Denton v. Fireman's Fund Indemnity Company, 7939.

• Decision Date: 28 October 1965
• Docket Number: No. 7939.,7939.
• Citation: 352 F.2d 95
• Parties: Edwin DENTON, Appellant, v. FIREMAN'S FUND INDEMNITY COMPANY, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

352 F.2d 95 (1965)

Edwin DENTON, Appellant, v. FIREMAN'S FUND INDEMNITY COMPANY, Appellee.

No. 7939.

United States Court of Appeals Tenth Circuit.

October 28, 1965.

Richard L. Banta, Jr., Denver, Colo. (Robert W. Botts and Harry O. Morris, Albuquerque, N. M., on brief), for appellant.

William C. Briggs, of Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, N. M., for appellee.

Before MURRAH, Chief Judge, and BREITENSTEIN and SETH, Circuit Judges.

MURRAH, Chief Judge.

The appellant, Edwin Denton, and his deceased business partner brother signed a "General Contract of Indemnity" with appellee, Fireman's Fund Indemnity Company, whereunder "* * * each of them for themselves * * * jointly and severally * * *" agreed to indemnify the company for any losses which it "* * * may at any time sustain or incur by reason * * *" of having executed any bond on behalf of Denton and Griggs, another brother's partnership construction company. After the death of appellant's business partner brother, the Denton and Griggs partnership defaulted on a number of construction projects, for the performance of which Fireman's Fund had issued surety bonds. As a result of the default, the surety company was required to pay an agreed amount. In this suit to recover the amount so paid plus interest, costs and attorneys' fees, the trial court gave judgment for the indemnity company.

On appeal Edwin Denton has raised a myriad of points, but we think the trial court properly grouped them under three principal headings: (1) The bond was executed by the indemnitors on the condition that it would also be executed by the principals, Denton and Griggs, who were named in the face of the instrument, and since the principals never executed it, the indemnitors were never bound; that in any event the agreement was executed and delivered with the intention and understanding that it covered a bond or bonds for one specific project on which no losses were alleged or proved. (2) The agreement sued on, if originally valid, was terminated (a) by the death of the co-indemnitor; or (b) by the subsequent words and deeds of the parties. (3) The indemnity company is by its conduct estopped to assert liability on the indemnity agreement.

On the point of conditional delivery, the appellant offered testimony to the effect that his brother, J. Earl Denton, brought the prepared indemnity agreement to his place of business and prevailed upon him and his other brother to sign it on the condition that Earl and his business partner Griggs would also execute it and on the further understanding that the agreement was to cover only one specifically named project, to-wit: the Eunice School.

If, of course, the appellant executed the agreement on the conditions as stated and the indemnity company was aware of such conditions, liability under the agreement never attached. See Halliburton Company v. McPheron, 70 N.M. 403, 374 P.2d 286. The fact that Earl Denton and Raymond Griggs were named in the body of the agreement but never signed it was sufficient under New Mexico law to put the company on constructive notice that the indemnitors may have signed on condition that the other brother and his business partner would also sign and complete the instrument. See Hendry v. Cartwright, 14 N.M. 72, 89 P. 309, 8 L.R.A.,N.S., 1056; M. J. O'Fallon Supply Co. v. Tagliaferro, 29 N.M. 562, 224 P. 394; American Surety Company of New York v. Egan, 6 Cir., 62 F.2d 223; 50 Am.Jur., Suretyship, § 161, p. 1008. The asserted conditional execution was to be sure a question of fact which appellant was under the burden of proving.

On this factual issue the trial court credited the company's witnesses to the effect that the typewritten portion of the contract containing the names of Earl Denton and Raymond Griggs was prepared by the company and submitted to appellant and his deceased brother in the office of the president of a bank in Clovis, New Mexico; that appellant and his brother signed the contract as individuals on the date it bears in the presence of two insurance agents; that it was notarized by one of the agents who personally witnessed the signatures of the appellant and his brother.

The court further specifically found that prior to the execution and delivery of this indemnity agreement, Earl Denton and Raymond Griggs, joined by their respective wives, had executed and delivered a general contract of indemnity pursuant to which the company had issued bid and performance bonds for the partnership until they advised Denton and Griggs it would be necessary to secure additional indemnitors; that as a result of the request for additional indemnitors the appellant and his brother executed this indemnity agreement; that it was delivered to the company's agents by the appellant Edwin Denton with knowledge that the principals Earl Denton and Raymond Griggs had not executed it and that there was no intention expressed at that time or any time material here that Denton and Griggs should execute the agreement; that it was delivered to the company's agent with the intention that it would be immediately effective without further signatures being necessary. It is sufficient to say that these findings are supported by the evidence, are binding here and are dispositive of the question of conditional delivery.

On the question of the scope or coverage, the agreement expressly recites that certain "* * * bonds have heretofore or may hereafter be required by, for and on behalf * * *" of Denton and Griggs, and the "* * * indemnitors, and each of them, for themselves, jointly and severally do hereby covenant and agree * * *" to become liable for any losses which the "* * * company shall or may at any time sustain or incur by reason or in consequence of having executed or having procured the execution of any such Bond * * *". The appellant does not seem to deny the continuing coverage under the terms of the agreement. He says he did not read it and was not given a copy. But, on the theory of conditional delivery he was permitted to testify at variance with the terms of the agreement to the effect that when his brother asked him to sign the agreement, he told him it was intended to cover one construction contract, to-wit: the "Eunice School"; that after his brother's death and before the issuance of any bonds under the agreement, he learned for the first time of its continuing effect. Appellant and his brother had previously executed an indemnity agreement for their other brother Earl covering one specific project. Earl was also permitted to testify that...