Fidelity & Deposit Co. of Maryland v. Wheeler

• Decision Date: 27 September 1929
• Docket Number: No. 8472.,8472.
• Parties: FIDELITY & DEPOSIT CO. OF MARYLAND v. WHEELER.
• Court: U.S. Court of Appeals — Eighth Circuit

34 F.2d 892 (1929)

FIDELITY & DEPOSIT CO. OF MARYLAND v. WHEELER.

No. 8472.

Circuit Court of Appeals, Eighth Circuit.

September 27, 1929.

Harley H. Stipp, of Des Moines, Iowa, (Eugene D. Perry, Robert J. Bannister, Vincent Starzinger, Fred A. Little, and Donald D. Holdoegel, all of Des Moines, Iowa, on the brief), for appellant.

William G. Harvison, of Des Moines, Iowa, for appellee.

Before KENYON and VAN VALKENBURGH, Circuit Judges, and MARTINEAU, District Judge.

MARTINEAU, District Judge.

George Youngberg, operating as the Youngberg Construction Company, prior to the 12th day of July, 1924, was engaged, under various contracts, in the construction of roads, bridges, viaducts, and culverts in North and South Dakota. The Fidelity & Deposit Company of Maryland was surety on Youngberg's construction bonds, guaranteeing the performance of his contracts. Youngberg became financially embarassed, and a number of his creditors sued his surety, the plaintiff in this action. W. W. Wheeler, the defendant below, claimed to be the principal creditor of Youngberg. Plaintiff, the Fidelity & Deposit Company, asserted that Wheeler was in fact a partner of Youngberg operating as the Youngberg Construction Company, and that he, for that reason, was bound for the debts of Youngberg and to indemnify it against liability to Youngberg's creditors. Wheeler denied that he was a partner and that he was liable for Youngberg's debts. With matters in this condition, on July 12, 1924, for the purpose of settling their dispute the Fidelity & Deposit Company and W. W. Wheeler entered into the following contract:

"This Agreement Made and Entered into this 12th day of July, A. D. 1924, by and between W. W. Wheeler of Des Moines in the County of Polk, State of Iowa, party of the first part and hereinafter referred to as the Creditor, and the Fidelity and Deposit Company of Baltimore, of Baltimore, Maryland, party of the second part, and hereinafter referred to as the Surety.

"Whereas, the Creditor represents that one George E. Youngberg of Aberdeen in Brown County, South Dakota, has been engaged in a general road and bridge constructing business as a sole trader under the firm name and style of the Youngberg Construction Company, and that the creditor has become the principal creditor of said Youngberg, and

"Whereas, the said Youngberg Construction Company has obligated itself under numerous contracts to construct roads, bridges, viaducts, and culverts in the States of North and South Dakota, and

"Whereas the Surety has executed and become obligated as a Surety for the said Youngberg Construction Company on contractors bonds under said construction contracts, and

"Whereas, the said Youngberg Construction Company has become extensively involved financially and a large number of its creditors are making claims against the said Surety under the said contractors bonds, and the exact extent of the liability of said Surety to the creditors of the said Youngberg Construction Company is unknown and unliquidated, and

"Whereas, the Youngberg Construction Company has furnished the parties hereto with a report of its accounts payable, which list is marked Exhibit `A,' attached hereto and by this reference made a part and portion of this agreement, and

"Whereas in order to further and protect his own financial interest the said creditor is desirous of undertaking to secure from all of the creditors of the said Youngberg Construction Company a release of all claims they may have or claim against the Surety.

"Now, Therefore, This Agreement Witnesseth: That for and in consideration of the covenants and stipulations hereinafter contained, to be performed by the Surety the said creditor does hereby contract and agree that within ninety (90) days from the date hereof he will secure from all of the creditors of the Youngberg Construction Company, including those described in Exhibit `A' full and absolute releases and acquittances of any claim or claims they may have of any kind or character whatsoever against the said Surety under any of the above mentioned contractors bonds heretofore executed by the said Surety on behalf of said Youngberg Construction Company, and that the said creditor covenants and agrees to save the said Surety harmless from any and all claim or expense including costs of suit and attorneys fees on any claim made under said bonds, whether said claim or claims are reported in Exhibit `A' or not. It being the intention of the parties hereto to cover all claims known or unknown to the parties hereto.

"In consideration of the covenants and agreements hereinafter contained upon the part of the said creditors the said surety agrees that when the said creditor represents to Messrs. Williamson, Williamson & Smith, of Aberdeen, South Dakota, attorneys for said Surety, such releases and acquittances of claims described in exhibit `A' with the signatures of said claimants properly witnessed and acknowledged, the said Surety will pay unto the said Creditor the full sum of Seventeen...