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Butler v. United Pacific Insurance Co.

May 17, 1973

BUTLER, APPELLANT,
v.
UNITED PACIFIC INSURANCE CO., RESPONDENT



Appeal from Circuit Court, Lane County. Helen J. Frye, Judge.

Edward V. O'Reilly, Eugene, argued the cause and filed a brief for appellant.

J. Terrence Bittner, Portland, argued the cause and filed a brief for respondent.

In Banc. Denecke, J. McAllister and Tongue, JJ., concur in the result.

Denecke

Plaintiff recovered a judgment for fraud against an automobile dealer. The jury awarded both general and punitive damages. Plaintiff brought this present action against the dealer's surety to recover the amount of the judgment against the dealer. The trial court gave judgment for the amount of the general damages only. Plaintiff appeals.

The first issue is whether a surety on an automobile dealer's bond is liable for the punitive damages assessed against the dealer.

The general rule is: "* * * [A] surety is liable only for the payment of actual damages caused by the principal, and may not be held for exemplary or punitive damages, in the absence of any statutory provision

imposing such liability." 11 Appleman, Insurance Law and Practice § 6361, p 86 (1944).

The Restatement of Security § 181 provides: "A surety on an official bond is not liable for penalties imposed by law on the officer for breach of duty." Section 198 of such Restatement provides: "The liability of a surety on an attachment bond extends within the penal limits of the bond to all loss sustained by the defendant in consequence of a wrongful attachment including reasonable expense incurred by the defendant in procuring a dissolution of the attachment, but does not include exemplary damages which may be recovered against the plaintiff for malicious prosecution or other reasons."

Cases supporting the general rule are as follows: Yesel v. Watson, 58 ND 524, 226 NW 624, 64 ALR 929 (1929) (sheriff's official bond); Vicario v. Jenkins, 79 Ohio L Abs 532, 155 NE2d 488 (1958) (real estate broker's bond); U.S. Fire Ins. Co. v. McDaniel, 408 SW2d 134 (Tex Civ App 1966) (real estate broker's bond).

Plaintiff cites Breeding v. Jordan, 115 Iowa 566, 88 NW 1090 (1902), which does hold to the contrary. Gaston v. Gibson, 328 F Sup 3 (ED Tenn ...


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