673), as surety for defendant Price. The evidence showed that on September 29, 1925, respondent Bridges delivered to one Ormond, as agent for Price, 210 shares of capital stock of National Automatic Music Company, to be exchanged for 336 shares of Monolith Portland Cement Company stock. Subsequently Price admitted to Bridges that he had sold his Music Company stock and had not procured the Cement Company stock, and on November 19, 1925, Price persuaded respondent to take his (Price’s) promissory note for the value of the stock, payable twenty-seven days after date. The note was never paid, and after its maturity this action was brought on the original obligation and appellant was joined as a defendant upon its bond. Judgment followed against both defendants.

The bond here in question recites that it is given as “required under the provisions of paragraph 3 of section 5 of said act (Corporate Securities Act) as amended in 1923.” As a matter of fact, prior to the execution and delivery of the bond that paragraph had again been amended in 1925 (Stats. 1925, p. 967), so as to enlarge the surety’s liabilty on the bond. Because of this recital appellant insists that its obligations are to be measured by the provisions of the act as it read in 1923 and prior to the amendment of 1925. Under those provisions it clearly would not be liable in this action.

(Blumenthal

Larson,

79 Cal. App. 726 [248 Pac. 681];

Mitchell

Smith,

204 Cal. 197 [267 Pac. 540].)

This contention, in our judgment, is not tenable. The bond was a statutory bond, and the law in force at the date of its giving is a part of it as effectually as if such provisions were in words inserted in it.

(Milliron

Dittmam,

180 Cal. 443 [181 Pac. 779].) Appellant is presumed to know the law, and hence to know that the statute under which the bond was given had been again amended in 1925. The statute as amended in 1923 had ceased to have exist

Bridges v. Price

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