Sugarman

This is an appeal from a judgment declaring that appellants as the successors to Walker Mining Company are the owners of certain stocks and cash presently held by respondent Federal Insurance Company, but that appellants are not presently entitled to delivery of this property because it serves as collateral to offset all liability for workmen’s compensation claims to which Federal may be exposed by virtue of a guaranty bond which its predecessor had furnished Director of Industrial Relations to enable Walker Mining Company to operate as a self-insured employer.

Appellants’ complaint against respondent Federal sought delivery of the bonds and cash and a declaration by the court that Federal has no further reason to retain possession of this collateral. Federal filed an answer and cross-complaint asserting, in essence, that it should be permitted to retain its security unless it be judicially determined that it would never be liable thereafter by reason of its status as surety upon the guaranty bond.

The respondent Director of Industrial Relations answered the complaint and the cross-complaint and asserted that Federal should not be declared free of future liability. We have…