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People v. Metropolitan Surety Co.

Supreme Court of New York, Appellate Division

December 28, 1911

THE PEOPLE OF THE STATE OF NEW YORK, Plaintiff,
v.
THE METROPOLITAN SURETY COMPANY, Respondent. R. GRANT JOHNSTON, Appellant.

Page 504

APPEAL by R. Grant Johnston, petitioner, from an order of the Supreme Court, made at the Albany Special Term and entered in the office of the clerk of the county of Albany on the 13th day of July, 1911, denying a motion that certain moneys be paid over to be applied upon an execution, and directing that the matter be referred to a referee to take testimony and report to the court.

COUNSEL

G. D. B. Hasbrouck and Amos Van Etten, for the appellant.

Edward R. Finch, for the respondent.

HOUGHTON, J.:

The appellant leased to the Jamestown Exposition Excursion and Steamboat Company a steamship for the period of seven months, beginning the 1st day of May, 1907, at a rental of $900 per month, payable monthly, and the lessee also agreed to pay certain charges and keep the vessel in repair. The lease contained a clause that the charterer should furnish a bond in the sum of $2,500 to guarantee the faithful performance of the contract of leasing. Thereupon the defendant, The Metropolitan Surety Company, executed such bond at the request of the exposition company, which deposited $1,250 as collateral thereto. The bond so furnished bound the principal and surety to pay such sum and secured appellant, named as

Page 505

obligee, from any pecuniary loss resulting from the breach of any of the terms, covenants and conditions of the contract of hiring, and further provided that the surety company should be informed of any breach of the terms of such contract within thirty days, and should not be liable for any greater sum than the penalty mentioned in the bond, nor at all unless proceedings thereon were instituted not later than the 1st day of January, 1908.

The exposition company breached its contract and the appellant brought suit against the surety company after the 1st day of January, 1908, and his complaint was dismissed because the action was brought after that date. Thereupon the appellant brought suit against the exposition company, and it being a foreign corporation the plaintiff obtained an attachment, and the sheriff attached, as is claimed, the fund which the exposition company had deposited with the surety company on the giving of the bond. Judgment was finally obtained against the exposition company for $2,951.26, and execution thereon issued to the sheriff, who levied the attachment, which execution is presumably outstanding.

On January 6, 1909, the above-entitled action was brought by the People to dissolve the surety company on the ground that it was insolvent, and a temporary receiver was appointed who has since been made permanent receiver, and is now engaged in marshaling the assets of such corporation, and has in his hands a sum greater than $1,250.

At the time the surety company gave its bond to the appellant it executed for the exposition company two other bonds, and the exposition company demanded and received in cash fifty per cent of the total of those bonds. Breach of these two latter bonds was made, and the surety company was compelled to pay a sum greater than the exposition company had placed in its hands on all three of the bonds which it had given.

The appellant demanded from the receiver the $1,250 which had been deposited with the surety company by the exposition company as collateral security for the bond which had been given, and, upon payment being refused, made a motion to compel such receiver to pay the same over to him. Instead of directing the receiver so to do the court appointed the referee

Page 506

to take proof and report. From such order Johnston appeals, claiming that he was entitled to have the money paid over to him as matter of law, and that the ...


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