NATIONAL SURETY CO. v. NAZZARO, Mass., Judgment, Law, casemine.com

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Attorney(S)

J.E. Crowley, for Nazzaro. J.E. McConnell, for the National Surety Company.

Judges

CARROLL, J.

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Smart Summary

Factual and Procedural Background

This matter involves two contract actions: one by National Surety Company against Michael B. Nazzaro seeking recovery under a written indemnity contract related to a bail bond, and a second by Nazzaro against the surety company to recover money given as security. The indemnity contract was executed in Massachusetts to indemnify the surety company for loss under a bail bond to be executed and performed in Connecticut. The bail bond was initially executed but rejected by the Connecticut clerk of courts, who required bail in the form of a recognizance, which was subsequently furnished and approved by an agent of the surety company. The prisoner defaulted, and the surety company paid the forfeited recognizance. The cases were tried twice, with the second trial conducted by a judge without a jury, who admitted evidence from the first trial by agreement of the parties. The judge found for the surety company in both actions, and Nazzaro filed exceptions.

Legal Issues Presented

Whether the term "bail bond" in the indemnity contract should be interpreted according to Connecticut law, where the contract was to be performed, or Massachusetts law, where it was executed.
Whether a recognizance, as used under Connecticut law, is equivalent to a bail bond for purposes of the indemnity contract.
Whether the surety company fulfilled its contractual obligations by furnishing a recognizance instead of a bail bond.
Whether the indemnity contract obligates Nazzaro to indemnify the surety company for losses arising from the recognizance.
Whether the agent "Blume" had authority to bind Nazzaro by substituting a recognizance for a bail bond.
Whether the statute of frauds bars recovery or retention of money under the indemnity contract related to the recognizance.

Arguments of the Parties

National Surety Company's Arguments

The indemnity contract covers losses arising from the execution of the bail bond or any matter connected thereto, which includes the recognizance under Connecticut law.
Under Connecticut law, recognizance and bail bond are synonymous, so furnishing a recognizance satisfies the contract.
The surety company performed its obligations by procuring the recognizance for the prisoner's release.
Blume acted as Nazzaro's agent in procuring the recognizance and assented to Crandall's role as surety.
The surety company is entitled to recover losses incurred from the forfeited recognizance.

Michael B. Nazzaro's Arguments

The contract was limited strictly to indemnifying the surety company for a bail bond, not a recognizance, which is a distinct legal instrument.
Blume had no authority to bind Nazzaro by substituting a recognizance or by authorizing another surety.
The surety company never became surety on the bail bond as described in the contract.
The statute of frauds bars any recovery or retention of money related to the recognizance.
The surety company did not afford Nazzaro a reasonable opportunity to produce the surety on the recognizance.
No consideration supported the surety company's claim for payments made on the recognizance.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
National Surety Co. v. Nazzaro, 233 Mass. 74	Question of agency authority and compliance with indemnity contract regarding bail bond and recognizance.	Court recognized that whether Blume was Nazzaro's agent and authorized substitution of recognizance was a question of fact.
Lovejoy v. Isbell, 70 Conn. 557	Recognizance is a bond in the strict sense; statutory acceptance of surety applies equally to recognizance and bail bonds.	Supported the court's interpretation that under Connecticut law, recognizance and bail bond are synonymous and interchangeable.
Old Dominion Copper Mining Smelting Co. v. Bigelow, 203 Mass. 159	Contracts to be performed in a particular place are governed by the law of that place.	Applied to hold that the indemnity contract must be interpreted according to Connecticut law since the bail bond was to be executed there.
American Malting Co. v. Souther Brewing Co., 194 Mass. 89	General rule that contract interpretation is governed by the law of the place where it is made unless parties intend otherwise.	Supported the principle that the indemnity contract's interpretation depends on the law of Connecticut due to the contract’s performance location.
Liverpool Great Western Steam Co. v. Phenix Ins. Co., 129 U.S. 397	Contracts are governed by the law of the place where they are made, unless parties have another law in view.	Reinforced the court’s conclusion that the indemnity contract’s terms relating to the bail bond should be interpreted under Connecticut law.
Electric Welding Co. Ltd. v. Prince, 200 Mass. 386	Law of a foreign state may be treated as a question of fact.	Supported the court’s acceptance of evidence regarding Connecticut law distinguishing it from Massachusetts law.

