Stoddard v. Maryland Casualty Co.

Headnote

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

Phillips v. Maryland Casualty Co., 201 App. Div. 866 , affirmed.

Appeal from a judgment, entered June 1, 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 Seneca Fire 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 the defendant undertook to indemnify the Seneca Fire Insurance Company for any loss of its deposits in the North Penn Bank of Philadelphia, Penn., not exceeding $100,000, 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 Seneca Fire 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 Seneca Fire Insurance Company at the time of the failure of the bank were fraudulent, and that the company had in fact no moneys on deposit at the time.