American Fidelity Company, a Corporation, and New Hampshire Fire Insurance Company, a Corporation v. National City Bank of Evansville, a Corporation

WILBUR K. MILLER, Circuit Judge.

The principal question presented here may be stated thus: When a contractor borrows money from a bank and as security therefor legally assigns the proceeds of its Government construction contract and the bank as assignee receives progress payments thereunder, may the sureties on the contractor’s performance and payment bonds recover such payments from the bank to reimburse them for sums paid by them because the contractor defaulted after the bank had collected the progress payments ?

Other questions are whether the proceeds of the bank loans of the contractor in…