United States Fire Ins. Co. v. Johansen

In United States Fire Ins. Co. v. Johansen (1969) 270 Cal.App.2d 824, the court addressed a similar legal issue as presented here: whether an indemnity contract applied to earlier issued bonds. (Johansen, supra, 270 Cal.App.2d at pp. 827-828.) After examining the language of the contract and the circumstances surrounding the execution of the indemnity contract, the court concluded the agreement did not cover earlier issued bonds. (Id. at pp. 836-840.) The Johansen defendant did not have a preexisting obligation to reimburse the surety for the prior bonds, and the parties stipulated that the purpose of entering into the indemnity agreement was to provide indemnity for future bonds. (Id. at p. 838.) Additionally, the recitals in the Johansen indemnity agreement contained language referring only to future bond issuance; whereas in this case the recitals included the surety's promise to "refrain from canceling bonds." Further, in a related agreement executed several weeks earlier, the Johansen surety included a typewritten provision stating that "'It is further understood and agreed that this Agreement of Indemnity, executed subsequent to the execution of certain bonds is nevertheless to be retroactive in all respects and applicable thereto.'" (Id. at p. 839, fn. 5.) The court found significant the absence of such provision in the agreement before it. (Ibid.)