St. Paul Fire & Marine Ins. Co. v. Russo Brothers, Inc.

Russo Brothers, Inc., was a wholesale tobacco business operated by Rose and Louis Russo (the Russos) (defendants). St. Paul Fire & Marine Insurance Co. (St. Paul) (plaintiff) provided the Russos with annual bonds that guaranteed to the state that the Russos’ tobacco taxes would be paid. The Russos’ financial condition deteriorated, and St. Paul refused to provide a bond unless the Russos signed an indemnity agreement that they would repay St. Paul if the state required St. Paul to pay the taxes. The Russos signed the agreement. The agreement expressly required the Russos to indemnify St. Paul if St. Paul were required to pay the Russos’ taxes under the bond at any time. A few years later, St. Paul was required to pay the taxes and sued the Russos pursuant to the indemnity agreement. The Russos claimed they were not liable because their insurance agent had assured them the indemnity agreement was effective for only one year. At his deposition, Louis Russo testified that he signed the indemnity agreement because he would have been out of business if he had not signed the agreement; he did not testify that he would not have signed the indemnity agreement if he had known it would be effective for more than one year. The trial court found that the indemnity agreement was unambiguous and that the parol-evidence rule precluded admitting evidence of a contemporaneous oral agreement that limited the indemnification to one year. The court entered summary judgment for St. Paul. The Russos appealed.