Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-06-23
TO REGULATE LIABILITY
EXECUTIVE DEPARTMENTS Is
SUE CONCURRENT ORDER.
Affects Fidelity and Surety Compa-
MES on Bonds Given to the
United States.

The nine executive departments have
recently promulgated q concurrent order
regulating the liability which may be as
sumed by fidelity and surety companies
acting as sureties on bonds given to the
United States The order Is an amend
ment of a regulation promulgated about
a year ago. and the important change
made by this amendment is in the mat
ter of more equitabiy adjusting liability
charged against the companies in certain
cases. The general rule is that no COM
pany shall assume liability on any one
risk for more than 10 per cent of its cap
ital and surplus. Exception is made in
the case of transportation bonds given
by the great railroad companies, and
warehousing bonds to insure the payment
of taxes on spirits stored in public bond
ed warehouses under the supervision and
control of a bonded official of the United
States. in view of the additional pro-
lection afforded in these cases the COM
panic. are authorized to assume liza
bility of 80 per cent of its capital and
surplus on any one Of such bonds.
IN computing liability under the 10 per
cent limitation the full penalty of the
bond is regarded as the amount at risk.
except in the following cases: Appeal
bonds in which cases the liability is re-
garded as the amount of the judgment
appealed from, plus 10 per cent. to cover
interest and costs; bonds of fiduciaries in
which cases the value of the known es-
tate Is regarded as the liability; contract
bonds. in which cases the amount of the
contract is regarded as the liability. and
bonds Of banks as repositories. in which
cases the maximum amount on deposit
at any one time is regarded as the ia
bility.
Uncertain as to Legality.
For a time there was uncertainty as to
the legal right of bond approving officers
to issue regulations so broad in their
scope. but it was finally determined that
the rights of the approving officers grow
ing out Of their discretionary power to
reject bonds gave them all needed author
ity to- prescribe regulations covering their
acceptance. The Attorney General has
finally joined with the other departments
promulgating an order containing all the
essential requirements of the concurrent
regulations.
The surety companies are required to
report quarterly to the Secretary Of the
Treasury as to their financial condition
and to submit quarterly list Of all
bonds written in excess Of the 10 per cent
limitation. showing how the excess In each
instance have been covered. whether by
reinsurance. cO-suretyship, the deposit or
conveyance of property collateral or in
joint control.
Surety Companies Pleased.
The Secretary Of the Treasury is to keep
the other executive departments advised
from time to time as to the standing and
qualifying power of the various compa-
MES under the regulations. The surety
companies are greatly pleased with the
order as amended. and some of them free
ly admit that the 10 per cent ruling Of
last hnn fro Tor ~,
account of the failure during the recent
financial depression of banks and trust
companies acting as repositories for
amounts in many single cases So large
that a surety company would have been
bankrupt had it been called upon to bear
them alone.
II is stated that during the last year
the United States required more than
100000 bonds the penalties aggregating
$3.JUUO,OOO