Court's Reasoning and Analysis

The court began by reaffirming that the indemnity contract was made in Massachusetts but its primary purpose was to indemnify the surety company for a bail bond to be executed in Connecticut. Since the contract was to be performed in Connecticut, the court applied the principle that the contract’s validity and interpretation must be governed by the law of the place of performance. The court found as a fact that under Connecticut law, "recognizance" and "bail bond" are synonymous and interchangeable terms.

The court examined the evidence, including statutory provisions of Connecticut law and relevant case law, concluding that the surety company fulfilled its obligation by furnishing a recognizance when the bail bond was refused by the clerk of courts. The court found that Blume was the agent of Nazzaro in procuring the release of the prisoner by bail or recognizance, and that Crandall acted as the agent of the surety company in entering into the recognizance.

The indemnity clause was construed to include indemnification for losses arising from any matter connected with the bail bond, including the recognizance. The court rejected Nazzaro’s arguments that the recognizance was not covered or that Blume lacked authority, emphasizing the factual findings supporting agency and performance. The court also addressed and rejected the contention that the statute of frauds barred recovery, as the contract was interpreted to cover the recognizance.

Ultimately, the court held that the surety company was entitled to recover under the indemnity contract because the recognizance satisfied the contractual obligation under Connecticut law, and the losses paid by the surety company were properly indemnified by Nazzaro.

Holding and Implications

The court overruled the exceptions filed by Nazzaro and affirmed the judgment in favor of the National Surety Company in both actions.

The direct effect of this decision is that the surety company is entitled to recover losses under the indemnity contract for the recognizance furnished in Connecticut, as the court interpreted the term "bail bond" in the contract according to Connecticut law where the contract was performed. No new precedent beyond the interpretation of the indemnity contract under conflict-of-laws principles and agency findings was established.

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NATIONAL SURETY COMPANY vs. MICHAEL B. NAZZARO. MICHAEL B. NAZZARO vs. NATIONAL SURETY COMPANY.

Bail Bond. Conflict of Laws. Contract, Of indemnity, Construction. Recognizance. Surety. Words, "Recognizance," "Bond."

In an action by a surety company upon a contract in writing executed and delivered in Massachusetts to indemnify it for a "bail bond" to be executed, delivered and performed in Connecticut for the liberation of a prisoner in that State or any "matter growing out of or connected therewith," it appeared that the bail bond was executed but was refused by the clerk of courts in Connecticut, who demanded bail in the form of a recognizance, which was furnished by authority of the surety company and approved of, by an agent of the defendant. There was evidence that the prisoner defaulted and that the surety company paid the forfeited recognizance. It further appeared that by the law of Connecticut, which in that particular differed from the law of Massachusetts, "recognizance" and "bond" were synonymous terms used interchangeably. Held, that

(1) The purpose of the indemnity contract being to indemnify the surety company respecting the main contract, described therein as a "bail bond," which was to be executed, delivered and performed in Connecticut, the term, "bail bond" must be interpreted according to the law of Connecticut;

(2) The indemnity bond was to be interpreted as if it read "recognizance" instead of "bail bond" in describing the main contract to be executed in Connecticut;

(3) The surety company was entitled to recover.

In the above described action it was held that a ruling of law "That the giving of a recognizance for [the prisoner] was a 'matter growing out of or connected therewith,' the execution of a bail bond" properly was given.

CARROLL, J.

