Manny v. National Surety Company of New York

• Decision Date: 05 January 1904
• Citation: 78 S.W. 69,103 Mo.App. 716
• Parties: MANNY, Plaintiff-Appellant, v. NATIONAL SURETY COMPANY OF NEW YORK, Defendant-Appellant
• Court: Missouri Court of Appeals

78 S.W. 69

103 Mo.App. 716

MANNY, Plaintiff-Appellant, v. NATIONAL SURETY COMPANY OF NEW YORK, Defendant-Appellant

Court of Appeals of Missouri, St. Louis

January 5, 1904

Appeal from St. Louis City Circuit Court.--Hon. J. A. McDonald Judge.

MODIFIED AND AFFIRMED.

Johnson & Richards and Charles Claflin Allen for plaintiff-appellant.

(1) Whatever defenses the National Surety Company may have had originally, if any, were waived by the conduct of the company, and the defendants are estopped from setting up any such defenses at this time. Nolan v. Johns, 108 Mo 431; Freeman on Judgments, (4 Ed.), sec. 180; James v Life Association, 148 Mo. 1; Nickell v. Ins. Co., 144 Mo. 420; M., K. & T. Trust Co. v. German National Bank, 77 F. 117; 23 C. C. A. 65. (2) The points and authorities presented by the defendant are not applicable to the case at bar. In answer to them, the plaintiff, as respondent shows: "At the hearing of the case it was admitted that the National Surety Company of New York had become the successor for all purposes to the National Surety Company of Missouri; that it purchased its assets and assumed its liabilities, and counsel for defendants admits that the averments of the petition in that respect are true." Thompson v. Abbott, 61 Mo. 176; Evans v. Bank, 79 Mo. 182; Kinion v. Railroad, 39 Mo.App. 382; Kinion v. Railroad, 39 Mo.App. 574. (3) The bond in the case at bar, while in form a simple contract, is, in legal effect, a contract of insurance. State v. Phelan, 66 Mo.App. 548; Frost, The Law of Guaranty, p. 327; Union Trust Co. v. Citizens' Trust and Sur. Co., 185 Pa. St. 217; Bank of Tarboro v. Fidelity and Deposit Co., 128 N.C. 366. (4) In this class of bonds "the surety is an insurer of his principal's obligations and liable as such in the first instance." Frost's Law of Guaranty Insurance, p. 12, sec. 3; Tebbetts v. Mer. Cred. Guar. Co., 19 C. C. A. 281 (1896); Globe Printing Co. v. Bickley, 73 Mo.App. 499; Carr v. Card, 34 Mo. 513; Brandt on Suretyship, p. 110, sec. 82. (5) The authorities cited by defendant's counsel in point three of his brief, do not sustain the doctrine as stated by him under said point. On the contrary, they are entirely consistent with the propositions advanced by the plaintiff, and may well be cited in connection with the points relied on by plaintiff Salmon Bank v. Leyser, 116 Mo. 74; Ham v. Hill, 29 Mo. 279. The bond was a joint and several contract obligation under its terms and under the statute law of Missouri (R. S. 1899, sec. 889), and either of the obligors therein could be sued separately (R. S. 1899, sec. 892).

T. J. Rowe for defendant-appellant.

(1) The National Surety Company of New York is no party to the bond herein sued on, therefore no cause of action is stated against it in the petition, and no judgment could be rendered against it in an action on said bond, because it was neither principal nor surety. (2) A liability on a bond can not be sold, transferred or assigned, and the obligors in a bond are the only parties that can be liable in an action on a bond. (3) The bond sued on herein being one of indemnity and not for the payment of a specific sum, the principal must be exhausted before the obligee in the bond has a right to proceed against the surety. Salmon Bank v. Leyser, 116 Mo. 74; Ham v. Hill, 27 Mo. 279. (4) The evidence for plaintiff established the fact that the work which Lyons Bros. were required to do under their contract with plaintiff, dated March 19, 1897, was completed October 1, 1897; and Lyons Bros. were paid in full for same, and the last work and labor done or material furnished by the O'Connell Painting Company upon which its lien claim was based, was done and furnished on January 18, 1898, and all the work done and materials furnished by it from October 1, 1897, to January 18, 1898, was done and furnished under a contract other than and different from the contract dated March 19, 1897. State v. Medary, 17 Ohio 565; Winstone v. Rives, 4 Stewart & Porter (Ala.) 269; Bauer v. Cabanne, 105 Mo. 118; Nofsinger v. Hartnett, 84 Mo. 549. (5) No principle is better settled than that a surety has a right to stand upon the very terms of his contract. Meyer v. Parker, 6 Ohio St. 501; Sharp v. Bedell, 5 Gilman 88; Wood v. Fisk, 63 N.Y. 245; Davis v. Van Buren, 72 N.Y. 587; Brandt on Suretyship and Guaranty, secs. 393-396. "He is the favorite of the law, and has a right to stand on the strict terms of the obligation." Brandt on Suretyship, sec. 97; Miller v. Stewart, 9 Wheat. 680.

GOODE, J. Bland, P. J., and Reyburn, J., concur.

OPINION

GOODE, J.

Action on a contractor's bond, originally brought against the firm of Lyons Bros., the contractors, the National Surety Company of Missouri and the National Surety Company of New York. We gather from the record that the case was dismissed as to the firm of Lyons Bros. That firm contracted with the plaintiff Manny to build him a house and gave bond for the faithful performance of the contract with the National Surety Company of Missouri as surety thereon. The bond bound the Lyons Bros. to well and truly perform and fulfill the stipulations and covenants of the contract, keep Manny harmless and indemnified against all claims, demands, judgments, liens, mechanic's liens, costs and fees of every description incurred in suits or otherwise, that might be had against him or against the improvements to be constructed under said contract, and repay to said obligee all sums of money which he might be obliged to pay on account of labor done or materials furnished for said improvement, etc. After the completion of the house, the O'Connell Painting Company filed a lien against the premises and brought suit to enforce it. The National Surety Company of Missouri, as surety on the bond, was notified to defend the case and did so. It resulted in a judgment enforcing the lien against the premises for the sum of $ 536.45 and $ 28.80 costs, which sums were afterwards paid by the plaintiff. No appeal was taken from this judgment by Manny in view of the advice from the attorneys of the surety company that they did not see any ground on which an appeal could be successfully prosecuted. They demanded that Manny pay the judgment and then sue Lyons Bros. and the National Surety Company of Missouri on the bond, stating that their reason for making this demand was that the surety company held an indemnifying contract and the indemnitors had not authorized the surety company to pay the judgment, and, hence, it did not feel safe in doing so. The letter containing those matters was written by McKeighan & Watts, attorneys for the surety company. It stated further that they knew of no defense that would be available against the judgment in favor of the painting company. During the trial it was admitted that the National Surety Company of New York had become the successor of the National Surety Company of Missouri for all purposes, had purchased its assets and assumed its liabilities, and that the averments of plaintiff's petition in that respect were true.

The answer set up as a defense that the plans and specifications for the building were changed without the consent of the Surety Company of Missouri and that the alterations and changes made in the work during its progress involved a difference in the cost...