612 Indemnification of Surety

• Jurisdiction: Arizona

Where the principal obligor or another is required to indemnify thesurety for any payments made, any release by the surety must be supportedby consideration. A guarantor’s promise is to pay the debt of another,while that of the surety is to pay a debt which becomes the surety’s uponthe principal’s failure to pay; the surety’s liability is thereforeprimary and the guarantor’s secondary, and the surety may not seekindemnification from the guarantor.

In J.D. Halstead Lumber Co. v. Hartford Accident & Indem. Co.,38 Ariz. 228, 298 P. 925 (1931), the surety required the contractor and Halstead Lumber Co. to agree to indemnify it against any loss which it might sustain on a performance bond.

At the end of construction, a number of parties with lienable claims remained unpaid. The surety was required to pay some of them, and sought indemnification from Halstead Lumber. Halstead Lumber presented at trial...