
    FIDELITY AND DEPOSIT COMPANY vs. EDWIN W. POE et al., Receivers.
    
      Surety Company — Effect of Receivership — Insolvency—Right to Premiums.
    
    It is the duty of the court, in passing on a demurrer to the replication, to inspect the whole record and, mounting up to the first fault, to give judgment against the party committing the first material error, and, if the pleas are bad, so to hold under the demurrer. p. 489
    That, of several surety companies which were joint sureties on various bonds, one was placed in the hands of receivers during the life of the bonds, did not deprive such company or its receivers of the right to its share of the annual premiums on the bonds, paid after the appointment of receivers, such appointment not establishing the insolvency of that company or its inability to pay losses under the bonds, it not being adjudicated insolvent during the life of the bonds, and there being in fact no losses under the bonds. pp. 496-500
    In an action by receivers of a company, which was surety on a contractor’s bond, against its cosurety, for a share of the premiums paid for the bond, held, that it was proper to refuse a prayer that the plaintiff could not recover if, after appointment of the receivers, there were changes made in the contract, to which the receivers did not assent, in the absence of evidence as to the character of such alleged changes. p. 501
    Defendant having continued to collect the premiums on the bond although knowing that there had been changes in the contract, could not assert such changes as a ground for refusing to pay plaintiff its share of the premiums. p. 501
    
      Decided March 20th, 1925.
    
    Appeal from the Superior Court of Baltimore City (Staet-TOET, I.).
    
      Action by Edwin W. Poe and others, receivers of the United Surety Cbmpany, .against the Fidelity and Deposit 'Company of Maryland. From a judgment for plaintiffs, defendant appeals.
    Affirmed.
    The cause wais argued before Pattison, Ubneb, Adkins, Okfutt, Digges, P!abke, and Bond, JJ.
    
      Washington Bowie, with whom were Francis K. Murray and Stephen W. Gambrill on the brief, for the appellant.
    
      Robert W. Williams and J. Kemp Bartlett, Jr., with whom were Bartlett, Poe & Claggett, and Janney, Ober, Slingluff & Williams on the brief, for the appellees.
   Pattison, J.,

delivered the opinion of the Court.

The appeal in this case is from a judgment recovered by the appellees, the receivers of the United Surety Company, against the appellant, the Fidelity and Deposit Company, in the Superior Court of Baltimore City.

The declaration consists of six of the common counts and four special counts.

In the seventh count, the first of the special counts, it was alleged

“That the United Surety Company, on or about February 7, 1910, executed a bond in the penalty of fifty thousand dollars on behalf of John 0. Eodgers, John J. Hagerty and James M. Eodgers, in favor of the City of Hew York, guaranteeing the completion of the Kensico Dam and appurtenant works, * * * and in consideration of the execution of such bond, John C. Eodgers, John J. Hagerty and James M. Eodgers agreed to pay to the United Surety Company for executing said bond and continuing the same the sum of nineteen hundred and eighty-eight dollars and twenty-six cents per annum, until the United Surety Company should, in the manner provided by law, be discharged or released from any and all liability and responsibility upon and from said bond and all matters arising thereon, and proper legal evidence of such discharge or release be served on the United Surety Company; that thereafter John C. Eodgers, John J. Hagerty and James M. Eodgers assigned the contract covered by said bond to H. S. Kerbaugh, Inc., and the said H. S. Kerbaugh, Inc., assumed the obligation of the said Eodgers and Hagerty to pay premiums as aforesaid; and that thereafter the Fidelity and Deposit Company, as agent and fiduciary of the United Surety Company and these Eeceivers, received from H. S. Kerbaugh, Inc., the net sum of sixty-six hundred and seventeen dollars and eleven cents in installments and on the dates set forth in the account marked ‘Exhibit B,’ attached to and made a part of this declaration, in accordance with the agreement of John C. Eodgers, John J. Hagerty and James M. Eodgers made to the United Surety Company, which said agreement was assumed, as aforesaid, by H. S. Kerbaugh, Inc.; that demand has been made upon the defendant to pay to the plaintiffs said amount so collected upon behalf of the United Surety Company and these plaintiffs, but payment has been refused and no part of the same has ever been paid.”