In National Surety Co. v. Nazzaro, 233 Mass. 74, where the facts are reported, it was decided that it could not be ruled as matter of law that by providing a recognizance for the release of McKenna the surety company had complied with its obligation to execute a bail bond for his release, thereby entitling it to recover on the contract of indemnity. It was further decided that it was a question of fact whether Blume was the agent of Nazzaro and authorized to bind him by substituting a recognizance for the bail bond and another surety for the surety company.

At the second trial the cases were tried by a judge without a jury, and by agreement of the parties the stenographic notes of the evidence at the former trial, together with the exhibits were admitted, it being agreed that such evidence might be considered as though offered by witnesses at the trial; in addition Nazzaro testified that Blume was not authorized by him to do anything in connection with the bail bond, and was sent to Connecticut, where the prisoner was confined, solely for the purpose of identifying him. The surety company introduced in evidence the Gen. Sts. of Connecticut (1888), § 1612, to the effect that every person detained in jail for trial of an offence not punishable with death, shall be entitled to bail and shall be discharged on entering into a proper recognizance, and § 1613, giving the surety on a recognizance in criminal proceedings the same remedy as sureties upon bail bonds; and §§ 696, 1685, 1686, §§ 896, 897, 963, and the decision in Lovejoy v. Isbell, 70 Conn. 557.

The judge found that Blume was the agent of Nazzaro in procuring the release of McKenna by bail or recognizance; that the terms of the agreement were performed by entering into the recognizance for the release of McKenna; that under the statutes of Connecticut, recognizance and bail are interchangeable terms, and by the law of Connecticut a contract to furnish bail is performed by furnishing a recognizance. He further found that Crandall in all matters acted as the agent of the National Surety Company; that the surety company executed the bail bond as described in the indemnity agreement, which bond was refused by the clerk of courts, who required bail in the form of a recognizance; and that the forfeited bail or recognizance was paid by the National Surety Company.

The indemnifying clause of the bond upon which reliance is placed in this action is that Nazzaro will "indemnify and keep indemnified the company, and hold and save it harmless from and against any and all damages, loss, costs, charges and expenses of whatsoever kind or nature, including counsel and attorney's fees, which the Company shall or may at any time sustain or incur by reason or in consequence of having executed said instrument; and . . . will pay over, reimburse and make good to the Company . . . all sums and amounts of money which it or its representatives shall pay or cause to be paid or become liable to pay on account of having executed said instrument and on account of any damages, costs, charges and expenses of whatsoever kind or nature . . . which the company or its representatives may pay, or become liable to pay by reason of having executed said instrument, or in connection with any litigation, investigation or other matters growing out of or connected therewith." The bond indemnifying the surety company was executed and delivered in Boston and its construction is ordinarily governed by the law of this Commonwealth. According to its terms the "Bail Bond" was to be delivered in Connecticut for the purpose of releasing a man under arrest in that State. Under the law of Connecticut "recognizance" and "bail" are interchangeable and a contract to furnish "bail" is performed by furnishing a "recognizance." In Lovejoy v. Isbell, supra, it was held: "A recognizance is a bond in the strict sense of the word, and a statutory requirement to give bond with surety is satisfied by entering into a recognizance for that purpose. . . . When the statute authorized any officer charged with the duty of approving such bonds, to accept a corporation as surety upon the bond of any person required by law to execute a bond, it included a recognizance as well as other bonds."

