The Federal Reporter with Key-Number Annotations, Volume 256: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, May-July, 1919. Page: 78
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, . , 4, REXEPtAL RBORTER
n, -,pe dependent covenant, breach of which gives cause of ,action.for
2. PRINCIPAL AND SURETY 057 - SURETY COMPANIES - REINSURANCE -
INiotlDGE OF DEPAVUIT.
iWithin the provision of a contract, whereby the N. Surety Company
agreed to take the place of the E. Surety Company on its bonds, that
there was no default on any of the bonds known to its officers, they are not
shownto .have known of a default on a bond for a government building
contractor, because advised by government architect that the work would
not lie, completed till about a certain date, seven months after the time
provided 'by the contract; there being no default if the delay was caused,
and allowance for it made, by the government, as authorized by the con-
Appeal from the District Court of the United States for the North-
ern.District of Mississippi; Henry C. Niles, Judge.
Suit by the United States, for the use of the American Sheet Metal
Works and others, against the National Surety Company. From an
adverse decree, defendant appeals. Affirmed.
Percy Bell, of Greenville, Miss., and Wm. Grant and Wm. B. Grant,
both of New Orleans, La., for appellant.
J. S. Sexton, of Hazlehurst, Miss., for appellees.
Before WALKER and BATTS, Circuit Judges, and FOSTER,
WALKER, Circuit Judge. The Empire State Surety Company
was the surety on a bond given by the contractors for the erection of
a post office building at Greenwood, Miss. While that bond was in
force, by an agreement entered into by and between the National Sure-
ty Company (which will be referred to as the appellant) and the Em-
pire State Surety Company, made and dated September 18, 1912,
the former, in consideration of the payment to it by the latter of 68
per cent. of the current unearned premium on each of the surety bonds
specified in a schedule annexed to the agreement, in which was included
the above-mentioned bond, reinsured--
"all the said unexpired surety bonds * * * for any default of the prin-
cipals named in said bonds and for loss sustained by the insured in such poli-
cies after 4 o'clock p. m. of the 22d day of August, 1912, and agrees to re-
pay to the Empire State Surety Company, its successors and assigns, any
sum which the Empire State Surety Company shall be liable to pay in con-
sequence of any such default."
That agreement contained the following, among other, provisions:
"The National Surety Company agrees to fulfill all the obligations of the
Empire State Surety Company under the bonds and policies hereby reinsured
against loss as above stated, and agrees to adjust all claims arising as afore-
said under any of such bonds and such policies at its own expense, and to
pay, as aforesaid, all valid claims arising as aforesaid under said bonds and
policies in accordance with their terms and conditions occurring after Au-
gust 22, 1912, at 4 o'clock p. m. The Empire State Surety Company hereby
transfers to the National Surety Company all its rights, interests, powers,
and privileges under all such bonds and such policies, so that the National
Surety Company may act thereon in all respects as If it had itself issued such
bonds and such policies, and said National Surety Company may give any
mFor other cases see sme topic & KEY-NUMBER in all Key-Numbered Digests & Indexes
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The Federal Reporter with Key-Number Annotations, Volume 256: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, May-July, 1919., legislative document, 1919; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38827/m1/92/: accessed March 28, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.