It was upon the eighth count that the plaintiffs sought to recover .an annual premium collected by 'the Fidelity and Deposit Company, its agent and fiduciary, upon a bond executed on or about December 20th, Í909, by the United Surety Company, together with the Fidelity and Deposit Company, in the penalty of two million dollar® “running to the City of Hew York” guaranteeing the completion of a contract for the construction of the municipal building by Thompson-Stai-rett 'Company, and which said -sum so collected has never been ;piaid to the United Surety Company. The amonnt of liability assumed by the United Surety Company by the execution of said bond was sixty thousand dollars; and for the assumption of such liability it was to be paid by the principals of the bond the sum of eight hundred eighty-four dollars and twenty-five cents per annum, in advance, until it was released from such liability in the manner sett forth in the aforegoing eighth count of the declar ration; and! as alleged therein, the Fidelity and Deposit Company, .asi agent of the United Surety 'Company, on or about January 6, 1911, collected1 one annua! premium, amounting to eight hundred eighty-four dollars and twenty - five cents, from which amount the Fidelity and Deposit, Company was authorized to deduct a commission of two hundred sixty-five dollars and twenty-seven cents for the collection of such premium, leaving due and unpaid to the United Surety ■Company and the plaintiffs a balance of six hundred eighteen dollars and ninety-eight cents.

The ninth count was on a bond executed by the United Surety 'Company, together' with the Fidelity and Deposit Company, on or about the 9th day of December, 1909, on behalf of Frank B. Down, executor, conditioned upon the faithful performance of his duties as such executor. In consideration of the execution of tihei bond by the United Surety Company, Frank B. Lown agreed to- pay to it a premium of four hundred .and thirty-eight dollars and eighty-nine cents for the first year, and thereafter an annual premium of two hundred and thirty^eight dollars and eigjhtyeight cents until the United Surety Company was discharged or released in the manner stated in the aforegoing count from any and all liability under said bond and all matters arising therefrom; and thereafter' the defendant, acting as agent and fiduciary of the United ¡Surety Company and the plaintiffs, collected from Frank D. Lown, from time to time, as shown by said “Exhibit B” the net sum of thirteen hundred and ten dollars .and fifty-one centsi, which it has never paid over to the United Surety 'Company, though demand therefor has been made upon it.

In the tenth count recovery was sought on a bond executed on the 17th day of September, 1909, by tbe United Surety Company, together with the Fidelity and Deposit Company, in behalf of Bessie M. Leggett et al., administratrix, for the faithful performance of her duties as such administratrix; and in consideration of the execution of said bond, the said Bessie M. Leggett agreed to pay to the United Surety Company an annual premium of eighty-nina dollars and fifty cents, until the United Surety- Company was released and discharged in the manner1 stated in the aforegoing counts; “and thereafter the defendant, acting as agent and fiduciary of the United Surety Company * * *, collected from Bessie M. Leggett on the respective dates set forth in * * * ‘Exhibit B’ (attached to the declaration) the net sumí of fifty-one dollars and eighty-nine cents,” which amount has never been . paid to the United Surety Company although demand has been made upon the defendant therefor.

To the declaration, the defendant filed, on the 25th day of June thereafter, the general issue pleas and the plea of payment, and later, on the fourth day of October of the same year, filed two others known as its fourth .and fifth pleas.

In its fourth plea it was stated

That John C. Dodgers, John J. Hagerty, and James 1£. Dodgers had a contract with the City of Dew York, for the construction and completion of the Kensico Dam and appurtenant works, for which they were to he paid the sum of $7,953,050. That they applied to the defendant to become surety upon a bond to he given to the City of Dew York, guaranteeing the completion of said contract and to procure other sureties, to the end that the amount of bond required, to wit, one million dollars, might he furnished and filed as required by ‘the terms of the contract; that the defendant became surety upon a bond in the penalty of $250,000 and procured the United Surety Company, together with other surety companies, to execute bonds of like tenor and effect, which with the bond executed by the defendant, amounted in all to the sum of one million dollars, the defendant thereby becoming what is known in surety parlance as the originating company. That in accordance with the custom and practice in such cases the annual premium upon all the bonds so executed, including the bond of the United Surety Company, were payable to the' Fidelity and Deposit Company, the originating company. “That under the terms and conditions of said bonds each surety thereon was liable up to the penalty of its particular bond for the faithful performance of the entire contract. Therefore, in the eveflt of the withdrawal or release of any one or more of said sureties the hazard or liability as to the remaining sureties was increased to the extent of the liability of the withdrawing surety or sureties. That thereafter H. S. Kerbaugh, Incorporated (which had by consent of all the parties to said contract and bonds been substituted in the place and stead of said John C. Kodgers et al.), the contractors on whose behalf the various bonds were given and the obligee therein, applied to the various sureties on said bonds to execute an agreement consenting to certain changes' and modifications in said contract and agreeing that their said bonds should be deemed as conditioned for the performance of the contract as so modified with the same force and effect as if the said contract has been originally drawn and executed as so modified. The said modifications or changes materially altered the terms of said contract in that under the contract payment for clearing areas was not to be made until the flooding of the areas cleared or the complete filling of the reservoir, whereas under the proposed change it was provided that clearing should be done from time to time and payment therefor made for such clearing as the work progressed, and that payment should be made but once for clearing any given area regardless of how many times the contractor might be required to go over it, and that clearing should be done as often as necessary in order to insure the space being in proper condition before flooding or when the reservoir was completely filled. That under said contract the areas to be cleared were very extensive and the -provision that the contractor would be paid but once for clearing, although it might be required that the site be cleared many times owing to the annual growth of trees, bushes, and shrubbery, materially increased the risk and hazard of said contract. That all of the sureties on said bonds executed said agreement save and except the United Surety Company, which company neglected, failed and refused to sign said agreement. That the City of New York required said contractor to procure the consent of the sureties on said contract to said modifications and when the plaintiffs herein refused to consent to said modifications, the City of iSTew York intervened in the receivership proceedings of the United Surety Company and petitioned the court therein that the receivers might be required and compelled to assent to said change or modifications. That said receivers, the plaintiffs' herein, took the position that the United Surety Company was no longer a going concern and that they should not by reason thereof execute any consent or agreements which might change or affect the status of the United Surety Company, and thereupon the court refused to require them to execute said consent. That thereupon the City of Hew York elected to make the said altera- • tion and change in said contract and did make said alteration and change without the consent of the United Surety Company. That thereupon the contract was so materially changed and modified that in consequence of the refusal of the United Surety Company to sign said agreement as aforesaid it became released and discharged from all liability on its said bond, and it therefore ceased to be entitled to share in or to receive any part of the premium paid to the defendant, as said originating company, after the contract had 'been changed and modified.”

