Court Opinion

ID: 7988552
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:28:21.583137+00
Date Added: 2024-06-11T16:35:16.748840
License: Public Domain

Terral, J.,
delivered the opinion of the court.
The appellee applied to the Guaranty Company of North America to guarantee him in the sum of $500 as an employe of the Southern Express Company, and to obtain the security sought, he answered certain questions, which he declared to be true, and stipulated further as follows: “In consideration of the issue of the bond hereby applied for, I agree to protect and immediately indemnify the said Guaranty Company of North *841America against any loss, damage, or expense it may sustain or become liable for in consequence of such guarantee, or any renewal thereof, hereby admitting the voucher or other proper evidence of payment by said company of any such loss, damage, or expense, as conclusive evidence (except for fraud) against me and -my estate of the fact and extent of my liability to said company. ’ ’
The guaranty company having paid several claims of loss made by the Southern Express Company against it in consequence of said insurance of fidelity of said Pitts, brought this suit against Pitts, and producing the requisite vouchers of payment, demanded judgment against him therefor. Pitts denied the justice of the claim of the express company against him and had judgment. From this judgment the guaranty company appeals.
One of the conditions on which the company became guarantor for Pitts is that the voucher or receipt to it for money paid, without fraud — that is, in good faith — for him to the obligee of the bond should be conclusive of the fact of his liability to the obligee for the sum paid. In other words, if the guaranty company should, in good faith, discharge a claim by the obligee for a liability asserted against Pitts, the voucher or receipt for the payment should be proof of the liability of Pitts. There is nothing wrong or unreasonable, or against public policy, in this stipulation. Parties sui juris may lawfully make such stipulations, and are bound by them. Under such contract the company was authorized in advance, as a condition of guaranteeing, to exercise discretion as to paying any demand made by the holder of the guaranty, and was bound only to act without fraud in settling a claim, and thus paying is entitled to hold the party guaranteed for reimbursement, and the voucher proves the claim, if not shown to have been infected with fraud. The expense, delay, trouble, and risk of loss to the guaranty company is a sufficient safeguard against an unwarranted payment, and without such a stipulation as complained *842of here, guaranty companies could not safely do business anything like as cheaply as they do, and to the evident advantage of the parties and of the general public. The stipulations of the bond are not influential in this case, which is determinable by the stipulations inducing the company to execute the bond. The suit is not on the bond.
Upon the case made by the record the appellant was entitled to a judgment, and because he was denied a recovery the judgment is
Reversed, and a new trial is awarded.