Platte Valley Drainage Dist. v. National Surety Co.
| Decision Date | 08 November 1926 |
| Docket Number | (No. 14991.) |
| Citation | 295 S.W. 1083 |
| Parties | PLATTE VALLEY DRAINAGE DIST. OF WORTH COUNTY, v. NATIONAL SURETY CO. |
| Court | Missouri Court of Appeals |
Appeal from Circuit Court, Worth County; John M. Dawson, Judge.
Action by the Platte Valley Drainage District of Worth County against the National Surety Company. Judgment for plaintiff, and defendant appeals. Affirmed.
Sebree, Jost & Sebree and Henry L. Jost, all of Kansas City, for appellant.
Charles H. Mayer, of St. Joseph, and Ed Kelso and C. B. Du Bois, both of Grant City, for respondent.
This suit is upon an oral contract wherein defendant is alleged to have assumed, upon a consideration, to carry out in favor of plaintiff an obligation of a third person. The case was tried before the court without the aid of a jury, resulting in a judgment in favor of plaintiff in the sum of $3,212.78 and defendant has appealed.
The facts show that in May, 1920, plaintiff, having decided to provide funds for meeting the cost of certain drainage work by the issuance of bonds, accepted the offer of J. R. Sutherlin & Co., a corporation of Kansas City, Mo., to purchase the bonds. To insure the performance of the agreement, plaintiff required J. R. Sutherlin & Co. to execute a bond in the penal sum of $90,000, upon which bond the defendant became surety. The accepted offer of J. R. Sutherlin & Co. was made a part of the bond by being copied therein in full. In its offer J. R. Sutherlin & Co. agreed to buy bonds up to the par value of $200,000, to pay par and accured interest for the bonds delivered to it and to keep on deposit to the credit of plaintiff in a local bank selected by the latter the sum of $10,000. The remainder of the purchase price of such bonds was to be left on deposit with J. R. Sutherlin & Co. and to be paid to plaintiff as the drainage work progressed and as called for by plaintiff to meet the monthly engineer's estimates. Of the sum so remaining in the hands of J. R. Sutherlin & Co., it was to pay plaintiff four per cent. interest on daily balances.
Plaintiff found it necessary to issue bonds only to the par value of $100,000, which were delivered to J. R. Sutherlin & Co. under the contract. An initial payment of $10,000 on account of the purchase price was made and the remainder, $90,000, was left on deposit with J. R. Sutherlin & Co. The bond recited delivery of the bonds to J. R. Sutherlin & Co. and that of the purchase price $90,000 had been deposited with that company in accordance with the terms of the agreement. The bond contained the usual conditions and provided for indemnity to plaintiff for loss and damages suffered by reason of J. It. Sutherlin & Co.'s failure to perform the contract, and contained a special condition providing, in effect, that if J. R. Sutherlin & Co. should default in any manner in the performance of any of the things specified in the contract to be performed, plaintiff should give written notice to the defendant of the plaintiff "shall become immediately due and payable to" the plaintiff.
With the exception that J. R. Sutherlin & Co. paid interest from time to time on the money deposited with it, nothing further transpired until in June, 1921, when plaintiff had occasion to call on J. R. Sutherlin & Co. to pay the sum of $4,625.52, being the first estimate of plaintiff's engineer. Plaintiff promptly "billed" J. R. Sutherlin & Co. for this amount and that company gave its check for the same, which check was dishonored and went to protest. Thereupon plaintiff unsuccessfully undertook to collect this sum from J. R. Sutherlin & Co. and gave the defendant at its head office in New York City notice by letter of nonpayment but did not make any demand for the whole of the deposit with J. R. Sutherlin & Co. J. R. Sutherlin & Co. was not looked to further by plaintiff but no formal release of it was ever made. In response to said notice, Mr. Weichelt, defendant's general attorney for the central district, with headquarters at Chicago, went to Grant City, the home of the attorneys for plaintiff.
