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July 1, 1936


The opinion of the court was delivered by: KIRKPATRICK

This suit at law was tried to the court without a jury.

Findings of Fact.

 Prior to November 5, 1924, one, Robert W. A. Wood, was engaged in importing Argentine wool into the United States. He financed his purchases through the plaintiff (hereafter referred to as the bank). To secure the bank for advances, the importations of wool were consigned to it. It was the importer of record and, so far as the customs authorities were concerned, was to all intents and purposes the owner.

 Of the wool so imported, 169 bales were seized and libeled for forfeiture by the government for fraudulent attempt to violate the customs laws. In order to get the merchandise released (presumably at Wood's request), the bank, on November 5, 1924, gave the government its bond in the amount of $39,528 to stand in the place of the wool, the bond containing a provision that the government might enter judgment in that amount against the bank in case of forfeiture. The wool was then released and sold for Wood's account. Upon settlement, the bank retained $39,528 of Wood's money to indemnify itself against loss in case the wool should be forfeited and it should become liable on its bond.

 Some months later, and while the forfeiture proceedings were pending, Wood needed the cash which the bank was holding against possible liability upon his bond. The bank was willing to let him have it provided he furnished some equivalent security and, on September 15, 1925, he gave the bank his bond with the defendant (hereinafter referred to as the Maryland Company) as surety, in the amount of $45,000, the condition being that the obligors would indemnify the bank "from and against all claims and demands of every description upon or under the above recited bond (bond of November 5, 1924, given by the bank to obtain the release of the wool) * * * and of, from and against all costs, charges, damages and expenses, including counsel fee, and legal expenses, that shall or may happen to arise in connection with any suit, action or proceeding of any kind, upon, under or in relation to said bond. * * *" This was the bond upon which this suit was brought. Upon receiving it, the bank paid over to Wood his $39,528.

 The forfeiture proceedings against the wool (or the substituted bond) resulted, in the District Court, in the dismissal of the government's libel on December 4, 1930, and the government took its appeal to the Circuit Court of Appeals.

 The bank, having the Maryland Company's bond as its security, was willing to let wood have the money, but apparently hesitated to sign the letter without at least getting in touch with that company, which it did. However, the interchange of telephone calls and letters between it and the bank only resulted in the Maryland Company's serving notice that it would not agree to the payment of the money to Wood, but, on the contrary, intended to hold the bank for any loss which might result from the release of any collateral or security belonging to Wood which the bank might have or have control over. In spite of this the bank did, on July 25, 1931, sign the letter to the Collector and as a result of its action in this respect $55,075.86 of the money was paid to Wood. What became of the balance is not important. The bank did not get it and Wood, if he got it, did not keep it very long.

 On May 4, 1932, the Circuit Court of Appeals reversed [ United States v. 169 Bales Containing Wool, 56 F.2d 736] the judgment of the District Court in the forfeiture proceeding. The case was retried and, on December 11, 1933, judgment of forfeiture was entered, followed on the next day by entry of judgment against the plaintiff on its bond of November 5, 1925, in the amount of $39,528.

 Thereafter the plaintiff endeavored to secure a modification or reduction of the judgment and in so doing necessarily and properly expended the sum of $2,190.91 in counsel fees and legal expenses, which amounts I find were fair and reasonable. Pending these proceedings, an appeal was taken in order to stave off execution on the bond until they could be concluded.The plaintiff's efforts were unsuccessful and the appeal was dropped. On September 27, 1924, the plaintiff paid the government the sum of $41,431.93, being the amount of the judgment against it in the forfeiture proceedings with legal interest thereon.

 The foregoing is a statement of all the facts which in my judgment are relevant and material. However, the defendant wishes certain additional facts to appear and, that he may have the benefit of them for what they are worth, I add the following findings:

 When Wood applied to the Maryland Company to act as his surety upon the bond of November 5, 1924, he made a statement of his assets and liabilities and included in the latter was an item of $39,528 which by reference is the exact amount of the liability in connection with the bond of the bank covering the 169 bales of wool released by the government after its seizure.

 Between the date of the execution of the bank's original bond of September 15, 1925, to obtain the release of the wool, and July 22, 1931, when the bank signed the letter consenting to the payment to Wood by the Collector for refund of excess duties, etc., the financial condition of Wood had so materially changed that in the event that either the plaintiff or the defendant would be called upon to ...

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