United States Fidelity & Guaranty Co. v. Carnegie Trust Co.

Appeal from a judgment entered April 10, 1917, upon an order of the Appellate Division of the Supreme Court in the first judicial department, which affirmed an order of Special Term granting a motion by plaintiff for a judgment in its favor upon the pleadings. Defendant was a depository of the funds of estates in bankruptcy and as required by statute had given a bond for the safe- custody of the deposits. The plaintiff was the surety upon this bond. When the bond was issued the Carnegie Trust Company executed a written agreement of indemnity to the plaintiff to save it harmless from loss and to reimburse it for payments made by reason of the obligation of the bond. The trust company closed its doors and effort was made to recover by priority claim the funds of the estates in bankruptcy in toto, but the attempt failed and preference was denied. The bankruptcy creditors then filed general unsecured claims for the full amount of the deposits. Action by the bankruptcy creditors against the plaintiff followed and the plaintiff paid the obligation of its bond with interest. Thereafter the plaintiff offered for filing a claim against the assets of the Carnegie Trust Company in liquidation for reimbursement for the payment thus made. The plaintiff founded its claim upon the indemnity agreement. The defendant rejected the claim. Upon these facts the plaintiff sued to sustain the validity of the claim. The defendant, answering, denied the claim to be a valid one and alleged separately that dividends totalling thirty-five per cent had been paid to general unsecured creditors of the Carnegie Trust Company including the claims of the bankruptcy creditors for whom the plaintiff was surety.