Mr. Edward Kelso, one of these attorneys, testified that at the time of the default of J. R. Sutherlin & Co., it owed the district about $90,000; that when Weichelt arrived the witness showed him the bond and contract and told him that under their provisions plaintiff was entitled to $90,000 and demanded of Weichelt that defendant pay this sum of money; he did not mention any interest upon the deposit. Further on in his testimony the witness stated that he did not make a formal demand for the money but stated to Weichelt that under the provisions of the bond $90,000 was due and Mr. Kelso testified that he was afraid that the company might attempt to "sidestep" their obligation. Mr. Weichelt replied to Mr. Kelso, Weichelt returned to Kansas City and afterwards Kelso made several trips to that place when Weichelt would call him up over the phone and ask him to come.
Mr. Kelso further testified that on June 15th Weichelt made a draft upon the defendant in the sum of $4,625.52 to pay the first estimate, which was honored by the defendant; this was about a week after Weichelt first appeared in Grant City. The witness further testified that about thirty days after the negotiations first started when Weichelt first came to Grant City, he and Weichelt arrived at a settlement, Mr. Kelso telling him all the time that he would not insist on the payment of the $90,000 if defendant would carry out the Sutherlin contract; that finally Weichelt called him over the phone and told him that he had word from the general office that "they had everything completed and that they would agree to carry out the contract of Sutherlin & Co if it would be satisfactory." Mr. Kelso replied that it would be, and Weichelt said, "You rest assured that it will be carried out, and you tell your supervisors that they don't need to worry anything about it." Nothing more occurred and Weichelt returned to Chicago. Plaintiff sent its estimates as they fell due to the defendant at New York, which estimates were all paid. At the expiration of six months the payments had amounted to $90,000. The second estimate was not promptly paid, so Mr. Kelso wrote to Weichelt at Chicago about the matter and Weichelt replied on a letter head of defendant that he felt assured that Mr. Magee, the general counsel at New York, would handle the matter satisfactorily; if not, the latter would probably call on Mr. Kelso for any additional information that he might want. When the final estimate came due, which covered the balance of the $90,000, plaintiff for the first time demanded payment of the interest that would have accrued under its contract with J. R. Sutherlin & Co. Defendant paid this estimate but refused to pay the interest. Mr. Kelso further testified that during these negotiations he called up Mr. Magee in New York City, defendant's general attorney, but that he did not ask him "who Mr. Weichelt was" nor did he inquire of defendant's local agent at Kansas City.
On the part of the defendant Weichelt testified that he was general attorney for the central department of the defendant with headquarters at Chicago, Ill.; that the first he knew of this bond matter was that he received a telegram from New York to go to Grant City; that his duties in such matters were "to investigate them and report findings of my investigations to the New York office, our home office." That the telegram from New York told him to go to Grant City "and see what the condition of the work was and what the bond provided and what, if anything, had been paid, and what the progress was, and investigate it and report"; that when he went to Grant City he saw one of the officers of plaintiff and Mr. Kelso, its attorney; that Mr. Kelso told the witness about the dishonor of the check and said to him that defendant ought to take it up; that the work was going on and that the estimates had to be paid and "he was very anxious that we meet them." The witness told them "that I had nothing to do with it, I was just down here to get information, and that we would investigate it, and I said, `If there is any liability on our part with the bond, why, we will meet it, but I cannot `ass on it until we have it thoroughly investigated.'" That no demand was made for the immediate payment of the $90,000, that the subject was not mentioned at that time; that Mr. Kelso was merely urging that the defendant meet the check that had been protested. The witness further testified that he returned to Kansas City and made further investigations and went to New York and came back; that "I believe we had one or two telephone conversations." Then Mr. Kelso came to Kansas City. Mr. Kelso was worried about the paying of the unpaid estimate and asked the witness to draw a draft on the defendant for the sum, which the witness did. This seems to have been before Mr. Kelso came to Kansas City.
Weichelt testified that it was understood between Kelso and himself that the draft was to be paid "conditionally or pending the conceding of liability on our part." This was about two weeks after he had first seen Mr. Kelso at Grant City and Weichelt told him, "I was still investigating it and could not do anything further about it" and told him that "when the company had indicated its attitude as to whether or not it would admit liability on the bond that he could...
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