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Allen v. Commercial Casualty Insurance Co.

Decided: April 13, 1944.

WILLARD H. ALLEN, SECRETARY OF AGRICULTURE OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
COMMERCIAL CASUALTY INSURANCE COMPANY, DEFENDANT-RESPONDENT



On appeal from the Supreme Court.

For the appellant, Edward W. Currie, Assistant Attorney-General.

For the respondent, Lum, Fairlie & Wachenfeld (Charles S. Barrett, of counsel).

Perskie

The opinion of the court was delivered by

PERSKIE, J. The questions requiring decision on the appeal and cross-appeal from the judgment entered in the Supreme Court stem from an action by the Secretary of Agriculture against the surety on a bond filed pursuant to statute by a licensed purchaser of milk. R.S. 4:12-1, et seq.

The facts which give rise to these questions were submitted to the learned trial judge (the late Judge Palmer) without a jury on an agreed state of facts.

From the facts so stipulated, and the record submitted, we learn that Elmer Kleppinger, trading as Farmer's Exchange Company, having complied with the statutory requirements (R.S. 4:12-2 to R.S. 4:12-4), was granted a license, by our Secretary of Agriculture, plaintiff below, entitling Kleppinger to conduct the business of buying milk from producers of this state at his station or place at Belle Mead, New Jersey, for the period commencing July 1st, 1939, and ending on June 30th, 1940. R.S. 4:12-5.

By one of the requirements of the statute, Kleppinger was obliged to file with the Secretary of Agriculture a surety bond in a sum not less than one and one-half times his estimated monthly "indebtedness * * * to the persons from whom he may purchase * * * milk * * *." 4:12-4. He filed such a bond in the sum of $5,000, and the Commercial Casualty Insurance Company, a corporation of this state, defendant below, became surety thereon.

Kleppinger bought milk from the producers in this state but defaulted in his payments for his purchases. Claims were filed with the Secretary of Agriculture by some thirty-nine producers pursuant to statute totaling $7,013.49. R.S. 4:12-7. The claims were audited by the Secretary of Agriculture who demanded the full amount of the bond from the surety company. R.S. 4:12-8.

The defendant surety company refused to pay anything on account of the claims of the thirteen producers, whose claims totaled $2,809.69, upon the ground that they had executed an indemnity agreement with it under the terms of which these claimants agreed "At all times [to] indemnify" it "and to hold and save it harmless from and against any and all liability, damages, loss * * *." Fourteen additional producers signed the indemnity agreement, but they filed no claims with the Secretary of Agriculture.

The defendant surety company likewise refused to pay in full the claims of those who did not sign this indemnity agreement, whose claims totaled $4,203.80; it is, and was, willing to pay them the percentage (.71291%) which $5,000 -- the amount of the bond -- bears to $7,013.49 -- the total amount of all claims -- i.e., it is willing to pay them .71291% of $4,203.80, which amounts to $2,996.94.

Upon these facts, the late Judge Palmer determined that the indemnity agreement was not illegal and void, as urged by the Secretary of Agriculture, as contravening public policy; and that the Secretary of Agriculture was entitled to the full amount of the bond plus interest, viz., $5,495.75, which sum he was ...


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