State of New York v. Peerless Ins. Co.
Cases that cite this one
25 later published cases cite this decision.
- Greenblatt v. Delta Plumbing & Heating Corp. (District Court, S.D. New York 1993)
- Cam-Ful Industries, Inc. v. Fidelity And Deposit Company Of Maryland (2d Cir. 1991)
- Cam-Ful Industries, Inc. v. Fidelity & Deposit Co. of Maryland (2d Cir. 1991)
- Florida Steel Corp. v. Indiana Lumberman's Mutual Insurance Co. (Ky. Ct. App. 1990)
- Hartford Fire Insurance v. United States (United States Court of International Trade 2012)
- Schanfield v. Sojitz Corp. of America (District Court, S.D. New York 2009)
- Bear Stearns Investment Products, Inc. v. Hitachi Automotive Products (USA), Inc. (District Court, S.D. New York 2009)
- In re Alstom SA Securities Litigation (District Court, S.D. New York 2005)
- Westrm-West Risk Markets, Ltd. v. Lumbermens Mutual Casualty Co. (District Court, S.D. New York 2004)
- Fulton Cogeneration Associates v. Niagara Mohawk Power Corp. (2d Cir. 1996)
- Rachman Bag Company, a Partnership Composed of Plains Bag and Bagging Co., Inc., and Rachman Bag Co., Inc. v. Liberty Mutual Insurance Company (2d Cir. 1995)
- Banco Portugues Do Atlantico v. Asland, S.A. (District Court, S.D. New York 1990)
- Burke v. City of Rochester (Appellate Division of the Supreme Court of New York 2018)
- Seneca Insurance v. People (Appellate Division of the Supreme Court of New York 2007)
- Incorporated Village of North Hills v. Avr Links Development Corp. (Appellate Division of the Supreme Court of New York 2006)
- State v. Insurance Co. of Pennsylvania (Appellate Division of the Supreme Court of New York 2003)
- Preferred Capital, Inc. v. PBK, Inc. (Appellate Division of the Supreme Court of New York 2003)
- Marubeni America Corp. v. United States Fidelity & Guaranty Co. (Appellate Division of the Supreme Court of New York 2001)
- 24-26 East 82nd Street Tenants Corp. v. Bell (Appellate Division of the Supreme Court of New York 1998)
- U.S. Capital Insurance v. Buffalo & Erie County Regional Development Corp. (Appellate Division of the Supreme Court of New York 1991)
- Menorah Nursing Home, Inc. v. Zukov (Appellate Division of the Supreme Court of New York 1989)
- State v. Peerless Insurance (Appellate Division of the Supreme Court of New York 1988)
- Briarwood Towers 85th Co. v. Guterman (Appellate Division of the Supreme Court of New York 1988)
- Lincoln First Commercial Corp. v. New York State Tax Commission (New York Supreme Court 1987)
- State v. Peerless Insurance (Appellate Division of the Supreme Court of New York 1986)
This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.
Opinion
OPINION OF THE COURT
Memorandum.
The order of the Appellate Division should be affirmed, with costs. *847 It has long been settled in this State that absent either an express agreement in the surety bond or inquiry by the surety, a creditor has no duty to keep the surety informed of the debtor’s financial situation (Bostwick v Van Voorhis, 91 NY 353, 360-362; Howe Sewing Mach. Co. v Farrington, 82 NY 121, 126-127; Western N. Y. Life Ins. Co. v Clinton, 66 NY 326, 331; McKecknie v Ward, 58 NY 541, 553; Brown v Curtiss, 2 NY 225, 230; State Bank v McDonnell, 40 AD2d 905; Stagg Tool & Die Corp. v Weisman, 12 AD2d 99, 103, affd 10 NY2d 741). Rather, the surety bears the burden of making inquiries and informing itself of the relevant state of affairs of the party for whose conduct it has assumed responsibility (Bostwick v Van Voorhis, 91 NY 353, 360-361, supra; Western N. Y. Life Ins. Co. v Clinton, 66 NY 326, 331, supra; Brown v Curtiss, 2 NY 225, 230, supra).
Here, then, the State was not obliged to notify Peerless of Parkchester’s persistent failure to meet its financial obligations so as to allow Peerless to cancel the bonds by their terms or forbear from increasing the bonds’ face amounts. Nor was there a duty running from the State to Peerless such as would impose liability on the State for any negligence in continuing to sell tax stamps to Parkchester on credit and accepting uncertified checks as payment for the stamps after several previous checks had been returned for insufficient funds (Board of Supervisors v Otis, 62 NY 88, 92-93 ["The sureties are not discharged from their obligation by reason of any neglect or omission of duty by the (creditor), or any unfaithfulness or even malfeasance on (the creditor’s) part in (its) dealings with the principal in the bond”]). This is without regard to any statutory duty running from the State to the public (Looney v Hughes, 26 NY 514, 522; see, Board of Supervisors v Otis, 62 NY 88, 92-93, supra; People v Russell, 4 Wend 570).
Defendant misplaces reliance on cases holding that an insured under a fidelity bond must disclose known acts of dishonesty by the designated person (see, e.g., Atlantic & Pac. Tel. Co. v Barnes, 64 NY 385). The nature of a fidelity bond, in which an insurer agrees to indemnify the insured against loss resulting from the defalcation or negligence of an employee or other person holding a position of trust with the insured, is such that "[i]n demanding security for the honesty of the servant, [the insured] impliedly represents that to his knowledge [the servant] is not dishonest, and the application for security * * * is a 'holding of the servant forth to the sureties *848 as a trustworthy person’ ” (Howe Sewing Mach. Co. v Farrington, 82 NY 121, 126, supra [quoting Smith v Bank of Scotland, 1 Dow’s Pari R 272]). As such, these holdings are simply variations of the rule that a guarantee induced by fraudulent misrepresentation or concealment of a material fact is void (see, Atlantic & Pac. Tel. Co. v Barnes, 64 NY 385, 387, supra).
Here, in approving the credit and performance bonds that Parkchester obtained from Peerless and thereafter permitting increases in their face amount, the State made no representations, expressed or implied, that it would not extend credit to Parkchester beyond the 30-day period provided in Tax Law article 20 or that it had faith in Parkchester’s financial ability. Further, there is no support in the record for the allegation that the State fraudulently concealed Parkchester’s financial condition. " 'Bald conclusory assertions * * * are not enough’ ” (Ehrlich v American Moninger Greenhouse Mfg. Corp., 26 NY2d 255, 259 [quoting Kramer v Harris, 9 AD2d 282, 283]) to defeat a motion for summary judgment. Indeed, the insufficiency of Peerless’ claim of fraudulent concealment is made manifest by the fact that they never even inquired of the State about the financial status of Parkchester during the period that the bonds were in effect, thus demonstrating that there could not have been any reliance, an essential ingredient in a fraud claim.
The interpretation of the bonds, which were unambiguous and unconditional, presented only questions of law properly determined by the Appellate Division in granting the State’s motion for summary judgment (see, General Phoenix Corp. v Cabot, 300 NY 87).
Chief Judge Wachtler and Judges Meyer, Simons, Kaye, Alexander, Titone and Hancock, Jr., concur.
Order affirmed, with costs, in a memorandum.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.