Section 11.9 Measure of Damages Against Surety

• Library: Insurance Practice 2015

The surety’s liability, in the absence of contractual limitation, is usually measured by loss or damage directly resulting from the principal’s default with respect to the act that the surety bond is executed to secure performance of. Bolivar Reorganized Sch. Dist. No. 1, Polk County, Mo. v. Am. Sur. Co. of N.Y., 307 S.W.2d 405 (Mo. 1957). Rights and liabilities of the surety, absent specific contrary agreement, are measured by those of the principal. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. D & L Constr. Co., 353 F.2d 169 (8^th Cir. 1965), cert. denied, 384 U.S. 941 (1966); 72 C.J.S. Principal and Surety §§ 74, 90 (1987).

Some bonds are fixed penalty bonds, including defendants’ appeal and financial guarantee bonds and sales tax, tax lien, and utility bonds. There are forfeiture bonds, such as immigration and bail bonds, although application for remission may be filed in bail cases and allowed in whole or in part at the discretion of the court in state cases and under Rule 46(e) of the Federal Rules of Criminal Procedure in federal cases. Action to enforce judgment on a bail bond is in the nature of a civil suit for payment of a debt. Procedure...