USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 94-2104

WESTCHESTER FIRE INSURANCE COMPANY,

Plaintiff - Appellee,

v.

RICHARD H. CAMPBELL & DEBORAH D. CAMPBELL,

Defendants - Appellants.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Morton A. Brody, U.S. District Judge]

___________________

____________________

Before

Boudin, Circuit Judge,

_____________

John R. Gibson* and Campbell, Senior Circuit Judges.

_____________________

_____________________

Stephen G. Morrell,
___________________

with whom

Laurie A. Dart and

_______________

Eaton,
______

Peabody, Bradford & Veague, P.A., were on brief for appellants.

________________________________
Keith R. Jacques, with whom
_________________
was on brief for appellee.

Jensen Baird Gardner & Henry,

_____________________________

____________________

June 1, 1995
____________________

____________________

Of the Eighth Circuit, sitting by designation.

JOHN

R. GIBSON,

Senior Circuit Judge.

_____________________

Richard

and

Deborah Campbell appeal the summary judgment entered against them

in

favor of Westchester Fire Insurance Company on a guaranty the

Campbells executed for the benefit of their family-owned company,

R. H.

Campbell, Inc.

We

affirm the

judgment of

the district

court.

The facts are undisputed.

an

agreement

with

indemnify Universal

Universal

In 1987 the Campbells signed

Bonding

against loss

on any

execute on behalf of R. H. Campbell, Inc.1

Insurance

Company

surety bonds

The

The agreement

____________________

The operative language of the agreement provided:

[S]hould the
execute

[Universal Bonding] Company

or procure the

execution of the

suretyship for which

application is

pending,

may

or

which

be

it might

agreement had no

termination date, and neither party terminated it.

to

now

hereafter

applied for . . . the

undersigned [i.e.,

the Campbells] . . . hereby undertake and

agree:

. . .

That the

indemnitor

will . . .

at

all

times indemnify and

save the

[Universal

Bonding]

harmless

from

against
[or]

Company
every

liability

loss . . . sustained or incurred by

the Company by
or

claim, demand,

and

reason of having executed

procured the execution

of said bonds

or obligations . . . .

The agreement also stated:

The indemnitor and

his successors

agree

to indemnify and save harmless the Surety

from

and

against any

liabilities,
expenses

loss,
of

and
costs,

whatever

kind. . . .

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all demands,
damages
nature

or
or

defined as

the "Surety" entitled to

Bonding Insurance

or entity

indemnification: "Universal

Company, its reinsurers, and

which the surety may

any other person

procure to act as

Surety or co-

surety on any bond or any other person or entity who executes any

bond at its

request."

In 1990 Westchester

performance

bonds

R.

for

H. Campbell,

request, in reliance on the guaranty

the Campbells.

issued payment

Inc.,

at

and

Universal's

Universal had obtained from

Richard Campbell was aware that

his corporation

was

obtaining the

since

bonds at

the time

he signed the bonds in his

Westchester issued

them,

capacity as president of R. H.

Campbell, Inc.

Westchester

million

dollars in claims, expenses,

surety bonds.

the guaranty

summary

was eventually

Consequently,

agreement.

judgment.

required

to pay

and attorneys' fees on its

Westchester sued the

The district

almost a

Campbells on

court granted Westchester

Westchester Fire Ins. Co. v. Campbell, 863 F.

_________________________
________

Supp. 32 (D. Maine 1994).

The Campbells argue that under Maine

Norton v. Eastman, 4 Me. 521

______
_______

guaranty

guaranty.

is entitled

They argue

law, specifically

(1827), a guarantor on a continuing

to notice

that they

of acceptance

did

of his

not receive

offer of

notice that

Westchester

Campbells

issued its bonds in reliance on their guaranty.

quote

from

Ellsworth, 83 A. 546
_________

the writing of

American Agricultural Chemical Co.

_____________________________________

(Me. 1912):

guaranty is merely

"Until acceptance

The

v.

and notice,

a proposal, making

necessary

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acceptance by the other party to complete the contract."

Id.

at

___

547.

However, there are

of acceptance

from

several situations in which

is unnecessary,

since acceptance can

the circumstances of the

offer of guaranty.

are

some

exceptions to

the

general rule [requiring notice], three of

which
case.

the plaintiff relies

One is when

the guaranty

the consideration of

directly or indirectly
from the creditor.
guaranty is

made at

creditor.