For a fifth plea the defendant stated

“That the bond dated on or about the seventh day of February, 1910, in the penalty of $50,000 on behalf of John C. Rodgers et al.; the bond dated on or about December twentieth, 1909, in the penalty of $2,000,000 on behalf of the Thompson-Starrett Company; the bond dated on or about December ninth, 1909, on behaf of Frank B. Town, and the bond dated on or about September seventeenth, 1909, on behalf of Bessie M. Leggett, were bonds in which the defendant was the originating company. That the obligation and duty of ‘this defendant to the said John C. Rodgers et al., the principals upon each of the said bonds created by virtue of the application to this defendant to procure the necessary sureties upon their said bonds, was to procure other sureties that would be acceptable to the various authorities required by law to approving said bonds on behalf of the obligees. And the defendant procured the United Surety Company and others to become surety thereon, and in accordance with the custom and usage among surety companies the entire premium was to be received by the defendant and then diverted among the various surety companies in accordance with the penalties of their bonds and (or) the agreements among the sureties as to the amount of liability to be carried by each. That on or about the thirteenth day of January, 1911, receivers were appointed for the United Surety Company and were directed to wind up and close its affairs. That from and after the appointment of said receivers the United Surety Company was no longer in a position to promptly respond to and perform its obligations. That this defendant was surety upon various bonds and obligations upon which the United Surety Company was principal, and that after the thirteenth day of January, 1911, the said United Surety Company defaulted and failed to perform its various contracts and obligations upon which this defendant was surety, with the result that this defendant was called upon to pay and did pay large sums of money on account of the obligations it had executed as surety for the said United Surety Company, and that although the correctness of the said claims was checked and admitted by the plaintiffs they failed and refused to pay or to reimburse the defendant after it had paid any of said sums so paid by the defendant, nor have the plaintiffs paid the same to this day, and the defendant therefore says that the United Surety Company was not entitled to participate in or receive any premiums collected by the defendant on the bonds of John 0. Rodgers et al., Thompson-Starrett Company, Frank B.
Lown, and Bessie hi. Leggett after the date of the appointment of said receivers.”

The plaintiff's for replication to defendant’s fourth plea said:

“That John C. Rodgers, J ohn J. Hagerty and J ames hi. Rodgers applied to the Hnited Surety Company for a bond of $50,000 to be executed by the Hnited Surety Company in favor of the City of Hew York, and prior to the execution of such bond by the Hnited Surety Company and as a condition thereto the said John 0. Rodgers, John J. Hagerty and James M. Rodgers executed a written application and indemnity agreement, a copy of which is attached hereto, marked ‘Indemnity Agreement,’ and prayed to be taken as a part of this replication herein.
" “Thereafter the defendant and its attorneys wore in correspondence with the plaintiffs and their attorneys with respect to the said bond in the penalty of $50,000 executed by the Hnited Surety Company in favor of the City of Hew York, and with respect to the premiums on said bond .and the termination of liability of the Hnited Surety Company and its estate by reason thereof, copies of 'the letters forming this correspondence being attached hereto, marked ‘Correspondence,’ and prayed to he taken as a part of this replication.”

