United States Fidelity & Guaranty Co. v. Smith

California Court of Appeal Mar 12, 1929 No. Docket No. 6448.Published

Before: Koford

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Holding. The court held that the appellant was liable under his written indemnity agreement to reimburse the respondent for attorney fees and costs incurred in good faith defending a suit brought against the respondent as surety on the appellant's bond. The court further held that procedural irregularities regarding the production of the original bond application did not constitute reversible error as the appellant suffered no prejudice.

Issues

Whether the appellant's indemnity agreement covered the legal expenses incurred by the respondent in defending a suit on the bond.
Whether the trial court's procedural error in admitting the original bond application post-trial constituted reversible error.
Whether the respondent's cause of action for indemnity was barred by the statute of limitations.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The respondent defended the action necessarily and in good faith as shown by the findings and the evidence and this brings the case under the provisions of Civil Code, section 2778, subdivision 3, and of appellant’s covenant in the bond application.”

“We therefore hold that no injury or reversible error occurred at the trial in respect to this incident.”

KOFORD, P. J.

The respondent recovered judgment for $423.75 against the defendant for attorney fees and costs expended by respondent in defending a certain action at law prosecuted against it by reason of having become surety upon a bond given by appellant to the creditors of Force-Hewitt Company for the faithful performance of his duties as trustee for said creditors. The execution of "the bond was admitted by the answer. The execution of the application for the bond was denied on information and belief only. It was presumptively in his knowledge and could not be so denied

(Curtis

Richards,

9 Cal. 33, 38), although it was evidently treated at the trial as sufficient. The trial court’s finding No. 3 describes the covenant upon which defendant’s liability in this action is founded as follows: “That it is true that in the application for said bond and undertaking executed by said J. L. Smith, it was agreed in writing among other things, that the defendant, J. L. Smith, would indemnify and save the plaintiff harmless from any and all loss, costs, charges, suits, damages, counsel fees and expenses of whatever kind or nature which the said plaintiff shall have or may for any cause at any time sustain or incur, or be put to for or by reason or in consequence of said company having executed the said bond as surety.” The court also found that W. J. Somers Company, one of the creditors of said Foree-Hewitt Company, obtained a judgment against appellant as such trustee and that within four years prior to the commencement of this action and

[495]

while said bond was in full force and effect respondent was sued as surety on said bond by George B. Somers as assignee of said W. J. Somers Company; that respondent in good faith employed attorneys to defend the suit and did expend $600 for their attorney’s fee, which was reasonable, and $123.75 necessary legal costs in defending said action; that each of the allegations in defendant’s answer and cross-complaint were untrue and gave respondent judgment for $423.75. This, apparently, was only one-half of the $600 attorney fees paid out by respondent, but this is only a surmise because the judgment does not specify whether the $423.75 is for costs or attorney fees or for both or all for attorney fees and none for costs.

United States Fidelity & Guaranty Co. v. Smith

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KOFORD, P. J.

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