In Old Dominion Copper Mining Smelting Co. v. Bigelow, 203 Mass. 159, at page 174, it was said: "Where a contract is made with a purpose by the parties to it that it shall be performed in a particular place, its validity and interpretation are to be determined by the law of the place where it is to be performed. It is made with a view to that law." See also American Malting Co. v. Souther Brewing Co. 194 Mass. 89. "According to the great preponderance, if not the uniform concurrence, of authority, the general rule, [is] that the nature, the obligation and the interpretation of a contract are to be governed by the law of the place where it is made, unless the parties at the time of making it have some other law in view." Gray, J., in Liverpool Great Western Steam Co. v. Phenix Ins. Co. 129 U.S. 397, 458. Carnegie v. Morrison, 2 Met. 381, 397. The indemnity bond was made in Massachusetts, to be executed here, and action on it is brought in our courts. But its purpose was to indemnify the surety respecting the main contract to be executed, delivered and performed in Connecticut. The main contract is described as a "bail bond." If this term is interpreted according to the law of this Commonwealth, it means one thing, a thing which is impossible under the law of Connecticut. If the term is interpreted according to the law of Connecticut, it means the furnishing of an obligation designed to accomplish the desired end, viz., the release of McKenna. The purpose of the parties, to be inferred from the result aimed at and the words used, was that "Bail Bond" was to be interpreted according to the law of Connecticut, where the main contract was to be executed, and since a recognizance, under the law of Connecticut, is equivalent to "Bail Bond" the indemnity contract should be interpreted according to the law of that State. The main contract indemnified by the bond in suit, was to be performed in Connecticut, and the words describing that main contract are shown by the circumstances to have been intended to be used in the Connecticut sense and not as used and understood in Massachusetts, and therefore the indemnity bond is to be interpreted as if it read "recognizance" instead of "Bail Bond" in describing the main contract to be executed in Connecticut.

The law of Connecticut was a question of fact. Electric Welding Co. Ltd. v. Prince, 200 Mass. 386. On the evidence in the case it could be found that the law of Connecticut was different from the law of this Commonwealth, and that by the law of Connecticut "bail" and "recognizance" are synonymous terms and used interchangeably. It being further found that Blume was the agent of Nazzaro in procuring the release of McKenna by bail or recognizance, National Surety Co. v. Nazzaro, supra, and that the surety company through its agent Crandall, having entered into a recognizance for the appearance of McKenna, performed its agreement with Nazzaro and, having paid the forfeited recognizance on McKenna's default, was entitled to recover.

There was evidence to support these findings. It was agreed that Crandall acted for the surety company in entering into the recognizance for McKenna, and thereafter received a bond from the surety company, indemnifying him from all loss by reason of his becoming surety; and there was evidence that Blume assented to Crandall's becoming surety and acted as Nazzaro's agent in securing the release of McKenna by the recognizance furnished by Crandall. On these facts the surety company made out its case and is entitled to recover.

The judge gave the surety company's seventh request for rulings of law, "That the giving of a recognizance for McKenna was a 'matter growing out of or connected therewith,' the execution of a bail bond." The written contract on which the surety company relies and upon which it must recover, provided that the company had signed the bail bond for the release of McKenna, that Nazzaro was to indemnify the company for all loss sustained by reason of having executed it, or any "matter growing out of or connected therewith." If the law of Connecticut were like the law of this Commonwealth, the giving of a recognizance would not be in compliance with the contract for the execution of the bail bond, and the furnishing of this recognizance would not be a matter growing out of the contract which would entitle the surety company to recover. National Surety Co. v. Nazzaro, supra. If this ruling of law is so interpreted, then the ruling given was erroneous and the exceptions should be sustained. But we do not think it should be so construed. The judge found as a fact that the law of Connecticut and the law of Massachusetts in this particular were not alike, in Connecticut recognizance and bond being synonymous terms; that the surety company performed its agreement with Nazzaro; that when the "Bail Bond" referred to in the indemnity contract was refused by the clerk of courts, by signing a recognizance for the release of McKenna, the contract was fulfilled. Recognizance and bond being interchangeable terms, providing the recognizance instead of the bail bond was a "matter growing out of or connected" with the giving of the bail bond, and we think this is the correct meaning of the ruling and the effect that should be given to it. So construed there was no error of law in the ruling.

We find no error in refusing the requests of Nazzaro, nor in the rulings given.

In the case of Nazzaro v. National Surety Co. the exceptions are overruled. In National Surety Co. v. Nazzaro, in the opinion of a majority of the court the exceptions are overruled.

So ordered.

NATIONAL SURETY CO. v. NAZZARO