Court Opinion

ID: 6869360
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:58:53.822917+00
Date Added: 2024-06-11T16:05:22.677535
License: Public Domain

SIBLEY, Circuit Judge
(dissenting).
When the District Judge made his finding that the settlement by the New York bank of all claims under the surety bonds for $75,000 to go wholly to the New York bank was reasonable and to be approved, he had previously adjudged that there was no good basis for other claims to arise under the bonds based on other transactions of the San Antonio bank’s bonded president. We have just reversed the judge’s conclusion as to one of these other transactions, and it is probable that claims *163touching several of them may be ultimately sustained. Connecticut Fire Ins. Co. v. Commercial National Bank of San Antonio (C.C.A.) 87 F.(2d) 968. The power of compromise given to the New York bank, whatever its scope, was a power in trust and cannot be exercised wholly for the trustee’s benefit without a fair regard to the interests of the trustor. Under the changed aspect of the other incipient claims under the surety bonds, it is possible that the judge or the New York bank might have a different view of the fairness of this settlement, or that the San Antonio bank’s mortgagees of its remaining assets might wish to pay off the New York bank. Opportunity ought to be given to reexamine this feature of the case.
But -the power to compromise, an unusual one and to be closely scanned, does not go beyond the compromise of the claim which arose concerning the transaction of the San Antonio bank’s president in stolen securities of the New York bank, which is the only claim on which suit against the surety company is pending or has yet ripened, and which was the only claim in mind when the power to compromise was executed. In settling with the New York bank for its stolen securities, the San Antonio bank as a pledge for a $75,000 balance on the settlement did assign the surety bonds and “all claims and demands of whatsoever nature” under them, but when two pages further on it came to authorizing a compromise without the consent of the San Antonio bank the language is quite different. “It is further agreed that the holder of said note shall have authority to make settlement of said claim with the Aetna Casualty & Surety Company.” The said claim was that referred to following the assignment of the bonds and all claims thus: “The said Commercial National Bank of San Antonio represents that it has suffered a loss under the terms of said bonds, and it has a claim * * * aggregating more than the sum of $100,000 which will be asserted as hereinafter provided. * * * The Commercial National Bank agrees that it will prosecute said claim with diligence,” the holder of the note being given the right to assume control of the litigation. At the time of this assignment, the only loss the San Antonio bank had yet suffered was that incurred by settling with the New York bank, a loss exceeding $100,000. Suit was at once instituted against the surety company on that claim in the name of the San Antonio bank and with the co-operation of the New York bank’s attorneys. That is the claim which the parties intended the New York bank should have a full power to settle. It was based on a transaction in the New York bank’s own securities, and it was natural in settling with the New York bank that it should control the ultimate disposition of that controversy. But this naturalness does not exist as to other and future claims that might ripen under the surety bonds touching other matters, and the language of the power does not include them. The surety company in settling this claim with the New York bank ought not, I think, to be allowed to draw in other probable claims for premature settlement.