Aetna Casualty & Surety Co. v. Cunningham

224 F.2d 478 (1955)

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Aetna Casualty & Surety Co. v. Cunningham

United States Court of Appeals for the Fifth Circuit
224 F.2d 478 (1955)

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Facts

Cunningham (defendant) was hired as a contractor to construct a building. In the event that Cunningham was unable or unwilling to complete the construction, a surety bond from Aetna Casualty & Surety Company (Aetna) (plaintiff) provided funds to Cunningham's employer so the project could be completed. After Cunningham failed to complete the project and proceeds from the surety bond were provided to Cunningham's employer to finish the construction, Aetna filed suit against Cunningham to recover the expended funds. At trial, Aetna presented two theories for recovery. First, it claimed that the terms of the bond allowed recovery from Cunningham. Second, even if the bond did not expressly provide for such recovery, Cunningham had committed fraud in applying for the bond. The district court found for Aetna on the bond claim, awarding Aetna all of its requested damages, but held that Cunningham had not committed fraud. Aetna, concerned that a judgment based only on the bond claim would be dischargable if Cunningham applied for bankruptcy, appealed the denial of the fraud claim to the United States Court of Appeals for the Fifth Circuit.

Rule of Law

Issue

Holding and Reasoning (Rives, J.)

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