And

agreement

upon in this

is a valuable

to

one, moving,

to the

guarantor

Another is when

the

the request of

the

third

the

contract

guaranteed,

is contemporaneous

with the

guaranty.

In

unnecessary.

of

such
the

or

when

the

acceptance

accept,

is

cases

notice

guaranty

be inferred

In Ellsworth
_________

the Maine Supreme Judicial Court stated:

There

notice

of
is

Id. at 547.
___

This

Ellsworth,
_________

case

since

"Undersigned

presents

the Campbells

warrant

that

beneficially interested

import

of this

guaranty--that

valuable

benefits

language

is,

the

consideration

This exception

the

agreed

each

in

first

exception

in

of them

is

that

the

Bond."

consideration

issuance

benefitting

the

of

the

Campbells

sense, because when

in

guaranty:

specifically

of each

Surety's

makes perfect

the 1987

is

the obtaining

listed

for

and

The

the

bonds--was

themselves.

the guarantor

from the surety's execution of the bond, he has already

received something under

withdraw from it.

the arrangement and is

Moreover,

the very receipt

not entitled to

of that

benefit

functions as notice of acceptance of the guaranty, making further

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notice superfluous.

Here, the Campbells

of R. H. Campbell, Inc.,

the

issuance

business.

entitled

of

to

Ellsworth.2
_________

and as such had an obvious

bonds enabling

Under these

insist

on

were sole shareholders

R.

H.

circumstances,

further

notice

Campbell,

the

of

interest in

Inc. to

Campbells are

acceptance

do

not

under

Westchester

Campbells,

that

the

also

states without

Campbells

objection

executed the

from the

guaranty

at

the

request of the creditor, thus

coming within the second exception

to

See Ellsworth,
___ _________

the notice

requirement.

generally, Annotation,
_________

Acceptance of Guaranty,
_______________________

Supp.); Restatement

Westchester's

83 A. at

547; see
___

Necessity of Giving Creditor Notice of

_________________________________________

6 A.L.R.

(Second) of

assertion is

3d 355,

Contracts

corroborated

10 (1966

54, cmt.

by the

and 1994

d (1981).

fact that

the

guaranty agreement consists of a Universal Bonding form signed by

the Campbells.

Thus, the Campbells' arguments based on Maine law

are unavailing.

____________________

These

facts

also establish

another

generally

recognized

proviso

to

the

guarantor is an
acceptance

notice

acceptance

requirement:

insider of the principal

to the

corporation

of

guarantor

has received

See
___

corporation, notice of

is considered

notice.

when

redundant once

Richard

F. Dole,

Notice Requirements of Guaranty Contracts, 62 Mich. L.

__________________________________________

the

Jr.,

Rev. 57,

79-80 (1963); Annotation, Necessity of Creditor Giving Guarantor

_______________________________________
Notice of Acceptance of
Guaranty, 6 A.L.R. 3d
___________________________________
and 1994 Supp.); Restatement (Second)
(1981).
and

In this

were officers

of Contracts

case, the Campbells were the

and directors

355,

of the

13 (1966
54, cmt.

sole shareholders

principal corporation.

Richard Campbell was aware that the corporation was obtaining the
bonds.
and

Campbell's knowledge

creditor

acceptance.

is

an

adequate

of the transaction
basis

for

between debtor

inferring notice

of

See, e.g., Cobb v. Texas Distrib., Inc., 524 S.W.2d

___ ____ ____
____________________

342, 345 (Tex. Civ. App. 1975).

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Finally, to

Westchester

should have

concluded in

notice.

the extent the Campbells

notified

reliance on their

Their

transaction

from

guaranty, they have

waived such

Certainly,

the

states:

"Undersigned waive

Since in

performance bonds the surety lent

R. H. Campbell, Inc.,

funds.

transaction

loaning funds to Principal."

executing the payment and

Campbell

about each

guaranty agreement

notice of . . . Surety's

credit to

them

are arguing that

it was in effect

this

guarantor's

was

point

the

of

its

lending R. H.

effect

view,

of

the

since

the

guarantor's concern is whether the principal will contract a debt

he cannot repay.

Therefore,

our decision is

bolstered by

the

fact

that

the

Campbells

transactions in their

waived

notice

guaranty agreement.

of

principal-surety

See Davis v.
___ _____

104 U.S. 159, 169 (1881).

We affirm the judgment of the district court.

Affirmed.
________

Wells,
_____

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