Stoddard v. United States Fidelity & Guaranty Co.

Headnote

Principal and surely — bonds — action to recover upon surety bond — defense of fraud.

Phillips v. U. S. Fidelity & Guaranty Co., 200 App. Div. 208 , affirmed.

Appeal from a judgment, entered May 31, 1922, upon an order of the Appellate Division of the Supreme Court in the third judicial department, reversing a judgment in favor of plaintiff entered upon the report of a referee and directing a dismissal of the complaint. The plaintiff, acting as liquidator of the affairs of the New York National Insurance Company, brought this action to recover the amount named in a depository bond, issued to that company by the defendant the United Fidelity and Guaranty Company, whereby defendant undertook to indemnify the New York National Insurance Company for any loss of its deposits in the North Penn Bank of Philadelphia, Penn., not exceeding $50,000, which might be sustained by it during the course of one year through the insolvency of the bank. The action was defended on the, ground that the Néw York National Insurance Company, when it applied for the bond, knew, or had reason to know, that the North Penn Bank was insolvent, and fraudulently concealed information thereof from the defendant. It

was also defended upon the ground that the book entries of the North Penn Bank showing a credit balance in the account of the New York National Company were false.