Bristow v. Western Sur. Co., 9579

• Decision Date: 08 October 1956
• Docket Number: No. 9579,9579
• Citation: 78 N.W.2d 734,76 S.D. 362
• Parties: W. Lloyd BRISTOW, Plaintiff and Respondent, v. WESTERN SURETY COMPANY, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 734

78 N.W.2d 734

76 S.D. 362

W. Lloyd BRISTOW, Plaintiff and Respondent, v. WESTERN SURETY COMPANY, Defendant and Appellant.

No. 9579.

Supreme Court of South Dakota.

Oct. 8, 1956.

Rehearing Denied Nov. 21, 1956.

Kirby, Simons, McDonnell & Kirby, Blaine Simons, Sioux Falls, Harold P. Gilchrist, Kadoka, for defendant and appellant.

M. Q. Sharpe, John W. Larson, Kennebec, John Coupland, Valentine, Neb., for plaintiff and respondent.

RENTTO, Judge.

This is an action on a bond executed by the defendant company as surety. Mike Slater, principal in the bond, had entered into a contract with the plaintiff to build him a residence. The Farmers Home Administration, an agency of the United States Department of Agriculture, loaned the plaintiff money for this purpose. On the premise that the contractor, the principal in the bond, did not perform or fulfill all the agreements of his contract, plaintiff brought this action to recover from the surety. The jury returned a verdict for plaintiff. From the judgment entered thereon the surety appeals.

The decisive question presented by the errors assigned is whether one who bases his cause of action on a written instrument which does not express the agreement as he claims it to be, may recover thereon without seeking reformation of the writing to reflect the claimed agreement.

The contract entered into by the plaintiff and the contractor provided that:

'The Contractor will furnish a corporate surety bond, in a penal sum equal to the amount of the contract price, conditioned upon the performance by the Contractor of all the provisions of this contract and upon the prompt payment by the Contractor to all persons supplying labor and materials in the prosecution of the work provided for in this contract. The form of such bond and the surety company furnishing it will be subject to the approval of the Representative.'

The Representative referred to is an official designated by the Farmers Home Administration. In an effort to comply with this provision the contractor applied to the defendant for a bond.

The application signed by the contractor contained the following inquiry: 'Amount of Bond: Performance $_____ Payment $_____ Maintenance $_____'. This was answered by inserting in the blank after the word performance the figures 13,700. The remaining blanks in the question were left unfilled. The application also stated that the bond applied for was to be given to the Farmers Home Administration. It indicated that the contract concerned the building of a residence, but nowhere does it disclose that it is being built for the plaintiff or that he is a party to the contract.

On this application defendant issued the bond on which this suit is based. It is denominated a performance bond. It states that the principal and surety 'are held and firmly bound unto the United States of America, hereinafter called the Government'. In describing the obligation it recites: 'that whereas the principal entered into a certain contract, hereto attached, with the Government, dated _____ 19__, for Building Residence for Farmers Home Administration'. The obligation of the principal is to 'perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of said contract'. No contract is attached to the bond.

This bond is a performance bond conditioned on the performance of a contract between Mike Slater and the Government, with the United States of America as obligee. It concerns a contract that does not exist. He never entered into a contract with the Government for the building of a residence for the Farmers Home Administration. Rather, his contract was with the plaintiff and it required him to construct a residence for the plaintiff. This is the contract with which the contemplated bond was to be concerned. The bond stipulated in this contract was to be a payment and performance bond with the plaintiff as obligee. Manifestly the bond sued on expresses an undertaking that is different than the undertaking of the bond called for by the contract.

By its answer defendant admitted that it furnished the bond above described and as one of its defenses urged '...