Jenkins v. National Surety Co., 277 U.S. 258 (1928)

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Jenkins v. National Surety Co.

No. 424

Argued April 11, 12, 1928
Decided May 14, 1928
277 U.S. 258

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Syllabus

A surety company went on the bond furnished by a bank to secure repayment on demand of the deposits of a county treasurer up to a specified amount, and, as part consideration for executing the bond, took the bank’s agreement to indemnify it for any liability it might thereby sustain or incur. The bank became insolvent while holding deposits of the treasurer exceeding the amount of the bond, and the surety, having paid that amount, sought to participate pro rata with him and his surety in the distribution of surplus assets of the bank, basing its claim on the indemnity agreement.

Held:

1. That a former judgment denying the surety the right to be subrogated to the creditor’s claim and remedies against the debtor until the creditor had been paid in full did not bar the surety’s claim under the indemnity agreement. P. 265.

2. That the indemnity claim should not be allowed. A surety for part of an indebtedness does not, through the expedient of taking a separate indemnity agreement from the debtor, equip himself to compete with the secured creditor in the distribution of the debtor’s assets when the debtor becomes insolvent and the surety’s obligation has been paid. P. 265.

18 F.2d 707 reversed.

Certiorari, 275 U.S. 515, to a decree of the circuit court of appeals, which allowed the respondent surety company’s claim to share, by way of indemnity, in assets of an insolvent national bank. The claim had been denied in the district court.