Court Opinion

ID: 6859618
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:46:45.421814+00
Date Added: 2024-06-11T16:05:13.423376
License: Public Domain

HUTCHESON, Circuit Judge
(dissenting).
The case, and their reasons for the conclusions they reach, are so clearly stated by the majority that for my dissent only a statement of what I think our differences are will be necessary.
The majority opinion, for purposes of recovery on the excess bond, treats each bond as a separate contract, and each period covered by the base provisions and the riders on each bond as a distinct period. It holds that in order to recover under the excess bond the losses in the two periods covered by it may not be aggregated. It holds that there must be a loss in each period recovered for under it in excess of $50,000. It holds, too, that the superseded suretyship rider, by its terms superseding the United States Fidelity & Guaranty Company’s primary bond, and also by its terms extending to losses recoverable under that bond, was made meaningless and ineffective as to the excess bond by the proviso in it that “the acts and defaults causing such loss or losses be such as are covered under the attached on its effective date.” Construing this proviso as limiting the excess bond to losses under the prior bond in excess of $50,000, and the prior bond as limited to losses of $50,000 or less, it declares that the superseded suretyship rider on the excess bond is destroyed by its own contradictions.
On both grounds, then, that the loss in each of the periods covered by the excess bond was less than $50,000-, and that the attempted coverage of the superseded suretyship rider failed through self contradiction, the majority deny recovery under the excess bond.
I find myself unable to agree with the majority in either of these conclusions. With deference, I submit that the construction adopted does not give effect to the principal apparent purpose o-f the parties, and that this is a ease in which “that pin-pose should be given the greatest weight in determining the meaning of the words they use.” Contracts, Restatements, § 236; Cocke v. Vacuum Oil Co. (C. C. A.) 63 F.(2d) 408. I think the principal apparent purpose of the parties, evidenced by the bonds sued on, was by the issuance of the two bonds, the primary for $50,000-, the excess for the same amount, to insure the bank up to $100,000 against losses discovered before the expiration of one-year from the termination of the superseding *840bonds, both those occurring under these bonds and those occurring under the bond of the United States Fidelity & Guaranty Company they superseded. So thinking, I regard the sued on bonds as a single contract, made up of their base provisions and their riders, and not as a series of agreements, each separate from and independent of each other. So thinking, it seems clear to me that not to allow the bank to recover the $78,000 it lost in the contract period, $50,000 under the primary and $28',000' under the excess bond, is to permit the defendant to breach its contract without standing to the full consequences of the breach. Such a construction is to nullify the principal apparent purpose of the parties, to supersede the United States Fidelity & Guaranty bond with a coverage of $100,000, $50,000 primary and $50,000 excess.
I cannot any more agree with them on their second point, that the superseded surety-ship rider attached to the excess suretyship bond is self-contradictory. I think it expresses plainly and simply an intention to have the excess bond extend to and cover losses under' the United States Mdelity & Guaranty bond it superseded, just as the superseded surety-ship rider on the primary bond made that bond extend to and cover them, and that the proviso to which the majority refer, referred not to the amounts lost, hut to “acts or defaults causing the loss.” So read, this rider and the base provisions of the excess bond taken together with the excess rider attached to the end of it, and the whole taken with the primary bond, make a contract under which the primary bond stands to the extent of $50,000' for losses incurred in the two periods, and the excess bond for all losses over $50,000 so occurring.
The argument that the superseded surety-ship nder may have been attached to the excess bond under the mistaken idea that there was a prior excess bond will not stand up in face of the fact that the rider refers in terms to the bond it supersedes as a United States Fidelity .& Guaranty Company bankers’ blanket bond. It is quite clear that hut for the excess rider attached to and a part of the excess bond, the hank would have had two primary bonds of $50,000 each, each covering the same losses. That the excess rider was attached to the excess bond had no effect on it other than to make the coverage of that bond for losses in the periods described in it, apply not to the first, but to the second, $59,-,000 of those losses.
I think the construction I contend for, that the attachment of the excess rider to the bond was not for the purpose of requiring an excess of $50,000 to occur each period, but in the two periods covered as one, is a more reasonable construction than that the majority give it. This construction gives exact and full meaning to bonds written and tendered by the defendant as the result of earnest solicitation that it be allowed to take over the risk; the other construction makes one of the riders meaningless and prevents and destroys the effectiveness of the excess coverage. The construction the majority adopt in effect makes two provisions out of the one excess provision. It makes one applicable separately to the period of the superseded bond, the other applicable separately to the period of the superseding bond. It makes it necessary that in order to recover under each there should be losses in each period “ «“«f $50,000. I think that if the iad mt®ded “7 ^ yould> “ they °ould “9^ Redone have drawn thar contract that way. I think that sm?e ,they. drew their contract as they did, and since it cam be given effect "and meaning 83 .wlthout t^owmg away or* making meaningless any part of it, it ought to be eonstr^ed that way.
■ I respectfully dissent,