
    MARYLAND CASUALTY CO. v. CORN EXCHANGE NAT. BANK & TRUST CO.
    No. 6234.
    Circuit Court of Appeals, Third Circuit.
    March 19, 1937.
    
      Herbert A. Barton, C. Donald Swartz, and Swartz, Campbell & Henry, all of Philadelphia, Pa., for appellant.
    Charles J. Biddle and Drinker, Biddle & Reath, all of Philadelphia, Pa., for appel-lee.
    Before BUFFINGTON, DAVIS, and THOMPSON, Circuit Judges.
   BUFFINGTON, Circuit Judge.

In the court below (18 F.Supp. 971) the appellee, hereafter called Bank, brought suit against appellant, hereafter called Surety Company, upon the latter’s indemnity bond. Jury was waived, and the case tried by the judge, who found against Surety, by whom this appeal was taken. In deciding the case, the trial judge so fully discussed the facts and law that by reference thereto we avoid needless repetition and, as we find ourselves in accord therewith, we affirm the judgment on the court’s opinion, adding thereto a brief statement of the pertinent features involved in this complicated situation.

In 1922 the Bank, as the nominal importer, arranged on behalf of one Wood for the importation by him into the United States of 963 bales of wool in five different shipments. One of these shipments consisted of 169 bales. The government filed separate libels of forfeiture against each of the shipments. The libel against the 169 bales was filed on June 16, 1924. In order to obtain release of the 169 bales in question, the Bank gave its bond to the United States in the sum of $39,528. The wool was sold, and the Bank retained out of the proceeds $39,528 to indemnify it against any future loss by reason of its bond to the United States. Wood arranged to substitute a counterindemnity bond for this sum retained by the Bank and on September 15, 1924, gave it the bond in suit of $45,000 with himself as principal and appellant as surety. The libel proceeding against the 169 bales of wool was .dismissed, but on May 4, 1932, the Circuit Court of Appeals for the Second Circuit reversed the action of the District Court. United States v. 169 Bales Containing Wool, 56 F.(2d) 736. Subsequently the government sued the Bank on its bond and on December 11, ' 1933, recovered judgment against the Bank. The Bank took an appeal on March 5, 1934, but subsequently withdrew its appeal and paid the amount of the judgment, with interest, on September 27, 1934. Thereupon it brought the present suit.

In 1931 Wood prosecuted his claim on the other four shipments of wool and the Collector of Customs agreed to deliver to Wood the sum of $99,305.85, being excess duties paid by him, provided the Bank, as nominal importer, authorized the payment. On July 25, 1931, the Bank delivered to Wood, over the protest of the Surety Company, a letter authorizing payment by the government of the excess duties to Wood. •In the interim between the giving of the bond by Surety Company and the letter referred to, Wood’s financial condition had changed materially for the worse.

As we read the record, the appellee had no claim against the excess duty funds in the possession of the Collector of Customs and at the time of the July, 1931, letter had no legal claim against Wood. Liability on the bond to the' United States did not accrue until some time subsequent to the giving of the letter. Wood at that time owed the Bank nothing, and it would have exceeded its legal rights had it undertaken to exercise control over the funds to which it had no just claim. The banks had neither real nor potential control of the funds in the custody of the Collector of Customs and had no immediate or direct claim against Wood until December 11, 1933, when judgment was entered against it on its bond to the United States. The possibility that judgment might be entered in favor of the government was not sufficient to justify the bank in refusing to allow Wood the right to collect on other claims which Wood had against the government.

So regarding, the judgment below is affirmed.  