CHAPTER 460

AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE, ENTITLED "INSURANCE", BY ADDING THERETO A NEW PART ENTITLED "SURETYSHIP".

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Title 18, Delaware Code, is amended by adding thereto a new Part to read:

PART II. SURETYSHIP

CHAPTER 77. SURETYSHIP

SUBCHAPTER 1. CORPORATE SURETIES

§ 7701. Execution and sufficiency of corporate suretyship

(a) Whenever any bond, undertaking, recognizance or other obligation is by law or the charter, ordinances, rules or regulations of any municipality, board, body, organization or public officer, required or permitted to be made, given, tendered or filed with surety or sureties, and whenever the performance of any act, duty or obligation, or the refraining from any act, is required or permitted to be guaranteed, such bond, undertaking, obligation recognizance or guarantee may be executed by an insurer duly authorized to transact surety insurance in this State under a certificate of authority issued by the Insurance Commissioner of this State.

(b) The execution by such insurer of such bond, undertaking, obligation, recognizance or guarantee shall be in all respects a full and complete compliance with every requirement of every law, charter, ordinance, rule or regulation that such bond, undertaking, obligation, recognizance or guarantee shall be executed by one surety or by one or more sureties or that such sureties shall be residents or freeholders, either or both, or possess any other qualification, and shall be accordingly accepted and treated.

§ 7702. Acceptance and approval by public officers

(a) Any public officer or department of state, county or municipal government, whose duty it may be to approve the surety upon any bond or bonds, may accept and approve such bonds when executed by the principal therein and by any surety insurer qualified to act as surety or guarantor as provided in section 7701 of this subchapter. The Levy Courts of the several counties of this State may accept such bonds as security for Receivers of Taxes and County Treasurers in lieu of the security provided for by the laws of this State.

(b) Whenever any bond, undertaking, recognizance, or guarantee has been duly executed in compliance with the terms of this chapter by the principal or principals therein, and by an insurer, duly authorized under the law of this State to transact the business of executing bonds of suretyship, then any officer, judge or any department of the state, or of any county, or municipal government, whose duty it may be to approve of the surety upon the bond, undertaking, recognizance, or guarantee, may accept and approve such bond, undertaking recognizance, or guarantee.

§ 7703. Agreement requiring principal to deposit assets; withdrawal

Any party of whom a bond or undertaking is required may agree with his sureties for the deposit for safe keeping of any and all moneys and other depositable assets for which such sureties are or may be held responsible with a trust company, safe deposit company or bank authorized by law to transact business as such in this State, if such deposit is otherwise proper, in such manner as to prevent the withdrawal of such moneys and assets or any part thereof, except with the written consent of such sureties, or an order of the court, made on such notice to them as such court may direct.

§ 7704. Release of liability on bond; procedure

The surety or representatives of any surety upon the bond of any trustees, committee, guardian, assignees, receiver, executor or administrator or other fiduciary, may apply by petition to the court wherein the bond is filed or which may have jurisdiction of such trustee committee, guardian, assignee, receiver, executor or administrator or other fiduciary or to a judge of the court, praying to be relieved from further liability as such surety, for the acts or omissions of the trustee, committee, guardian, assignee, receiver, executor or administrator or other fiduciary, which may occur after the date of the order relieving such surety, to be granted as herein provided for; and to require such trustee, committee, guardian, receiver, assignee, executor or administrator or other fiduciary to show cause why he should not account and such surety to be relieved from any such further liability as aforesaid, and such principal be required to give a new bond. Thereupon, upon the filing of such petition, the court or judge thereof, shall issue such order, returnable at such time and place and to be served in such manner, as such court or judge may direct, and may restrain such trustee, committee, guardian, assignee, receiver, executor or administrator or other fiduciary from acting except in such manner as it may direct to preserve the trust estate and, upon the return of such order to show cause, if the principal in the bond account in due form of law and file a new bond duly approved, then such court or judge shall make an order releasing such surety filing the petition from liability upon the bond for any subsequent act or default of the principal; and in default of such principal thus accounting and filing such bond, such court or judge shall make an order directing such trustee, committee, guardian, assignee, receiver, executor or administrator or other fiduciary to account in due form of law and if the trust fund or estate shall be satisfactorily accounted for and delivered or properly secured, such surety shall be discharged from any and all further liability as such for the subsequent acts or omissions of the trustee, guardian, committee, assignee, receiver, executor or administrator, or other fiduciary after the day of such surety being so relieved and discharged.