And for replication to the fifth plea the plaintiff said:

“That the principals, John C. Rodgers et al., executed an application and indemnity agreement in favor of the Hnited Surety Company, as set forth in the plaintiff’s replication to the defendant’s fourth plea, and that the other three principals referred to in the defendant’s fifth plea, to wit, Frank B. Lown, Bessie M. Leggett and Thompson-Starrett Company, likewise executed indemnity agreements of substantially the same tenor and effect in favor of the United Surety Company, and the execution of such indemnity agreements was a condition precedent to the execution by tbe United Surety Company of tbe four bonds referred to in tbe defendant’s fifth plea.
. “Upon tbe appointment of receivers of tbe United Surety Company due notice was given to tbe obligees upon tbe four bonds of tbe United Surety Company referred to in tbe defendant’s fifth plea'to prove any claims arising from said bonds against tbe estate of tbe United Surety Company in equity proceedings pending in tbe Circuit Court of Balitmore City, and no claim was ever proven against tbe estate of tbe United Surety Company growing out of any one of tbe four bonds referred to, nor were*any of tbe said four bonds, nor tbe bonds of' tbe defendant or other sureties made in relation therewith on behalf of tbe principals named in said fifth plea, ever breached, and no losses resulted to any of tbe said sureties by reason of said bonds, or any of them.”

Thereafter on the 16th day of January, 1924, the defendant asked for and obtained leave of the court to amend its fifth plea, by eliminating therefrom all reference to the Down Bond, and to file an additional plea -known as its sixth plea, in which it is stated:

“That in December, 1909, one Frank B. Town applied to tbe United Surety Company to become surety upon bis bond as executor of Charles H. Roberts, deceased, in tbe penalty of $1,500,000, in tbe Surrogate’s Court of Ulster County, ÍTew York. That tbe United Surety Company requested tbe defendant to become co-surety with it upon said bond, which tbe defendant company did. That tbe United Surety Company collected tbe entire premium on said bond, and paid to tbe defendant its pro rata part, to wit, two-thirds thereof less thirty per cent, commission in accordance with tbe custom and practice among surety companies. And when tbe renewal or annual premium became due tbe United Surety Company likewise collected and divided tbe premium, less its commission of thirty per cent. That after tbe appointment of receivers for tbe United Surety Company tbe agent, or broker, who placed this business with tbe United Surety Company refused and declined to pay to it further annual premiums, hut, instead, paid them to the defendant as the remaining solvent surety, although there was no contract between said Lown and said Fidelity and Deposit Company of Maryland other than that arising from the relation of principal and surety.
“That prior to the making of any payments to the defendant by said Frank B. Lown, the defendant, on April 24th, 1911, offered to carry the entire liability, retaining the entire annual premium.”

Thereafter, on January 24th, 1924, a demurrer was filed to the replication to the fourth audi fifth pleas. This made it the duty of the court, iu passing upon such demurrer, to inspect the whole record and, mounting up to the first fault, to give judgment against the party committing the first material error, and as the court, iu its opinion, found the fourth and fifth pleas had, they were so. held under the demurrer; and a demurrer filed to the sixth plea was sus.tained.

Iu this condition of the pleading, the case was tried by the judge without -the aid of a jury, and the verdict and judgment being in favor of •the plaintiff, the defendant has appealed.

The evidence discloses that the United 'Surety Oompauy became cosurety ou the four bonds named in the declaration. In three of these, the defendant was thei originating company, or the company which procured the business., while in the other, the Lown bond, the United Surety was the originating company. As .shown by the record, the practice, in such cases, is for the originating company to collect the entire premium upon the bond, that is, the amounts owing to. its cosureties, as well as the amount owing to it, and after deducting thirty per cent, from the amount so collected for them, as commissions therefor, to. pay over to each of them the balance owing to it. Pursuant to such practice the defendant, iu the oases iu which it was the originating company, collected not only the premium owing to- it, but also the premium owing to each of its co-sureties, including the plaintiffs, and paid1 over to> each of them-, except the plaintiffs, the premiums collected for them, less the commissions aforesaid; but, of the premiums collected by the defendant for the United Surety Company, no part thereof collected after the .appointment of tire receivers on January 13th, 1911, was paid over either to. the company or its receivers. The United iSprety Company, in the case of the Down bond, where it was the originating company, collected the annual premiums on the bond, inehiding those owing to the defendant, to- the time of the appointment of receivers, and of such premiums, it paid to the defendant the amounts to. which it was entitled, less commissions for collection. Thereafter the principal of the bond, without the consent of the plaintiffs; paid to the defendant in each and every year the entire premium, on the bond, of which no part has ever been paid to the plaintiffs.

By the bonds: mentioned above the United Surety Company assumed liability to the extent shown by the record, and for which it was to be paid the annual premiums agreed upon “until (as stated in the agreements) the United Surety Company .shall in the manner provided by law be discharged or released from any and all liability and responsibility upon ■and) from said bond and all matters arising therefrom, and proper legal evidence of such discharge, or release be served on the United .Surety Company.”

