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: 83
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GREEN V. INTbERSTATE CASUALTY CO. I
By the terms of each of the continuation certificates the obligation it
evidenced was "subject to' all the covenants and conditions of said orig-
inal bond heretofore issued, dating from the 1st day of October, 1910"
This resulted in making the covenants and conditions of the original
bond parts of the renewal agreements as effectually as if they had been
copied in the continuation certificates. It follows that each continua-
tion certificate is. to be regarded as containing the provision warrant-
ing the truth of the statement referred to in the original bond and of
any subsequent statement or statements. That included a warranty of
the truth of the statement made prior to and in contemplation of the
issue of each continuation certificate. Each of those subsequent state-
ments was false in its assertion, with reference to McKinzie, that "he
is not now in default."
The bank had notice from the terms of the original bond that it
was issued in reliance upon statements made in its behalf to the surety
company, and that, in the ordinary course, renewals, which the terms
of the bond showed were in contemplation, might also be based upon
further statements to be made on behalf of the bank. In view of
these circumstances, and of the additional one that each continuation
certificate expressly made the obligation it evidenced subject to the
covenants and conditions of the original bond, one of the provisions
of which was a warranty of the truth of the statement specifically re-
ferred to in the bond and of any subsequent statement, there is no
room for holding the surety company bound by a continuation certifi-
cate issued on the faith of a statement which was warranted to be
true, but was false in a respect material to the obligation which the
surety company conditionally incurred. Guarantee Co. v. Mechanics,
etc., Co., 183 U. S. 402, 22 Sup. Ct. 124, 46 L. Ed. 253; Fidelity &
Deposit Co. v. Courtney, 186 U. S. 342, 22 Sup. Ct. 833, 46 L. Ed.
It is not fairly questionable that the statement in reference to the
cashier that "he is not now in default" was one of a fact material to
the contemplated undertaking of the surety company. Max J. Winkler
Brokerage Co. v. Fidelity & Deposit Co., 119 La. 735, 44 South. 449.
The terms of its undertaking were such as to make the truth of that
statement a condition precedent to the right on the part of the obligee
to recover on the renewals of the bond. As the evidence without con-
flict showed that the quoted statement was false, the court did not err
in ruling that the plaintiff was not entitled to recover for shortages
which occurred during the periods covered by the renewals of the bond.
The evidence disclosed a state of facts under which, by the explicit
terms of the renewal agreements, the surety company was not to be
liable for shortages occurring during the periods covered by the re-
In the course of the argument in behalf of the plaintiff in error at-
tention was called to a number of decisions with reference to contracts
not based on statements warranted to be true. Those decisions are
not pertinent to the question presented in the instant case, which is a
suit on contracts based on statements warranted to be true, but which
turned out to be false.
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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/m1/97/: accessed March 25, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.