Sweeney v. First Virginia Bank of Tidewater, 224 Va. 579

Summary

The Supreme Court of Virginia affirmed a judgment enforcing the Sweeneys' indemnity bond in favor of First Virginia Bank of Tidewater. The court held that delivery of the nonnegotiable bond to the Sweeneys' attorney did not discharge the obligation absent an intent to release it, and that the bond covered the bank's losses from transactions with Batts & Hockaday without requiring a prior judgment establishing Batts & Hockaday's liability.

Holdings

1. Redelivery of a nonnegotiable bond to its obligors does not discharge the bond when the evidence establishes that the obligee did not intend to discharge the obligation. The trial court's finding that the Bank did not intend a discharge was supported by credible evidence.
2. The bond did not require Batts & Hockaday Motors, Inc. to have been held legally liable to the Bank or to have its underlying obligations reduced to judgment. The bond's broad operative language covered losses occurring in transactions between Batts & Hockaday and the Bank, and the Bank's supported finding of $137,796.98 in losses established liability under the bond.
3. The Bank, as the party suing on the bond, bore the burden of explaining its failure to produce the original instrument, but the fact that the original was destroyed did not compel a finding that the bond had been cancelled or discharged when the evidence showed that the destruction was not by Bank officials or anyone acting at the Bank's direction.

Questions Presented

1. Whether delivery of the nonnegotiable indemnity bond to the Sweeneys' attorney discharged the Sweeneys' obligation under the bond.
2. Whether the bond required Batts & Hockaday Motors, Inc. to have been held legally liable to the Bank, or whether proof of the Bank's losses in transactions with Batts & Hockaday was sufficient to establish liability.

Disposition

affirmed