James Eva Estate v. Oakland B. M. Co.

Action by a lessor for the collection of delinquent rent, against its lessee and two sureties upon a bond guaranteeing the faithful performance on the part of said lessee of the covenants of a written lease. The lessee suffered default and the action was tried as against the sureties *Page 517 alone. Judgment was rendered against both sureties, from which one of them appeals. The appellant urges three grounds for reversal, which will be considered in the order in which they are made. [1] It is claimed that the bond executed by appellant is void because "it was entered into contrary to express statutory law, to wit, sections 594-596, inclusive, of the Political Code of the State of California." The sections referred to are found in article XVI of the Political Code, which article by its title and provisions refers to the office of insurance commissioner, the performance of his duties and the transaction of the business of insurance under his supervision. The particular sections relied upon are section 594, subdivision 5, which provides that fidelity and surety insurance includes ". . . guaranteeing and executing all bonds, undertakings, and contracts of suretyship, and guaranteeing…

In view of the circumstances disclosed by the evidence in this case, including the recital in the resolution adopted by the directors of the appellant corporation to the effect that it is for the best interests of the corporation that the lessee shall secure the rights and privileges of the lease, we are satisfied that there was a sufficient showing of benefit to appellant corporation to make its undertaking valid. We express no opinion on the question of burden of proof discussed in the opinion. The application for a hearing in this matter after decision by the district court of appeal of the first appellate district, Division Two, is denied. All the Justices concurred, except Wilbur, J., who was absent. *Page 521