American Surety Co. of New York v. 14 Canal Street, Inc.

176 N.E. 785, 276 Mass. 119, 1931 Mass. LEXIS 976
CourtMassachusetts Supreme Judicial Court
DecidedJune 23, 1931
StatusPublished
Cited by15 cases

This text of 176 N.E. 785 (American Surety Co. of New York v. 14 Canal Street, Inc.) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Surety Co. of New York v. 14 Canal Street, Inc., 176 N.E. 785, 276 Mass. 119, 1931 Mass. LEXIS 976 (Mass. 1931).

Opinion

Crosby, J.

This action to recover for breach of an agreement of indemnity was tried before a jury in the Superior Court. The jury found for the plaintiff in the sum of $1,000, the amount claimed in the declaration, with interest thereon from August 15,1929, which was the date of the payment by the plaintiff, as surety, of the penal sum of the bond. The agreement of indemnity was executed and delivered by J. M. Mann, Inc. to the plaintiff. The case is before this court on the defendant’s exception to the admission of certain evidence, to the direction by the trial judge that if certain questions propounded to the jury were answered in the affirmative a verdict should be returned for the plaintiff, and to portions of the charge.

At the time the cause of action arose., the defendant, 14 Canal Street, Inc., a Massachusetts corporation, was named J. M. Mann, Inc. On or about September 22, 1923, J. M. Mann, its treasurer, Benjamin A. Elf man, its president, and Lionel Fontaine associated and formed a New Hampshire corporation by the name of Fontaine Furniture Company with Fontaine as president, Mann as treasurer and Elfman as assistant treasurer. In accordance with a vote passed at the first meeting of the incorporators, two hundred fifty shares of stock of the corporation were issued to J. M. Mann, Inc., in consideration of the transfer by it to the furniture company of the assets of a corporation known as Lionel Fontaine, Inc. which had been sold in bankruptcy proceedings in August, 1923, to J. M. Mann, Inc. The two hundred fifty shares of stock so issued constituted the entire outstanding stock of the furniture company.

By a writ dated July 7, 1926, one Harry Novak brought an action against the furniture company, in the Superior Court for Hillsborough County, New Hampshire, and attached as the property of the defendant in that action a motor truck which had been used in the business of the furniture company and had been purchased in exchange for a truck which was a part of the assets transferred by J. M. Mann, Inc., to the furniture company. J. M. Mann, Inc., was in the business of dealing in furniture, carpets, rugs, and other merchandise. There was evidence from which it could [122]*122be found that the furniture company was a subsidiary of J. M. Mann, Inc., and bought nearly all of its goods from that company. J. M. Mann had charge of the finances of the furniture company and Fontaine looked to him for directions in its management. After the truck was attached in the action brought by Novak, application was made to the plaintiff in this action for a bond to dissolve the attachment. An application and an agreement of indemnity under seal were executed by J. M. Mann, Inc., through its treasurer who made oath “that he knows the seal of said corporation; that the seal affixed to said instrument was such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order.” It could have been found that the plaintiff, upon this application and in reliance upon the agreement of J. M. Mann, Inc., to indemnify and save the plaintiff harmless from loss on account of having become surety on the bond to dissolve the attachment, executed and delivered a bond to the sheriff of Hillsborough County, New Hampshire. It is undisputed that on July 6, 1929, the sheriff made demand upon the plaintiff for payment of $1,000 as the penal sum of the bond, judgment having been obtained by Novak against the Fontaine Furniture Company in said action in the sum of $1,893.12 on or about July 1,1929, and not having been satisfied. The plaintiff made demand upon the defendant for the amount demanded by the sheriff but the defendant failed to pay the plaintiff and did not pay the amount of the bond or any part of it. On August 14,1929, the plaintiff paid the sheriff $1,000, the penal sum of the bond. The plaintiff has never been reimbursed for this payment by J. M. Mann, Inc., by the Fontaine Furniture Company or by 14 Canal Street, Inc. At the trial the defendant admitted the genuineness of the signature to the bond, application and agreement of indemnity, but contended that the execution of the agreement of indemnity by J. M. Mann, Inc., was ultra vires.

The trial judge submitted to the jury three questions as follows: (1) “was there a community of business interest between the Fontaine Furniture Company and the J. M. [123]*123Mann, Inc.”? (2) “was the Fontaine Furniture Company a subsidiary company of the J. M. Mann, Inc.?” and (3) “did the J. M. Mann, Inc., receive a benefit in money or property by agreeing to indemnify the American Surety Company in connection with loss?” The judge instructed the jury that if they should answer questions 1 and 2 in the affirmative they should return a verdict for the plaintiff for SI,000 plus interest from August 15, 1929, and if they should answer the third question in the affirmative they should return the same verdict, but that if they should answer the three questions in the negative then their verdict should be for the defendant. The jury answered each question in the affirmative and returned a verdict for the plaintiff for S1,000 with interest from August 15, 1929. All material evidence is contained in the bill of exceptions.

The defendant excepted to the refusal of the judge to limit the admission of the application for a bond and agreement of indemnity to the second and third pages thereof. The application and agreement are contained in a single document which was properly admitted in its entirety.

One Feeney, a witness called by the plaintiff, testified that she was employed in the office of general insurance agents and that it was a part of her duty to receive applications for bonds to be executed by the plaintiff. She was asked if she looked up the rating of the Fontaine Furniture Company and replied that she did. She was then asked what she found, and answered, subject to the defendant’s exception, that she could find no rating for that company in Dun’s rating book but did find a rating for J. M. Mann, Inc. As the Fontaine Furniture Company was wholly owned by J. M. Mann, Inc., and could have been found to have been a subsidiary of the latter, which did have a rating, J. M. Mann, Inc.’s guaranty of indemnity of the bond of its subsidiary was given for the protection of its property and was incidental to its business. There was no error in the admission of this evidence.

The defendant excepted to the admission of all the answers to interrogatories propounded by the plaintiff to Lionel Fontaine, save the first. The answers excepted to, [124]*124thirty-two in number, need not be referred to separately. It is sufficient to say that they related to the history and business of the Fontaine Furniture Company and its connection with J. M. Mann, Inc., and the interest of the latter in the assets of the furniture company. These facts were of probative value upon the defence of ultra vires. This exception is overruled.

The judge admitted in evidence, subject to the defendant’s exception, a duly authenticated copy of the articles of organization and the annual returns of the Fontaine Furniture Company on file in the office of the Secretary of State of New Hampshire. The records so admitted showed that all the stock of the company was owned by J. M. Mann, Inc., and that Mann and Elf man, treasurer and president of J. M. Mann, Inc., were treasurer and assistant treasurer and two of the three directors of the Fontaine Furniture Company during all the time material in the case at bar. This exception is without merit.

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Bluebook (online)
176 N.E. 785, 276 Mass. 119, 1931 Mass. LEXIS 976, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-surety-co-of-new-york-v-14-canal-street-inc-mass-1931.