Upon the: bond of Rodgers., ITagerty and Rodgers, there were collected by the defendant for and on behalf of the plaintiffs and not turned over to it, net premiums amounting to $'6,617.11. The first of these collections was on June 29-th, 1911, and the last on March 6th, 1916. The contract in that class, which was for the construction of the Kensico Dam was, within a few month® after its execution, assigned to. H. S. Kerbaugh, Inc., to which assignment the United -Surety Company assented on tire 7th day of November, 1910.

The defendant collected for the plaintiffs; net premiums ■ on the three remaining bonds, which were not turned over by them to the plaintiffs, of the following sums, to wit: On the Down bond, $1,310.51, on the Leggett bond, $51.89, and on the Thomip'son-Starrett bond, $618.98, making a, total (including the net premiums collected and not paid over by the defendant on the Podgers, Hagerty and Rodgers bond) of $8,598.49; and as disclosed by the evidence, no> loss was suffered by any of the indemnifying companies upon any of said bonds.

The defendant’s, grounds; for its refusal to turn over to the plaintiffs' the amounts soi collected by it for them are disclosed by the defendant’s contention raised and presented by its pleas and prayers. These contentions are as follows:

1st. That if the United Surety Company, a co-surety of the defendant, “from and after the appointment of the receivers * * * did not promptly pay claims that were made upon it or was not in a position so to do, that the premiums on said bonds should be divided among the other sureties on the said bond.”
2nd. That as the United Surety Company “is now insolvent, and * * * no new business was written or new obligations incurred by the receivers after their appointment; * * * the insolvency relates or goes back to the time of the appointment of the receivers and they (the receivers) are not entitled to collect premiums on bonds for, or covering any period subsequent to the appointment of the receivers.”
3rd. As “the contract in the John C. Rodgers case was altered or changed after the appointment of the receivers, and the receivers did not assent thereto; * * * the plaintiffs are not entitled to recover for any portion of the premiums on the Rodgers-Kerbaugh bond.”

. In the evidence of Mr. Janney, one of the receivers, is found a statement that government representatives, for several weeks prior to the appointment of the receivers, had been examining the affairs of the United 'Surety Company and had made a complete audit thereof, and that from such examination they had found its capital stock so much impaired that it wais determined the company should no longer do business; and that the Insurance 'Oommissioner of Maryland made the same ruling and stopped the company from doing business because of the impairment of the capital stock; but at such time, as stated by Mr. Janney, the company was not shown, or thought, to be insolvent; in fact it, for some years thereafter, was considered and treated as a solvent company, not only by the receivers and those dealing with them, but also- by this 'Court, a,s well, in the cases decided by it growing out of the receivership; and it was not until the 25th day of February, 1921, long after the liability under the bonds had ceased with noi loss to the indemnifying companies, that it was adjudicated insolvent. It is true that, upon the appointment of the receivers, it was held by the lower court that the effect of the receivership', irrespective of solvency ml nonwas to break the outstanding contracts, of the company and to disable it from carrying out its contracts, and as 'expressed by Mr. J&imey, “justice required that every bond holder should know that he was not protected any more, but would have a claim due to the breach of .contract rather than a claim on the bond.” In accordance with this ruling, the order of the court passed on October 19th, 1912, fixing the time for filing claims, was sent to .all the bond holders of the company, that is, all the obligees named in the bonds ; and the receivers acted upon such ruling of the lower court until the same was: reversed by this Court in United States v. Poe, 120 Md. 89, decided! on February 31st, 1913, in which ease this. Court in reviewing the order of October 10th, 1912, held, as stated in the syllabus., which correctly states what was decided therein, that “where a bonding or surety company has not been declared insolvent, equity will not, in preceding# for its voluntary dissolution, pass any order which might have the effect of discharging it from its obligations upon which default has not occurred or been discovered.”

It was, while the receivers were acting, upon the lower court’s order, before its reversal by this Court, that Mr. ¿Fanney, on behalf of the received®, ■wrote the'letter of Deeemher 3rd,'1912, in reply to one from the Fidelity and Deposit Company written by Mr. Bowie on the 21141 day of the preceding month, inclosing requests of indemnitors that the United Surety Company execute an .agreement for the modification of the Rodgers contract, the one referred to in the third contention of the defendant. In this letter of December1 3rd, 1912, it is stated:

“The receivers feel that it is their duty to decline to have this agreement of modification executed and suggest the propriety of other surety company taking over their liability and giving tbem a release therefor, retaining all future premiums for the account of such as may assume this obligation. This is not only our view as receivers engaged in liquidating the United Surety Company, but it is obvious that we are not in position to represent to the Board of Water Supply of Pew York that our obligation is a continuing one, in view of the court’s order fixing a limited time for those insured by our bonds to procure substitutions and claim for their loss, if any, against this company.
“We are returning you herewith the papers which you sent, and request that you notify us when proper substitution of surety has been made.”

