Fidelity & Cas. Co. of New York v. D.N. Morrison Const. Co., Inc. of Virginia

• Full Citation: Fidelity & Cas. Co. of New York v. D.N. Morrison Const. Co., Inc. of Virginia, 156 So. 385, 116 Fla. 66 (Fla. 1934)
• Decision Date: 01 August 1934
• Citation: 156 So. 385,116 Fla. 66
• Court: Florida Supreme Court
• Parties: FIDELITY & CASUALTY CO. OF NEW YORK v. D. N. MORRISON CONST. CO., Inc., OF VIRGINIA.

156 So. 385

116 Fla. 66

FIDELITY & CASUALTY CO. OF NEW YORK v. D. N. MORRISON CONST. CO., Inc., OF VIRGINIA.

Florida Supreme Court

August 1, 1934

Rehearing Denied Sept. 18, 1934.

Error to Circuit Court, Dade County; Uly O. Thompson, Judge.

Action by the D. N. Morrison Construction Company, Incorporated, of Virginia, against the Fidelity & Casualty Company of New York. Judgment for plaintiff, and defendant brings error.

Affirmed.

BROWN J., dissenting.

COUNSEL

Miller, McKay, Dixon & DeJarnette, of Miami, for plaintiff in error.

Hudson & Cason and G. M. McNutt, all of Miami, for defendant in error.

OPINION

TERRELL Justice.

D. N Morrison Construction Company, Incorporated, and Coley &amp Peterson, Incorporated, are both general contractors of Virginia. They entered into a contract with Robert Clay Hotel Corporation of Miami, the former to construct the Robert Clay Hotel and the latter to install the plumbing and heating therein. In September, 1926, D. N. Morrison Construction Company, Incorporated, and Coley & Peterson, Incorporated, filed separate bills of complaint to establish and foreclose mechanics' liens against Robert Clay Hotel Corporation, which had under section 3532, Revised General Statutes of 1920, section 5396, Compiled General Laws of 1927, filed its bond with Fidelity & Casualty Company of New York as surety to release the lien sought to be foreclosed. Fidelity & Casualty Company was made a party defendant to the chancery causes, but disclaimed liability on the bond. Its objections were overruled, and appeal therefrom was taken to this court. See Fidelity & Casualty Co. v. D. N. Morrison Construction Company, Inc., of Virginia, 99 Fla. 309, 126 So. 151.

In the last-cited case this court held that a bond given under section 3532, Revised General Statutes of 1920, is not substituted for the land on which the improvement is made in the sense that equity may proceed against the bond as it could against the land. The bond is a contract of indemnity, and, if denied by the surety or maker, it raises an issue upon which our Constitution preserves the right of trial by jury, though the lienor may by his suit in equity procure a decree in personam against the lienee. Specific directions were given by the opinion to be pursued under such circumstances as are involved here.

The mandate went down, and a final decree was entered pursuant to directions of this court in which the chancellor adjudged the equities to be with Morrison Constuction Company and Coley and Peterson, and that they were entitled to first and prior liens against the lands on which the hotel was constructed. They were also directed by the final decree to institute their actions at law upon the surety bonds given to release the liens of complainants. Appeal was taken to this court from said final decree, and is pending here under the name of Robert C. Hogue v. D. N. Morrison Construction Company, Incorporated, of Virginia et al., 156 So. 377. Other suits to foreclose against the same lands had been brought in the meantime. All were consolidated under the last-entitled suit.

Morrison Construction Company and Coley and Peterson each filed actions at law on the surety bonds as directed in the final decree, resulting in directed verdicts for the amount found to be due them by the chancellor in the chancery cause. This writ of error is to the final judgment on the directed verdict in the law action in favor of D. N. Morrison construction Company.

The declaration of D. N. Morrison Construction Company alleges the filing of the notice of lien by the contractor, the filing of the surety bond under the statute to release the lien, the decree establishing the lien, demand for payment, and refusal to pay it. Fidelity & Casualty Company interposed a plea of non est factum and eleven special pleas. A demurrer to the special pleas was sustained, and issue was joined on the plea of non est factum. By this plea the sole question raised below and brought here for solution is whether or not the act of the agent, Tarilton, in signing the bond on which the instant cause is predicated, bound the defendant, Fidelity & Casualty Company.

Plaintiff in error contends that Tarilton's authority was limited to the execution of bonds in the sum of $50,000 or less; that in this case he executed a bond in excess of that amount for the purpose of enabling the owner of the property to release a mechanic's lien thereon; that the maker did not know of the existence of the bond for several weeks after it was filed, received no premium there on, and repudiated it as soon as found to be in existence. It is therefore not bound thereon.

Defendant in error contends that Tarilton was the agent of Fidelity & Guaranty Company, plaintiff in error, under section 4345, Revised General Statutes of 1920, section 6307, Compiled General Laws of 1927, that he executed the bond on behalf of his principal for the purpose of releasing a mechanic's lien acquired under section 3532, Revised General Statutes of 1920, section 5396, Compiled General Laws of 1927, that the bond was approved by the clerk of the court as prescribed by statute, and that such a bond is not rendered invalid by limitations upon the agent's authority contained in his power of attorney or agency contract when that power is exceeded if such limitations were not communicated to the obligee and the bond was executed as required by statute without the obligee's knowledge or opportunity to examine into the agent's authority.

In fine, plaintiff in error contends that this cause is controlled by the general principles of law relating to the apparent authority of nonresident surety company agents, while defendant in error contends that it is controlled by the general principles of law relating to the authority of a statutory agent of a nonresident surety company.

To support its contention defendant in error relies on Parsons v. Federal Realty Corporation, 105 Fla 105, 143 So. 912, 88 A. L. R. 275. In so far as applied to the case at bar, this court held in Parsons v. Federal Realty Corporation that section that section 4345, Revised General Statutes of 1920, section 6307, Compiled General Laws of 1927, does not conclusively fix the scope and extent of the authority of the agent of a surety company, that the apparent authority of such an agent is equal to real authority, as to third persons, when limitations on it are not made...