§ 7705. Estoppel of surety insurer to deny corporate power

No insurer having signed any bond, undertaking or obligation as surety, guarantor or indemnitor shall be permitted to deny its corporate power to execute such instrument or incur such liability, in any proceeding to enforce liability against it thereunder.

§ 7706. Premium on bond of public officers; expense of office

The expenses incurred by any public officer for suretyship upon any bond required by law of him, as well as the expenses for suretyship upon any bond required of any of his assistants or clerks shall, where the bond or bonds are required for the protection of the State, be paid for by the State, and where the bond or bonds are required for the protection of any of the several counties, be paid for by the Levy Court of the county, and where the bond or bonds are required for the protection of a municipality, be paid for by the municipality, and shall be charged to and considered a part of the expenses of the office held by the official. The cost of the bond shall not exceed the sum or sums determined by any applicable rate filed by the surety with the Insurance Commissioner.

§ 7707. Premium on bond of fiduciary; expense of estate

Any receiver, guardian, assignee, committee, trustee, executor, administrator or other fiduciary required by law or the order of any court to give a bond undertaking or other obligation as such, who shall avail himself of corporate suretyship in such bond, undertaking or obligation as authorized by the laws of this State, may present to the proper court or officer before whom he is required to submit, a statement and receipt showing the amount of charges paid for such corporate suretyship; and thereupon the court or other officer, before whom such accounting is rendered, may either order and direct such sum, either in whole or in part, to be a charge upon the estate and charged accordingly; or it may direct that no part thereof shall be a charge upon the estate. No charge for such suretyship shall in any case be allowed in excess of the sum or sums determined by any applicable rate filed by the surety with the Insurance Commissioner.

§ 7708. Warrant of attorney

In all instances where corporate suretyship is offered in accordance with the provisions of this chapter, and where the form of bond required by law contains a warrant of attorney, the bond shall be accepted without such warrant of attorney being written therein.

SUBCHAPTER IL RIGHTS OF SURETIES

§ 7709. Assignment of obligation

Where any persons are bound in any bond, bill, or other writing, made payable to any person, his executors, administrators, order or assigns, and the money due thereon, or any balance thereof, shall be paid or tendered, by a surety therein, the obligee shall be obliged to assign such bond, bill, or other writing, to such surety; and such assignee shall, by virtue of such assignment, have an action in his own name thereon against the principal debtor, or his representative.

§ 7710. Joint sureties or debtors; assignment

Where several persons are bound together in any bond, bill, or other writing, as joint debtors, or as joint sureties, in any sum of money made payable to any person, his executors, administrators, order, or assigns, and such bond, bill or other writing, shall be paid by any of such joint debtors, or joint sureties the creditor shall assign such bond bill, or other writing, to the person paying the same; and such assignee shall, in his own name, as assignee, or otherwise, have such action, or remedy, as the creditor himself might have had against the other joint debtors, or sureties, or their representatives, to recover such proportion of the money, so paid, as may be justly due from the defendants.

§ 7711. Defense of infancy to joint sureties or debtors

Where several persons are bound together in any bond, bill or other writing or judgment, as joint debtors, or as joint sureties, in any sum of money, made payable to any person or corporation, his or its executors, administrators, successors, order or assigns, and one or more of such persons was, at the time of making, signing or executing the same, or at the time of the rendition of such judgment, an infant, such fact shall be no defense in any action, proceeding or suit for the enforcement of the liability of those bound thereunder, excepting as regards the person who was an infant at the time of making, signing or executing such bond, bill or other writing, or who was an infant at the time such judgment was rendered.

§ 7712. Rights of surety or of joint debtor on payment of judgment

(a) If a judgment recovered against principal and surety shall be paid by the surety, the creditor shall mark such judgment to the use of the surety so paying the same; and the transferee shall, in the name of the plaintiff, have the same remedy by execution, or other process, against the principal debtor as the creditor could have had, the transfer by marking to the use of the surety being first filed of record in the court where the judgment is.

(b) Where there is a judgment against several debtors, or sureties, and any of them shall pay the whole, the creditor shall mark such judgment to the use of the persons so paying the same; and the transferee shall, in the name of the plaintiff, be entitled to an execution, or other process, against the other debtors, or sureties, in the judgment, for a proportionable part of the debt, or damages, paid by such transferee; but, no defendant shall be debarred of any remedy against the plaintiff, or his representatives, or assigns by any legal or equitable course of proceeding whatever.