A year later, on the 4th day of December, 1913, the Fidelity and Deposit Company wrote the United Surety Company saying:

“Replying ot Mr. Hine’s letter of the 29th ultimo I beg to advise you that as far as I know nothing has been done towards taking over the liability by the other companies, inasmuch as the proposition made by Mr. Janney that the other companies should carry the liability in consideration of the future premiums was not considered an equitable proposition. If the receivers will pay to the other companies in cash the amount of premiums the United Surety has received, I believe there will be no difficulty in having the United Surety Company absolutely released.”

On February 18th, 1915, after the lapse of more than another year, Colonel Bowie, general counsel of the Fidelity • and Deposit Company, wrote the receivers wishing to know upon what basis they claimed the right to premiums on the' Rodgers bond, and in his letter saying that, as he understood, the modification of the contract in that case, which 'was submitted to them for their approval and consent and which, was refused by them, had since been made with the consent of all the other sureties; and suggested that whatever might have been the status of their company as to liability upon the bond prior to that modification, the acceptance by the city of the modified contract without their assent would release them from further liability. But he went on to sa.y

“On the other hand, it now may well be suggested that if the United Surety, with knowledge of the modification of the contract, even though it failed to assent in writing, should continue to accept premiums, it would be stopped from setting up the modification as a release of its liability. Hence, I think it has now come when the receivers must consider and determine just what their attitude is in this matter.” * * * “The Fidelity and Deposit Company’s interest in this matter is possibly that of an agent only and its duty being to see that the premiums reach the right destination. Informal suggestion has been made to it by the other sureties that inasmuch as they, the sureties other than the United, being the only ones in a position to respond to the claims of the City of Hew York on this bond and thus practically carrying all of the liability, that they should receive the premiums to the exclusion of the United.”

In r'eiply to Mr. Bowie’s letter of February 18th, Mr. Janney, on the 23rd day of the same month wrote him:

“The receivers of the United Surety Company have always been willing to reduce the liability of the estate by consenting to the cancellation of the risks upon receiving the premiums to the date of cancellation or release.
> “On the above bond (the Rodgers bond) the United Surety Company is hound as co-surety, and it is possible that a release ■ from the obligee could not he obtained, hut, as indicated in our letter to you of December 3, 1912, we shall he pleased to accept the indemnity against loss of your company, or of any one or more of the companies writing this risk, and to waive all participation in the premium from the receipt of such indemnity.
“We have no knowledge of what, if anything, has been done which might.tend to release the surety at this time, hut this knowledge is in the possession of the other sureties on the bond. If, therefore, you feel, in consideration of tl^e facts, that there is no liability upon the estate of the United Surety Company, the indemnity you would give the receivers would involve no risk. We would not feel justified, however, in assuming that we had been released, as we know of no occurrence which would have that effect. As you perceive, this is practically a reaffirmation of the position taken in our letter of December 3, 1912, and we hope you will take the matter off our hands.”

Colonel Bowie, in reply to Mr. Janney’s letter of February 23rd, wrote him on the 27th day of the same month saying that the Rodgers or Kerbaugh bond at- that time, according to. his last advices, had several years more to run; that, his. company, the Fidelity and Deposit, had collected the renewal premiums, on that bond for all companies and had credited the United .Surety Company with premiums collected for it for the years 1911, 1912, 1913 and 1914, which, with commissions deducted, amounted at that time to. $5,617.12. He then states in his letter

“The question has been raised as to whether under the circumstances in this case the receivers are entitled to renewal premiums, particularly the last two, which became due and were paid after tbe refusal of tbe receivers to assent to the modification in December, 1912, and likewise as to any further premiums.
“The Fidelity & Deposit Company will give to the receivers of the United Surety Company a suitable reinsurance agreement or bond of indemnity guaranteeing to protect and save harmless the said receivers from any and all claim or claims that might be made against them- by virtue of this bond, the effect of such an agreement beng to substitute the Fidelity for the United Surety as far as liability on this bond is concerned, it being a protection to the United from all claims from the time the bond was written. The eonsideration for this agreement is that the Fidelity be authorized to retain the last two annual premiums collected as above, to wit, for the years 1913, 1914 and to retain the United’s share of all further premium or premiums on said hond.
. ‘“It is of course understood that this principle is made by virtue of the peculiar circumstances of this case and is hot to be taken as a basis for similar reinsurance agreements.”

The above letter of Mr. Bowie wasi .answered by Mr. Janney on March 3rd, 1915, in whieh he said:

“After full consideration of the circumstances surrounding this risk and the present status thereof, I am directed to advise that the receivers do not think it will be advantageous to the estate in their hands that the terms yon suggest shall be accepted.”

