Central Sur. & Ins. Co. v. Hinton, 19490.

• Decision Date: 29 May 1939
• Docket Number: No. 19490.,19490.
• Citation: 130 S.W.2d 235
• Court: Missouri Court of Appeals
• Parties: CENTRAL SURETY & INSURANCE CORPORATION, RESPONDENT, v. CLAUDE HINTON, APPELLANT.

130 S.W.2d 235

CENTRAL SURETY & INSURANCE CORPORATION, RESPONDENT, v. CLAUDE HINTON, APPELLANT.

No. 19490.

Kansas City Court of Appeals. Missouri.

May 29, 1939.

Appeal from the Circuit Court of Jackson County. — Hon. Emory H. Wright, Judge.

REVERSED AND REMANDED.

W.F. Wilkinson and W. Raleigh Gough for appellant.

(1) The lack of negligence and non-liability of the defendant Hinton, in the Hurley case, is firmly established by this record. (a) Defendant could not have been held negligent in the absence of evidence showing that he failed to exercise "ordinary care" to replace the lights after having notice, actual or constructive, that the lights had been displaced. Sec. 572, Revised Ordinances, Kansas City, Mo; Myers v. City of Kansas, 108 Mo. 480, 487; Pyburn v. Kansas City, 166 Mo. App. 150, 148 S.W. 193. (b) The findings of fact conclusively established — as against plaintiff — the fact of Hinton's freedom from negligence in the Hurley case. Cantley v. American Surety Co. of New York, 225 Mo. App. 1146, 38 S.W. (2d) 739; Monnig v. Easton Amusement Co. (Mo. App.), 27 S.W. (2d) 495; Steele v. Johnson, 96 Mo. App. 147, 69 S.W. 1065. (c) The fact of Hinton's non-liability in the Hurley case must be assumed under the pleadings. 49 C.J. 120; Thompson v. Farmers Exchange Bank (Mo.), 62 S.W. (2d) 803, 810 (14), 812. (2) Defendant's freedom from negligence and his non-liability in the Hurley case would have been a complete defense to any suit by the city on the bond. (a) A judgment in defendant's favor (in the Hurley case) would have conclusively established defendant's freedom from negligence, in any subsequent suit by the city on the bond Gerber v. Kansas City, 311 Mo. 49, 277 S.W. 562; Kinloch Telephone Co. v. St. Louis, 268 Mo. 485, 188 S.W. 182; Kansas City v. Mullins (Mo. App.), 209 S.W. 558; Wiggin v. St. Louis, 135 Mo. 558, 37 S.W. 528; Kilroy v. St. Louis, 242 Mo. 79, 145 S.W. 769; Kansas City v. Mitchener, 85 Mo. App. 36. (b) Under the common-law principles of indemnity, the city could not recover from Hinton any loss growing out of the payment of a judgment recovered against it on account of its sole fault or negligence. Kansas City v. Mullin (Mo. App.), 209 S.W. 558; Kinloch Telephone Co. v. St. Louis, 268 Mo. 485, 188 S.W. 182. (c) Under the bond, the city could not recover except by showing that defendant's negligence was the cause of Mrs. Hurley's injury. Southwest District Telegraph Co. v. Southwestern Bell Telephone Co., 336 Mo. 453, 93 S.W. (2d) 19, 26-28; Southern Bell Tel. Co. v. Mayor, etc. of Meridian, Miss., 74 Fed. (2d) 983-984. (d) The legal relation between defendant and the City was not such as to require defendant to insure the City against all loss. Kinloch Tel. Co. v. St. Louis, 268 Mo. 485, 188 S.W. 182. (3) Plaintiff cannot recover herein, unless there would have been an actual liability upon the bond as the result of a judgment against the city in the Hurley case. (a) Under the common-law principles of reimbursement of a surety by him principal, the surety cannot recover for a payment made on a claim on which there is no liability, as a matter of law. 50 C.J. 252-253; 48 C.J. 758. (b) The indemnity agreement must be construed strictly against the plaintiff. U.S.F. & G. Co. v. Worthington, 6 Fed. (2d) 502; Fidelity & Deposit Co. of Maryland v. Davis, 68 A.L.R. 321. (c) The indemnity agreement ought not to be construed so as to allow plaintiff to recover for a "mistake of law," as opposed to a "mistake of fact." 48 C.J. 754; 65 C.J. 820. (d) If the indemnity agreement is so construed as to allow plaintiff to recover for payments made by it as the result of its own mistake of law, the agreement is void as against public policy. Secs. 14,016, 14,017, R.S. 1929; Young v. Ins. Co., 269 Mo. 1, 187 S.W. 865; Printing Co. v. Ins. Co., 204 Mo. App. 401, 221 S.W. 430; Printing Co. v. Ins. Co., 209 Mo. App. 422, 240 S.W. 263; Scott v. Parkview Realty & Imp. Co., 241 Mo. 112, 145 S.W. 48, 50-53; Williams v. Railway, 153 Mo. 487, 54 S.W. 689; Progressive Finance & Realty Co. v. Stemple, 231 Mo. App. 721, 95 S.W. (2d) 834; Brucker v. Georgia Casualty Co., 326 Mo. 856, 32 S.W. (2d) 1088; Long v. Chronicle Pub. Co., 68 Cal. App. 171, 227 Pac. 873. (e) Neither the petition nor the evidence supports a theory of recovery on the ground of a "good faith" mistake of law.

