Di Vito v. Fidelity and Deposit Company of Maryland

• Citation: 361 F.2d 936
• Decision Date: 12 July 1966
• Docket Number: No. 15516.,15516.
• Parties: Vincent DI VITO, Plaintiff-Appellee, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

361 F.2d 936 (1966)

Vincent DI VITO, Plaintiff-Appellee, v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Defendant-Appellant.

No. 15516.

United States Court of Appeals Seventh Circuit.

June 7, 1966.

Rehearing Denied July 12, 1966.

John P. Hampton, Roger D. Doten, Louis Linton Dent, Chicago, Ill., for appellant.

George Brode, Chicago, Ill., for appellee.

Before SCHNACKENBERG, KNOCH and CASTLE, Circuit Judges.

CASTLE, Circuit Judge.

Fidelity and Deposit Company of Maryland, the defendant-appellant, prosecutes this appeal from an order of the District Court denying its motion to vacate and set aside an agreed order of dismissal entered pursuant to stipulation of the parties in the action of Vincent Di Vito, the plaintiff-appellee, against the defendant as the surety on a contractor's performance bond. Defendant's motion is grounded on Rule 60(b) (3) of the Federal Rules of Civil Procedure (28 U.S.C.A.)¹ and based on its claim of "fraud and misrepresentation of plaintiff in procuring the settlement" which resulted in the stipulated dismissal of plaintiff's suit.

Plaintiff's complaint alleged in substance that on December 27, 1962, the defendant, as surety, executed a performance bond for H. P. Reger & Co., principal, in connection with a contract of Reger with the Sanitary District of Hammond, Indiana, for the construction of an intercepting sewer; that in the performance of the contract Reger rented excavating machinery and equipment from the plaintiff "pursuant to agreement" under which Reger was obligated to pay $51,594.26 therefor; that Reger paid $25,000 of the agreed rental but after the balance had become due and owing to the plaintiff for the use of equipment and apparatus furnished, Reger filed a voluntary petition in bankruptcy; and that the defendant as surety on the bond of Reger was obligated to the plaintiff in the sum of $26,594.26, and plaintiff was entitled to recover the same with interest and costs.

The defendant's answer included an affirmative allegation, made upon information and belief, that the sewer construction contract was a joint venture of Reger and the plaintiff, and that if plaintiff had leased and supplied machinery and apparatus to Reger, it was supplied as the plaintiff's contribution to the joint venture, and the plaintiff therefore is not entitled to recover against defendant under the performance bond.

In defendant's earlier interrogation of Reger's president, George L. McCue, in the bankruptcy proceeding, McCue had denied the existence of such a joint venture.

On May 24, 1965, the parties settled the cause. The defendant paid the plaintiff $18,838.00, and the plaintiff gave the defendant a release and a partial assignment of his claim in bankruptcy against Reger. On June 2, 1965, the order dismissing the cause pursuant to stipulation of the parties was entered. Defendant's motion to vacate and set aside that order was filed November 2, 1965.

Affidavits filed by the defendant in support of its motion to vacate and set aside the order of dismissal set forth that during the settlement discussions the attorney for the plaintiff represented that there was no joint venture agreement between plaintiff and Reger and under date of August 26, 1964, he sent defendant a letter in which he enclosed what he stated to be the "salient paragraphs of the agreement of August 7, 1963 by and between H. P. Reger & Company and Vincent Di Vito for the furnishing of and the use and rental of certain machinery and equipment in order to accomplish certain work contemplated in the Munster Hammond Sanitary District intercepting sewer project"; that the settlement was made in reliance upon these representations; that on June 16, 1964, after the settlement and dismissal of the cause, an attorney for the defendant discovered in the office of Reger's trustee in bankruptcy a written joint venture agreement between the plaintiff and Reger dated August 7, 1963, with reference to the contract with the Sanitary District, signed by the plaintiff; that defendant would not have settled the cause had it known that the contract of Reger with the Sanitary District was a joint venture of the plaintiff and Reger; and that defendant "is informed and believes" that the attorney for the plaintiff "prepared said joint venture agreement, that it was executed by plaintiff and Reger, and that plaintiff at all times knew that said contract with the Sanitary District was a joint venture of plaintiff and Reger, and that all machinery, equipment and apparatus supplied by plaintiff was his contribution under said joint venture agreement".

Exhibits accompanying the affidavits reveal that invoices constituting a part of the proof of claim affidavit the plaintiff furnished the defendant are represented to be billings "in accordance to contract dated August 7, 1963"; that the enclosure submitted with the August 26, 1964 letter and represented to be the "salient paragraphs" of the August 7, 1963, agreement discloses a rental agreement as alleged in plaintiff's complaint; and that the after discovered document, also dated August 7, 1963, but not executed on behalf of Reger, contains provisions identical with those plaintiff's attorney had represented to be the "salient paragraphs" of the agreement between plaintiff and Reger but also certain additional clauses which make such document in form and content a joint venture...