, It will be seen from the above 'correspondence that the defendant took the position that no part of the premiums in the hands of the defendant, collected by it for the United Surety Company after the ■appointment of the plaintiffs as receivers, was payable to . them, because, as. claimed by the defendant, the United Surety Company from and after that time was insolvent and unable to pay losses, if .any, that the obligees might sustain under the contracts for which the' bonds were given, and as it was insolvent and unable to pay such losses, it thereafter was subject to no risk o>r liability as co-surety under the bond, and, as contended by the def end-ant, the result. thereof was that the liability originally asstumed by -the United 'Surety Company fell upon the defendant and the other cosureties. But was the United Surety Company insolvent at that time, -and because of such insolvency was it discharged and released from the risk and liability assumed by it in the execution of the bonds? This question, we .think, hasi-been fully answered in the negative hy the decisions of this Court in the eases of Vandiver v. Poe, 119 Md. 348; United States v. Poe, 120 Md. 89, and Barber Asphalt Paving Company v. Poe, 139 Md. 332. In the first of these cases (Vandiver v. Poe), decided January 14th, 1913, two years after the appointment of the receivers, the United -Surety Company was considered and treated by the parties as well a-si by thei ao-urt as a solvent company, and it was upon -such- fact that the decision in that case rested. In the later case of United States v. Poe, supra., from which we ha-ve already quoted, it was held that as the company had not been declared or adjudicated insolvent, the proceedings for -dissolution and the appointment of the receivers thereunder -did not have the effect of discharging it from its obligations.

In the still later case of Barber Asphalt Paving Company v. Poe, decided hy -this Court so late -as the 29th -day of June, 1921, and long after all liability under the bonds bad ceased, the United Surety Company was on a large number of construction and maintenance bonds, given by the appellant in that ease to the City of Chicago f-or paving -streets in that city, -the most of them having been given in 1906, some coveonng a period of ten and others -a period of five years. On February llth, 1913, at the request of the city, the appellant gave new bonds, with th-ei United 'States Fidelity and Guaranty Company as -surety -on certain bonds, upon which the United 'Sürety Company was -originally surety. When the case came before the auditor, a claim was filed with him by the Barber Asphalt Paving Company for unearned premiums on bonds upon which the United Surety Company was surety, amoumting to $3,141.99. It also filed a claim for -the costs o-f the new bonds amounting to- $633.15. The auditor disallowed both claims, and iu so. doing was sustained by the Oircuit Court of Baltimore City. It was from the order of the court disallowing these claimls that an appeal was taken to. this Court. It was contended by tbe receivers that it was not shown that the Enited .Surety Company was released from its obligations, .and hence no unearned premiums could be recovered by the appellant.

This Court, speaking through Judge Boyd, sustained thi'scontention of the. appellants, and toi that extent affirmed the order of the court below, though it reversed that part of the order refusing the allowance of the costs of the new bonds. Tbe Court in that case said “there is a clear distinction, between this ease .and tbe Casualty Insurance Company’s Case, 82 Md. 535. That company had been adjudicated to-be insolvent, and the 'Court was dealing then with such a company, while the Enited Surety Company bad not prior to. the time the new bonds, were given been declared to be insolvent, but on the contrary it was confidently believed by the receivers, for some time after they were .appointed, that it was solvent, and possibly might be .able to resume business.” The Court then quoted approvingly from Vandiver v. Poe, supra, and United States v. Poe in distinguishing them from 'the Casualty Company’s Case, and concluded his remarks relative thereto by saying: “-Chief Judge IIaSKerry (who prepared that opiniou) was then speaking of corporations which had been declared insolvent. In tbe case of' Enited Surety Company, the first time the court said it was insolvent, so far as -has been brought to our attention, was on February 25th, 1921, .according to. a copy of the decree filed by agreement of the solicitors * * *. It is true that the. company was unable to issue new policies shortly after the-receivers were appointed, and was prohibited from doing so in some states until it restored the surplus and capital which had been lost by bad management, and of course, after the-company went into the hands of reoedversi, it could not be expected that it could get new business, unless- its stock holders or other’s came toi its relief and put it on a, proper” basis, but it, nevertheless, hacll not been -declared insolvent, 'and proceedings bad not been taken for its 'dissolution. As conditions existed wbien the new bonds were given, it could not be said that the United Surety 'Company wo-uld not be able to- -meet demands -on it in case -of default of its prin■eipala. 'There is no evidence that there was any default by the principal for the periods- covered by the bonds.” And later in the -opinion, on page 337, the Court said: “During the period between January 13th, 1911, the date of the receivership, and the time it gave new bonds, there can be no question about the liability o-f the United Surety Company still continuing.”