R.S. Eastin and McCune, Caldwell & Downing for respondent.

(1) The provision in the indemnity agreement permitting recovery for good faith payments is valid and enforceable. National Surety Co. v. Casner (Mo.), 253 S.W. 1057; Peay v. Southern Surety Co., 141 Ark. 265, 216 S.W. 722; National Surety Co. v. Fulton, 192 App. Div. 645, 183 N.Y. Supp. 237; American Bonding Co. v. Alcatraz Construction Co., 202 Fed. 483; U.S.F. & G. Co. v. Baker, 136 Ark. 227, 206 S.W. 314; City of New York v. Baird, 176 N.Y. 269, 68 N.E. 364; Inhabitants v. Chace, 82 Mass. 303; Illinois Surety Co. v. Maguire, 157 Wis. 49, 145 N.W. 768; Continental Casualty Co. v. National Slovak Sokol, Inc., 269 N.Y. 283, 199 N.E. 412; Fidelity & Deposit Co. v. Cataldo (Mass.), 164 N.E. 379; Maryland Casualty Co. v. Ballard (Okla.), 259 Pac. 528; Conway v. Union Indemnity Co., 185 La. 240, 169 So. 73; U.S.F. & G. Co. v. Huckstep (Mo. App.), 72 S.W. (2d) 838. (2) The settlement of the case of Luella Hurley v. Kansas City and Claude Hinton was made in good faith and was within the terms of the indemnity agreement. (a) Under the bond given to the city by plaintiff as Hinton's surety, the surety would have been liable to the city for the amount of any judgment obtained against it by Mrs. Hurley up to the face amount of the bond, although the city were negligent and Hinton were not. St. Louis & Suburban R.R. Co. v. Stewart (Mo.), 187 S.W. 836; Kansas City, M. & B.R.R. Co. v. Southern Ry. News Co., 151 Mo. 373, 52 S.W. 605; Heman Construction Co. v. City of St. Louis, 256 Mo. 332, 165 S.W. 1032; Kinloch Telephone Co. v. City of St. Louis, 268 Mo. 485, 188 S.W. 182; Wabash Ry. Co. v. Ordelheide, 172 Mo. 436, 72 S.W. 684; City of Cleveland v. B. & O.R.R. Co., 71 Fed. (2d) 89; Cacey v. Virginian Ry. Co., 85 Fed. (2d) 976; Southern Pacific Co. v. Fellows (Cal. App.), 71 Pac. (2d) 75; Buckeye Cotton Oil Co. v. L. & N.R.R. Co., 24 Fed. (2d) 347; Dudar v. Milef Realty Corp., 258 N.Y. 415, 180 N.E. 102; St. Paul Union Depot Co. v. Minn., etc., R.R. Co. (Minn.), 226 N.W. 572; Kokusai Kisen Kabushiki Kaisha v. Columbia Stevedoring Co., 23 Fed. 403; Long Island R.R. Co. v. American Bridge Co., 175 App. Div. 170, 161 N.Y. Supp. 543. (b) Even though this court might reach a different conclusion than plaintiff did as to its liability under the bond, this does not militate against the fact that the settlement was entered into in good faith. Platt v. Francis, 247 Mo. 296, 312, 152 S.W. 332; State ex rel. v. Diemer, 255 Mo. 336, 351, 164 S.W. 517; Jones v. Squire, 137 La. 883, 69 So. 733; McDonald v. Rankin, 92 Ark. 173, 122 S.W. 88; Searl v. School District, 133 U.S. 553, 33 L. Ed. 740; Sowder v. Lawrence, 129 Kan. 135, 281 Pac. 921. (c) The record does not support the conclusion of Hinton's nonliability to Mrs. Hurley. U.S.F. & G. Co. v. Fidelity National Bank & Trust Co. (Mo. App.), 109 S.W. (2d) 47; Hunt v. St. Louis, 278 Mo. 213, 211 S.W. 673; Beall v. N. Mo., etc., Ins. Co. (Mo. App.), 99 S.W. (2d) 492; Rezabek v. Rezabek, 196 Mo. App. 673, 192 S.W. 107; Steele v. Johnson, 96 Mo. App. 147, 69 S.W. 1065; Egger v. Egger, 225 Mo. 116, 123 S.W. 928; Section 801, R.S., 1929.

