Southern Pacific Co. v. Feldman

California Court of Appeal Mar 1, 1938 No. Civ. No. 11698Published

Before: Crail

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Holding. The court held that the trial court erred in relying on extrinsic correspondence to limit the scope of a surety bond, as such evidence was unsubstantial and insufficient to vary the bond's plain written terms. Consequently, the surety is liable for the full amount of the freight charges accrued under the bond.

Issues

Whether extrinsic correspondence between insurance brokers, a bond custodian, and a railroad agent effectively modified the terms of a surety bond.
Whether the surety bond was limited to incoming shipments at Los Angeles or to specific railroad allocations not stated in the bond instrument.

Disposition. remanded

Quotations verified verbatim against the opinion

“The trial court held in effect that the three letters above referred to became a part of the bond and varied its plain written terms. We are of the view that the evidence to sustain this finding is unsubstantial.”

“It is clear from what we have said above that the judgment should be rendered against both Feldman and the bond company for the full amount of $2,176.55 with interest.”

CRAIL, P. J. Lewis B. Feldman was doing a shipping business under the name of Atlantic Fruit & Produce Com[206]pany, and it became necessary in his business to furnish a bond to guarantee the payment of freight to several of the railroad companies. He obtained from the Commercial Standard Insurance Company a bond in favor of six railroad companies, including the plaintiff, “as their respective interests may appear, in the sum of Twenty-five Hundred and no/100 dollars ($2,500.00) the maximum liability hereunder, lawful money of the United States, for the payment of which the said Principal, and the said Surety, bind themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents. . . . Whereas, ... it has been agreed that the said Railway Company, or Companies, will receive prepaid shipments from the Principal, and will deliver collect shipments to the Principal without first exacting payment of the charges thereon. Now, Therefore, the Condition of This Obligation is such that if the Principal shall . . . pay, or cause to be paid, to said Railway Company, or Companies, all of such charges then this obligation shall be void, otherwise it shall be and remain in full force and effect; ...”

The bond was delivered to a joint custodian for the railroads with a letter from Levitt Maywood Company, insurance brokers, which read as follows: “We are inclosing herewith joint bond in amount of $2500.00 issued March 30th for Lewis B. Feldman, dba Atlantic Fruit & Produce Co., by the Commercial Standard Insurance Co. Please allocate this bond $1500.00 to the Southern Pacific $500.00 to the Santa Fe, and $500.00 to the Union Pacific.” Thereafter Feldman failed to make payments to plaintiff on eighteen shipments of perishable produce in the total sum of $2,176.55.

The first cause of action is against Feldman alone. It is alleged that Feldman delivered a carload of perishable produce to the plaintiff for transportation to Salt Lake City consigned to the said defendant; that the shipment was made and accepted there by the consignee; that through inadvertence and mistake plaintiff collected $10.38 less on the shipment than the interstate commerce commission required it to collect. It therefore seeks judgment for the outstanding undercharge against Feldman.

The second cause of action alleges the same matters, declaring upon the same shipment, and in addition sets out that Feldman and the Commercial Standard Insurance Com[207]

Southern Pacific Co. v. Feldman

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