Court Opinion

ID: 6690054
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:36:53.222336+00
Date Added: 2024-06-11T16:01:05.040784
License: Public Domain

SMITH, J.
Prior to the 29th day of November, 1910, the Citizens’ State Bank of Ft. Pierre was designated a depository *3of county funds of Stanley county, pursuant to the provisions of article 6, c. 5, Pol. Code 1903, as amended by chapter 125, Laws 1903. Said bank, for the purpose of furnishing security for the funds to be deposited, made application to appellant Western Surety Company for a bond, which application was also signed by respondents. This application, so far as material to the question presented upon this appeal, was as follows:
“The undersigned hereby request the Western Surety Company * * * to become surety or bail for and furnish' such bond or bonds, undertaking or undertakings, as may be required by or on behalf of, the following named applicant, to wiit: * * * Citizens’ State Bank of Ft. Pierre; * * * amount of bond required, $6,000, * * * to Stanley county, South' Dakota, conditioned for the payment, return, or handling all moneys by the Citizens’ State Bank of Ft. Pierre, South Dakota, that may be delivered or deposited for care with the said bank. * * * The undersigned, * * * in consideration of the Western Surety Company * * * agreeing to * * * execute * * * the bond or undertaking herein applied for, dto for value received hereby covenant, promise, and agree to pay the Western 'Surety Company an annual premium, of $--, * * * and we each jointly and severally * •* * agree to indemnity and keep indemnified the said company * * * from and against any liability and all loss, cost, charges, suits, damages, counsel fees and expenses of whatever kind' or nature which, said company * * * shall or may for ,any cause, at any time, sustain or incur for, or 'by reason or in consequence of said company * * * having become bail or security or entering into or becoming surety on such bond or 'bonds or undertaking or undertakings.”
Pursuant to said application and in compliance therewith, appellant surety company executed and delivered its bond conditioned as required by law, dated December 20, 1910, which bond 'was filed with the county. auditor on December 23, 19x0, approved andl accepted by? the board of county commissioners on January 14, 191T. Thereafter on January 8, 1912, the Western Surety Company, without any further or other application, executed and delivered! another bond or undertaking, exactly like the first, except as to date, which bond was accepted and *4approved by the 'board of county commissioners on February 21, 1912, and again on January 24, 1913, without any further or other application, the Western Surety Company executed and delivered a third bond or undertaking exactly like the first except as to date, which bond was accepted and approved by the board of county commissioners on February 28, 1913.
The trial court found that each of said bonds was executed and delivered pursuant to orders by the board of county commissioners, made in each of said year’s respectively, designating said bank as a depository of county funds; that the conditions of the first bond were fulfilled by said bank, but that in the months of March and April, 1913, said bank wholly failed and neglected to comply with its duties as such depository and on April 30, 1913, became insolvent, closed its doors, and ceased to conduct a banking business; that upon the designation of the said bank as a public depository of county funds in 1910, the county treasurer deposited and continued to deposit county fund® in saidl bank until the time of its -failure; that at the time said bank became insolvent'it was indebted to Stanley county on account of money so deposited in the sum of $1,756.66, and that while said bank was so insolvent, and had ceased to do business, the Western Surety Company did, under the bond last above described [the bond of January 24, 1913] and as a release therefrom, pay to said Stanley county the sum of $1,756.66, the amount then due and owing from said bank to said county.
The Western Surety Company thereafter instituted this action against respondents upon the contract of indemnity contained in the application above quoted. The trial court entered findings of fact in accordance with the foregoing statement of facts, and as a conclusion of law found that the indemnity contract contained in the application above set forth—
“was executed and delivered to the plaintiff to secure it for the execution of one bond of $6,000, specified and required in said [application] and was not given to secure a number of bonds, and that the bond [first given] having' been fully complied with by the defendant bank, and there being no default in any of *5the conditions of the same * * * the defendants * * * are not liable [upon the indemnity contract] for the defalcation.”
This appeal is from the judgment in favor of respondents, and the only assignment of error is that the trial court erred in its conclusion of law. The only question presented 'by this appeal is whether the trial court erred in its construction of the contract of indemnity contained in the application.
Appellant’s contention in .substance is that the application was a request to appellant to furnish as many bonds as Stanley county might require to safeguard deposits of county funds in the Citizens’ State Bank. This contention appears' to be founded upon the words used in the application, viz.:
“To furnish such bond or bonds as may be required by or on behalf of * * * the applicant,” Citizens’ State Bank.
[1] But appellant concedes that the bond or bonds applied for by respondents may not exceed $6,ooo, the sum named in the application, and in this we think appellant is correct. The application we think may be construed to'leave it optional with appellant to furnish the required $6,000 security, in the form of one or more bonds. It is perfectly clear that respondents’ liability on the contract of indemnity would be coextensive with the liability of appellant to Stanley county on the bond or bonds intended or contemplated in the application. Fidelity Co. v. Kickoff, 63 Minn. 170, 65 N. W. 351, 30 L. R. A. 586, 56 Am. St. Rep. 466.
[2, 3] Appellant suggests that its liability to Stanley county on the first bond • was a continuing one. If this be true, it certainly became liable to Stanley county to the extent of $18,000 on all three bonds, which are identical in form and substance. Appellant elected to issue bonds annually, each in the amount of $6,000, with premium payable annually on each bond. Suppose' a defalcation of $18,000 had occurred during the third annual period, and Stanley county -were seeking to hold appellant liable for the whole amount in an action founded upon the three bonds. Might we not anticipate that appellant, while admitting liability to the extent of $6,000 on the third' bond, would deny liability on the first and second, on the ground that each bond was intended to cover a default occurring during its annual period. *6In this connection we may note that the trial court found as a fact that appellant paid! to Stanley county the amount of the defalcation as an express release from, liability on the third bond, which act may be interpreted inferentially as a concession, by both the bank and appellant, of nonliability on the preceding' annual bonds. It could be plausibly contended, at least, that the annual issuance of bonds created; an ambiguity as to such liability, and a like abrraiguity would exist as to the liability of respondents upon the contract of indemnity. The indemnity contract was for the benefit of appellant. In such case the rule laid down in 13 C. J. 546, § 516, is that:
“Terms of a contract which appear on their face to be inserted for the benefit 'of one of the parties will be considered as having been inserted and worded by him, and therefore in case of ambiguity will be construed against him.”
See case note, 8 L. R. A. (N. S.) 1140.
We are of the view that the application made by respondents was for a “bond or bonds” in the amount of $6,000 as a single transaction, and not an application for an unlimited series of annual bonds.
It follows that the trial court did not err in its conclusion of law, and the judgment is therefore affirmed.