§ 7713. Affidavit of sum due

Before any transferee shall have the benefit of section 7712 of this subchapter, he shall file in the court, or before the justice of the peace where such proceedings are instituted, a statement of the sum due from the defendant, with an affidavit that it is wholly unpaid.

§ 7714. Execution and effect of transfer

Transfers, by marking to the use of the persons paying such judgment, shall be in writing, signed by the plaintiff or by his attorney of record; and after the date thereof, the plaintiff may not release, or discharge any of the debts, or sums, so paid; but such transfer shall be without recourse to the plaintiff, and shall not make him liable to the transferee in case the latter shall not recover the same.

§ 7715. Application of chapter

Every provision in this chapter giving a right or remedy to, or imposing a duty upon, or referring to the act of a debtor, obligor, assignor or transferor, or a surety, obligee, assignee or transferee, creditor, or other person, shall be construed to extend to or against, his executors, administrators, or assignee, when so applicable.

§ 7716. Remedies of co-debtor or co-surety

(c) Whenever one or more of several co-debtors or co-sureties for the payment of a debt shall pay, or shall have paid to the creditor or creditors the sum due, including the costs, if any, that may have been incurred by him or them, the person or persons so paying, if the amount paid shall exceed his or their proportion of liability for the demand, shall be entitled to have a transfer of the creditor or creditors' securities for the payment of the debt, whatever the nature of such securities may be, to enable him or them to obtain contribution from the others, liable with himself or themselves; such transfer may be made by assignment, marking to the use, or other appropriate method.

() When such transfer is made, the transferee or transferees shall be entitled to and shall have in his or their own name or names as such, or by and in the name of such creditor or creditors, for his or their own use as transferee or transferees, all and singular the remedy or remedies against the other debtor or debtors, surety or sureties which the creditor or creditors could have; and no such payment shall in anywise operate to discharge, impair, or otherwise affect the securities held by the creditor or creditors to the prejudice of the debtor or debtors, surety or sureties, so paying; nor shall any release of such co-debtor or co-debtors, co-surety or co-sureties, or entry of satisfaction upon any lien against him or them operate in any respect as a payment or discharge of the demand itself or of any of the securities therefor as against the other parties originally bound, to the end that such co-debtor or co-debtors, co-surety or co-sureties may recover by the use of the creditor or creditors' means or remedies the proportion of the demand which his co-debtor or co-debtors, co-surety or co-sureties ought to pay according to law and equity.

(a) The transfer to be made by the creditor or creditors shall not enable the transferee or transferees to take any legal proceedings against the co-debtor or co-debtors, co-surety or co-sureties, unless such transferee or transferees, or some creditable person for him or them, shall first file in the office of the Prothonotary or justice of the peace of the county where legal proceedings are contemplated to be taken, an affidavit, setting forth the amount which he claims his or their co-debtor or co-debtors, co-surety or co-sureties is or are bound to contribute on account of such co-indebtment or co-suretyship, and such amount shall be endorsed by the Prothonotary or magistrate upon the process issued.

§ 7717. Entry of satisfaction of judgment

(a) Upon the payment of any judgment under and according to the provisions of this chapter, the right or power of the creditor or plaintiff therein to enter satisfaction upon the record of such judgment shall co instanti, cease and determine, and this whether the transfer of such judgment shall have been made or not; the fact of the payment thereof shall be sufficient.

(b) If any creditor or plaintiff in such judgment, after payment of any judgment to him shall enter, or cause to be entered, satisfaction of the judgment upon the record thereof, without the express consent, in writing, of the person entitled, under the provisions of this chapter, to its transfer, the court in which such judgment is recovered shall, upon application of the person so entitled and upon sufficient proof of the facts, strike from the record and entry of satisfaction; whereupon the judgment shall be and remain in full force and virtue, and as valid and binding upon the defendant therein as it was or could have been, had such entry of satisfaction never been made. The application shall be in writing, and sworn or affirmed to by the applicant, and shall contain a general statement of the facts. Nothing in this section shall be construed to divest or interfere in any way with any rights which may have been acquired by innocent third persons who, in good faith, and without notice, may have relied and acted upon the protection and security of the entry of satisfaction. No defendant shall be debarred of any remedy against the plaintiff, or his representatives or assigns, by any legal or equitable course of proceedings whatever.

(c)

Approved August 9, 1968.