
    Charles Mosier and William Summers, Respondents, v. The United States Fidelity and Guaranty Company, Appellant.
    Fourth Department,
    November 17, 1909.
    Indemnity — ambiguous contract — when intention of parties question of fact — corporation — ultra vires — insurance in excess of statutory limit — right to reinsure.
    In an action against a guarantor for breach of an agreement to furnish a bond under an agreement providing that the insured was to pay in cash for each bond executed " a premium charge at the rate of fifteen cents per one hundred dollars (based on amount of contract) for each bond guaranteeing the terms of any given contract,” the question as to whether the rate was to be fifteen cents per hundred dollars per annum, or fifteen cents per hundred dollars for the full term of insurance, is one of fact to be determined by the court where both parties move for the direction of a verdict.
    
      So, too, the question as to whether there had been a mutual mistake is one of fact.
    Although section 24 of the Insurance Law provides that such guarantor shall not take any one risk to an amount exceeding ten per cent of its capital and surplus, the statute also provides that such part of the risk as is reinsured shall not be included in determining the limitation. Hence a surety cannot claim that a risk beyond that limit was ultra vires as it could have reinsured the unauthorized excess.
    Appeal by the defendant, The United States Fidelity and Guaranty Company, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Erie on the 12th day of January, 1909, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 15th day of March, 1909, denying the defendant’s motion for a new trial made upon the minutes.
    
      George P. Keating, for the appellant.
    
      Lincoln A. Groat, for the respondents.
   Williams, J.:

The judgment and order should be affirmed, with costs.

The action was brought to recover damages for the breach of a contract made between the parties, for the furnishing of bonds by the defendant guaranteeing the performance by the plaintiffs of contracts made by them with other parties. The contract between these parties was made August 12, 1905. About June 1, 1906, the plaintiffs were about to enter into a contract with the State for the improvement of the Oswego canal, at Fulton, N. Y., the contract price being $1,126,718, and were required to furnish a bond for $285,000. The defendant was asked to furnish this bond, and its alleged refusal to do so constitutes the breach of contract for which the damages were sought in this action.

The plaintiffs claimed the rate of compensation they were required to pay the defendant for the bond was fifteen cents per $100 of amount of the contract for its full term. That rate upon $1,126,718 amounted to $1,690.08.

The plaintiffs were obliged to pay another company for the bond $8,000, and for the'difference between these two amounts, $6,309.92, with interest from the date of the alleged breach of the contract between tliese parties, tlie verdict was directed. The defendant claimed the rate was fifteen cents per annum instead of fifteen cents for its full term, and that the contract guaranteed not having been completed when this action was tried, the true amount of damages if any could not be determined. This disagreement as to the rate, with other things, was the excuse of the defendant for refusal to furnish the bond in question.

First. As to the rate agreed on the language of the contract between these parties was: The applicant agrees to pay the company, in cash * * * for each instrument so executed * * * a premium charge at the rate of fifteen cents per one hundred dollars (based on amount of contract) for each bond guaranteeing the terms of any given contract.”

The defendant claimed this language was indefinite in that it did not state whether the fifteen cents was a per annum or a flat rate, and it gave evidence by its agent, Mr. Walsh, that in the surety business all premiums were based on an annual rate, with very rare exceptions when the word “ flat ” was inserted, that this was his experience after ten years’ service for the defendant. Bo proof was given as to the custom with other companies. During the negotiation for the contract between the parties defendant wrote a letter to its agent Walsh, and in it the rate of fifteen cents was stated to be per annum. It was claimed that this letter was exhibited to one of the plaintiffs, but he denied any knowledge of it. Then, in the application for the contract made by the plaintiffs, it was stated that they agreed to pay in advance the premium of one dollar and fifty cents on the amount of the contract bond for the first year, and one dollar and fifty cents annually thereafter, etc. This application bears date August 12, 19Ó5, the same as the contract itself. The agreement did not, however, refer to the application or make it a part thereof in any way, and the plaintiffs ■ claimed they knew nothing of this provision in the application which was made upon a blank some days before the contract was executed.

The most that could be claimed in behalf of defendant and as to the indefiniteness of the language of the contract and the proof as to its real meaning is that it was a question of fact in the case. Both parties moved for the direction of a verdict, and the decision of the court settled this question adversely to the defendant.

As to the claim that there was a mutual mistake and the contract between the parties should have been reformed by inserting the words “per annum,” this was at most a question of fact, to be determined upon the evidence, and the decision of the court settled it in favor of the plaintiffs. There were fair questions of fact in both these respects upon the evidence, and we cannot say the court determined them improperly.

Second. It was claimed that the defendant had no authority to become surety upon so large a bond as the one in question, under section 24 of the Insurance Law (Laws of 1892, chap. 690, as amd. by Laws of 1906, chap. 326), providing that no single risk or hazard should be taken by such a corporation to an amount exceeding ten per cent of its capital and surplus. The defendant’s capital and surplus amounted to $2,077,597.99, and ten per cent of that was $207,759.79; The bond .in question .was $285,000. The statute, however, provides that the parts of such risk or hazard, which shall have been reinsured, should not be included in determining the limitation prescribed by the statute. The defendant, therefore, could comply with the provisions of the statute by reinsuring a portion of the risk. The defendant answered to this that it was not bound by the terms of its contract to reinsure any part of the risks it undertook to take for the plaintiffs. It did, however, expressly agree to furnish bonds up to $800,000, and if it had the means of doing so within the law it was bound to do it under its contract.

No effort was made to show that reinsurance could not be obtained. This objection to a recovery was not, therefore, well taken.

We see no reason for reversing the judgment and order appealed from.

All concurred.

Judgment and order affirmed, with costs;  