Fidelity & Casualty Co. of New York v. Waugh

• Decision Date: 06 December 1927
• Parties: FIDELITY & CASUALTY CO. OF NEW YORK v. WAUGH.
• Court: Kentucky Court of Appeals

300 S.W. 592

222 Ky. 198

FIDELITY & CASUALTY CO. OF NEW YORK v. WAUGH.

Court of Appeals of Kentucky.

December 6, 1927

Appeal from Circuit Court, Pike County.

Action by the Fidelity & Casualty Company of New York against Harry M. Waugh. From a judgment dismissing plaintiff's petition, plaintiff appeals. Affirmed.

O. T Hinton and Johnson, Auxier & Hinton, all of Pikeville, and Fred Forcht, of Louisville, for appellant.

O. A Stump and Frank P. Damron, both of Pikeville, and John P Cusick, Warning Order Clerk, of Frankfort, for appellee.

HOBSON C.

On December 7, 1923, Harry M. Waugh was awarded a contract by the Pike fiscal court for the construction of a section of road in Pike county, pursuant to a bid theretofore submitted by Waugh to construct the road at so much a yard. The county engineer estimated the cost of construction to be $51,533. The fiscal court made an order fixing the amount of the bond which Waugh should execute at $10,400. A. R. Venters was agent at Pikeville of the Fidelity & Casualty Company of New York. Some communication had been had between Venters and Waugh as to the execution of the bond in case the bid was accepted, and when the bid was accepted Waugh and Venters went together to the clerk's office. There Waugh signed an application for a bond, and the bond was prepared and signed by Waugh and by Venters for the company. Waugh lived in West Virginia and then went home. Venters sent the application to the agent of the company in Louisville. The application contained, among other things, these statements:

"Bond No. 991651. Amount of bond, $10,400. Premium $156. Bond to be in force from December 7, 1923, to December 7, 1924. Contract price, $51,533. Approx."

Venters had told Waugh that the premium on the bond was 1 1/2 per cent. of the amount of the bond; he had put in the application the statement that the premium was $156, and Waugh had agreed that the company should make the bond under this assurance. When the application reached Louisville, the agent there struck out the figures "156" and wrote over them the figures "773" as the amount of the premium, and wrote to Venters that he had made a mistake; that the percentage of 1 1/2 per cent. was to be counted on the amount of work and not on the amount of the bond. Upon receiving this letter Venters wrote to Waugh and told him what the agent had said. But Waugh took no steps, insisting that no mistake had been made and that he was not willing to pay 1 1/2 per cent. on the amount of the work. A long correspondence followed. Neither party took any action to correct the mistake. Waugh went on and did the work, which amounted in the end to something over $80,000. On January 1, 1925, the Fidelity & Casualty Company brought this action against Waugh to recover the premium on the bond on the basis of 1 1/2 per cent. on the amount of the contract, which was over $80,000. Proof was taken, and during the pendency of the action Waugh paid in court the $156 with interest. On final hearing the circuit court dismissed the petition. The company appeals.

It is undisputed that Venters told Waugh that the premium on the bond would be $156, and that Waugh had the bond executed on this express understanding. The agent executed the bond at Pikeville, and Waugh went home before anything more was said. It is said that Waugh knew this was a mistake because he had been a contractor in West Virginia and this company had signed one of his bonds over there; he had paid the premium on a basis 1 1/2 per cent. of the amount of...