Phifer State Bank v. Detroit Fidelity & Surety Co.

• Decision Date: 13 April 1929
• Citation: 97 Fla. 538,121 So. 571
• Parties: PHIFER STATE BANK v. DETROIT FIDELITY SURETY CO./ ET AL.
• Court: Florida Supreme Court

121 So. 571

97 Fla. 538

PHIFER STATE BANK v. DETROIT FIDELITY SURETY CO./ ET AL.

Florida Supreme Court

April 13, 1929

En Banc.

Bill of interpleader by the City of Gainesville against the Phifer State Bank and the Detroit Fidelity & Surety Company. From a decree for the surety company, the bank appeals.

Affirmed.

Syllabus by the Court

SYLLABUS

Surety completing contract on contractor's default held entitiled to balance earned at time of default as against bank holding order from contractor. Where one having contract with city for municipal improvements had contracted with his surety that surety should be subrogated to all his rights and privileges in the contract, and had assigned to surety all moneys due and payable at time of default, or thereafter becoming due and payable, surety which completed contract on contractor's default was entitled to sum earned but unpaid at time of default as against bank to which contractor had given order on the city.

Appeal from Circuit Court, Alachua County; A. V Long, Judge.

COUNSEL

J. C Adkins, C. R. Layton, and H. L. Gray, all of Gainesville, for appellant.

Hampton & Hampton, of Gainesville, for appellees.

OPINION

BUFORD J.

In this case one Ladd, doing business as Ladd Construction Company entered into a contract with the city of Gainesville on August 7, 1925, for the furnishing of material and performance of labor necessary for municipal improvements. Ladd furnished bond guaranteeing the performance of the contract, which bond was executed by appellee as surety. After entering into the contract with the city and furnishing the bond, Ladd, in October, 1925, obtained a loan from Phifer State Bank, giving to the bank his note, and also giving the bank an order addressed to the city of Gainesville requesting the city to pay the bank on demand the sum of $10,000. The order was in the following language:

'Gainesville, Florida, Oct. 8th 1925.

'To the City of Gainesville, Florida:

'Please pay to the Phifer State Bank on demand the sum of $10,000 Ten Thousand Dollars and charge to my account.

'Ladd Construction Company,

'By Elwood G. Ladd, owner.'

The city did not accept the order in the sense that it bound itself to pay the same, but it did receive the order, and thereafter paid the bank the sum of $6.000, after the payment of which Ladd died, and default was made in the completion of the contract. The surety company was notified of the default, and assumed to complete the contract as fulfillment of its surety.

At the time that the default occurred, the city held an unpaid balance earned by Ladd of more than $4,000.

Before the bond was made, there was application for the bond by Ladd Construction Company and an agreement of indemnity made between Ladd Construction Company and the surety company, which agreement contained the following provisions, to wit:

'And for the better protection of the said Company, the undersigned, as of the date hereof, hereby assigns, transfers and conveys to it, the said Detroit Fidelity and Surety Company all right, title and interest of the undersigned in and to all the tools, plant, equipment and materials of every nature and description that may now or hereafter be upon said work, or in, on or about the site thereof, including as well all materials purchased for or chargeable to said contract which may now be in process of construction, or storage elsewhere, or in transportation to said site, hereby assigning and conveying also all rights of the undersigned in and to all sub-contracts, which have been or may hereafter be entered into, and the materials embraced therein, and authorizing and empowering said Company, its authorized agents or attorneys, to enter upon and take possession of said tools, plant, equipment, materials and sub-contracts, and enforce, use and enjoy such possession upon the following conditions, viz.: This assignment shall be in full force and effect, as of the date hereof, should the undersigned fail, refuse or be unable to complete the said work in accordance with the terms of the contract covered by said bond, or in event of any default on the part of the undersigned under the said contract.

'In further consideration of the execution of the said bond, the undersigned does hereby agree, as of this date, that the said Detroit Fidelity and Surety Company shall as surety on said bond, be subrogated to all rights, privileges and properties of the undersigned as principal and otherwise in said contracts, and does hereby assign, transfer and convey to said company all the deferred payments, and retained percentages, and any and all moneys and properties that may be due and payable at the time of such breach of default, or that may thereafter become due and payable to said undersigned on account of said contract, or on account of extra work or materials supplied in connection therewith, hereby agreeing that all such moneys and the proceeds of such payments and properties, shall be the sole property of the said Detroit Fidelity and Surety Company and to be by it credited upon any loan, cost, damage, charge and expense sustained, or incurred by it as above under its bond of suretyship.'

The surety company completed the contract, and the city paid the entire balance due and enrned under the contract to the surety company, less $4,000, and filed a bill of interpleader in the circuit court of Alachua county, setting up the fact that this fund was claimed both by the bank and by the surety company, and prayed an order from the court to determine to whom the money should be paid and to disburse the...