Burns v. Massachusetts Bonding & Insurance

California Court of Appeal Feb 21, 1944 No. Civ. No. 12526Published

Before: Peters

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Holding. A surety is liable for interest up to the face amount of its bond as part of the principal's debt, but for interest exceeding the bond's penalty, the surety is only liable from the date its own performance became due and it was in default. Because an action against a surety is premature until the principal's liability is fixed by a final order, the surety's default in this case did not occur until the remittitur was filed.

Issues

Whether a surety is liable for interest in excess of the penal sum of its bond prior to the date the surety's own performance became due.
When a surety's liability for interest in excess of the bond's penalty commences.

Disposition. affirmed

Quotations verified verbatim against the opinion

“For interest in excess of the penalty of the bond the surety is liable for interest from the time performance becomes due from it, as damages for its own withholding, that is, for its failure to pay the penalty when payment was due from it.”

“The rule is well settled in this state that no action may be maintained against the surety until a final order has been made by the trial court fixing the obligation of the principal.”

PETERS, P. J. This is a companion case to Burns v. Massachusetts Bonding & Insurance Co., this day decided (ante, p. 962 [146 P.2d 24]). The present appeal is by plaintiff from that part of the judgment fixing the amount of interest to which she is entitled, it being her contention that she is entitled to interest in a much larger amount than that allowed by the trial court.

In order to understand the respective contentions of the parties, the following dates and facts are pertinent:

July 1, 1937: Probate court determined that the guardian owed the ward $13,601.84. This sum included $12,116.09 for the guardian’s misappropriations, $1,000 referee’s fee, $425.50 reporter’s fee, and $60.25 costs. No interest was allowed On the sums misappropriated.

July 6, 1937: Plaintiff filed a demand with the surety, the exact amount of such demand not appearing in the record.

January 27, 1939: The probate court made an order allowing the plaintiff interest as against the guardian in the sum of $6,831.94 and costs in the amount of $356.65. When these sums are added to the amount fixed by the order of July 1, 1937, the total is $20,790.43, which is the amount of the indebtedness of the guardian to the ward on January 27, 1939. This order fixing interest was made in compliance with the decision rendered in Guardianship of O’Connor, 28 Cal.App.2d 527 [83 P.2d 65], allowing the ward compound interest from the date of the misappropriations. On the date this order was made the appeal of the guardian from the order of July 1, 1937, was still pending.

April 3, 1940: The remittitur was filed in the lower court in the guardian’s appeal from the order of July 1, 1937. (Guardianship of O’Connor, 37 Cal. App.2d 63 [98 P.2d 769].)

May 3, 1940: Plaintiff filed her complaint in the present action against defendant surety. In her complaint plaintiff asked for judgment for $17,000, the full amount of the bond, [975]plus 7 per cent interest from July 1, 1937, the date the trial court made its order that $13,601.84 was due from the guardian.

April 7, 1943: The trial court entered its judgment in the present action in favor of plaintiff for $17,000, the full penal sum of the bond, plus 7 per cent interest from April 4, 1940 (one day after the remittitur was filed in the appeal by the guardian), to April 7, 1943.

Burns v. Massachusetts Bonding & Insurance

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