BLAND, J.

This is an action to recover reimbursement of certain payments made by plaintiff on account of alleged liability incurred by it under a certain master plumber's bond executed by plaintiff, as surety, and by defendant, as principal, to the City of Kansas City. The case was tried before the court, without the aid of a jury, resulting in a verdict and judgment in favor of plaintiff in the sum of $1137.55, the full amount sued for, and defendant has appealed.

Defendant, as a master plumber, was required by Sections 43-2 and 43-3 of the Building Code of Kansas City, to post with the city a bond in the sum of $5000, conditioned that he would "save the city harmless from all damages to all persons or property resulting from or in any way growing out of any opening or excavation" made by him in the city streets. Such a bond was executed by defendant with plaintiff as his surety. Said bond provided that defendant shall "save the city harmless from all damages to all persons or property resulting from or in any way growing out of any injuries received on account of any opening or excavation made by him ... in any street, ... and shall comply with all ordinances of Kansas City, ... and shall save Kansas City harmless on account of any damages or loss to it, caused by his breach of any of such ordinances, rules or regulations." This bond was in full force and effect on December 31, 1933, and January 1, 1934. To procure the plaintiff to execute the bond as surety for the defendant, he made a written application to it and, in the first part of the application, defendant agreed: "That the undersigned (defendant) will at all times, indemnity and keep indemnified the Corporation (plaintiff) and hold and save it harmless from and against any and all damages, loss, costs, charges and expenses of whatsoever kind or nature, including counsel and attorneys' fees, which the Corporation shall or may at any time, sustain, or incur by reason or in consequence of having executed the Bond herein applied for,... and that we will pay over, reimburse and make good to the Corporation, its successors or assigns, all sums and amounts of money which the Corporation or its representatives shall pay, or cause to be paid or become liable to pay, on account of the execution of any such instruments and on account of any damages, costs, charges and expenses of whatsoever kind or nature, including counsel and attorneys' fees, which the...