Upon the question of insolvency it might also be added that there is no evidence in this -ease not found in Barber Asphalt Paving Company v. Poe, -showing the insolvency of "the United Surety Company during the periods o-f the life of these bonds but, -on the contrary, Mr. Janney, while upon the stand, speaking, it is true, of the financial standing of the company at the time of the appointment o-f the receivers, said that “Y-ou -could take its assets (United Surety Company’s assets) 'and making a fair -estimate of their probable' value -and the claims that then existed and making a fair ■estimate of what those claims would result in, charging off appropriate reserves, you did not have a condition of insolvency. -Of course, with millions of dollars of contingencies outstanding it Was .always probable that it would ultimately become insolvent because of the maturity of claims which we had no record -of and which at that time had not occurred and which actually occurred.”

As the United Surety Company was. not permitted to assume neiw liability or to continue the -operation of its business by which it might have acquired profits to .aid in the payment -of subsequently occurring losses, it was anxious to cancel its liability for -such losses, and this, it seem®, -was the policy adopted by the receivers and the one they attempted to ■carry out with the defendant company, but was unable to do -.so because of the latter’® belief, as expressed by it, that the adjustment proposed was inequitable, unless it gave to 'the 'defendant the premiums collected by it for the plaintiffs from the principals on the bonds for the period between the appointment of receivers and the cancellation of the United Surety 'Company’s liabilities'.

The failure to agree as to the disposition of the premiums for the time mentioned resulted in nothing being dona by any of the parties interested or concerned1 in the possible failure of the United 'Starety Company to meet the payment of its share, if any, of the losses under the bonds.

Had they, because of the financial condition of the United Starety Company, reasonably apprehended loss, they could have re-insured against such loss, and it would seem, from the decision in Barber Asphalt Paving Company v. Poe that the cost of such re-insurance would have been chargeable against the plaintiffs, but this was not done, and things were allowed to drift until it was shown that there were no- losses suffered for which the bonds were liable.

It is clear, we think, from the 'above mentioned decisions of this Court, .that the United Surety Company was liable for losa assumed by it under the bonds to the time it was adjudicated insolvent, which was after the life of the bonds had ended; and had there been a loss under .the bonds, the ■assets of the United 'Surety Company, properly applicable to the payment of the same, would have gone towards paying its part of such losses, which fact alona shows the injustice of withdrawing the whole of the premiums from the United Surety Company, when their inability to pay any part thereof, had there been a loss; is not shown. And as there was no loss under the bonds; it would, we think, under the facts .and circumstances; of the; case, be inequitable to' allow the defendant to retain the preminmfei.

Had 'the court granted the defendant’s third, fourth and sixth prayers, the instructions thereto contained would have been to conflict with the; views expressed to the decisions of this Court already cited, and those prayers; we think, were properly refused.

In the defendant’s fifth prayer, the court was asked to rule .as a matter of law that if it found upon the evidence that the contract in the John -O. Rodgers- case- was altered or changed after the appointment -of the receivers and they di-d not assent thereto-, the plaintiffs ware not entitled to recover any portion of the premiums on that bond 'accruing after such change- or alteration w,as made.

The changes and alterations mentioned in this p-rayer are not shown by the evidence in the case. The original contract, so far as we .are able to discover, is not in the record, and there is no evidence showing of what the changes o-r alterations consisted. They are stated in the fourth plea., to which a demurrer was sustained, the court holding that such facts were admissible under the general issue plea, hut the record fails to disclose that -any evidence was offered showing alterations -or change® in the original contract. This objection, we think, is sufficient to sustain the ruling of the court upon this prayer, hut there are- other reasons, in our opinion to justify the court’s ruling. The defendant in the collection of the premiums' was acting a® agent for the plaintiffs', and not only it, but all of the parties; interested in the transaction, knew that some -alterations were made in the contract, though -the record does not, show what those alterations and changes were, and notwithstanding such knowledge the defendant continued thereafter to- collect the- premiums for the plaintiffs and the principals; continued to- pay them, and it' i® now the defendant only that is holding, out against the payment of them to- the plaintiffs-, a.t first saying that it held them because they, for the reason® .already stated, should be distributed proportionately among the sureties other than the plaintiffs, according to- their respective liabilities, .and at a later time stating that it was withholding them until it was paid the money owing to it by the plaintiffs, which was 'allowed them in this oas-e, it having the- effect of reducing the judgment to- the extent of such indebtedness.

The first prayer, which asked for ;a -directed, verdict fo-r the defendant because of the want of legally sufficient evideuce entitling the plaintiff to recover, was, we think, prop^erly refused, as the evidence, which we will not further1 set out herein with the result of prolonging this opinion, was sufficient to go to the jury, tending to establish the right of the plaintiffs to recover1; nor doi we find any reversible error fipon the court's single ruling on the evidence. Therefore, as we find no error in the court’s ruling in this ease, the judgment will be affirmed.

Judgment affirmed, with costs.  