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Hartford Accident & Indemnity Co. v. Nelson Co., 291 U.S. 352 (1934)

Hartford Accident & Indemnity Co. v.

N. O. Nelson Manufacturing Co.

No. 239

Argued January 12, 1934

Decided February 5, 1934

291 U.S. 352


1. On appeal from a judgment of the highest court of a state, in a suit in which the validity of a statute of the state is challenged, the decision of the state court as to the meaning of the statute is binding upon this Court. P. 291 U. S. 358.

2. A state statute providing that any bond executed after its enactment for the faithful performance of a building contract shall inure to the benefit of materialmen and laborers notwithstanding any provision of the bond to the contrary is not an arbitrary restraint upon the liberty of contract enjoyed by surety companies under the Fourteenth Amendment. Pp. 291 U. S. 358-359.

So held where the bond was not required by the statute and where statutory effects of its voluntary execution were to exempt the building contract and the moneys collected or payable under it from statutory rights that would otherwise exist for protection of

Page 291 U. S. 353

materialmen and laborer, and to substitute the bond as their security, but in subordination to the interests of the obligee building owner.

3. The business of insurance is one peculiarly subject to supervision and control by the state. P. 291 U. S. 360.

4. Liberty of contract is not an absolute concept, but is relative to many conditions of time and place and circumstance. P. 360.

147 So. 815 affirmed. See also 166 Miss. 222, 135 So. 497.

Appeal from the affirmance of a judgment against building contractors and the surety on their bond in favor of the assignee of a materialman. The surety company, and the surety on its appeal bond in the court below, joined in the appeal to this Court. Another branch of the same litigation was here before, but that appeal was dismissed for defect of parties appellant. 285 U. S. 169.

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