Trident Corp. v. Reliance Ins. Co.
| Decision Date | 28 January 1986 |
| Parties | The TRIDENT CORPORATION v. RELIANCE INSURANCE COMPANY, the Simkiss Agency, Inc. Appeal of RELIANCE INSURANCE COMPANY. The TRIDENT CORPORATION, Appellant v. RELIANCE INSURANCE COMPANY and the Simkiss Agency, Inc. 712 PHILA. 1985 713 PHILA. 1985 |
| Court | Pennsylvania Superior Court |
Jon A. Baughman, Philadelphia, for Reliance, appellant in No. 712 and appellee in No. 713.
Gregory M. Harvey and Richard W. Hopkins, Philadelphia, for Trident, appellant in No. 713 and appellee in No. 712.
Before CAVANAUGH, McEWEN and CERCONE, JJ.
This is an appeal from the Order of the Court of Common Pleas of Philadelphia County denying appellant Trident Corporation's (Trident) Motion for a New Trial, denying appellee, Reliance Insurance Company (Reliance), its cross-appeal Motion for Judgment Notwithstanding the Verdict and to Conform Judgment, and granting appellee, Simkiss Agency, Inc. (Simkiss), its Motion for Judgment Notwithstanding the Verdict. The order appealed from entered judgment in favor of Trident Corporation against Reliance Insurance Company for $177,518.48.
This action was brought in contract and tort 1 by the Trident Corporation a construction company, against Reliance, an insurance and surety company, Simkiss, an insurance and bonding broker, and John A. Simkiss, Jr. 2 , the President of Simkiss Agency.
Trident's principal source of business was governmental contracts. To secure a government contract, a contractor is required to submit, with its bid, a bid bond issued by a qualified surety or insurance company. A bid bond guarantees that if the contractor is the lowest responsible bidder on a particular contract the contractor will accept the government's offer to perform in accordance with the contract. The bond provides that the surety will pay set damages in the event the contractor does not accept the offer. When Trident sought to establish a relationship with a bonding company, it engaged the services of Simkiss, the insurance and bonding broker. Simkiss sought and secured bid and performance bonds for Trident from Reliance, the insurance company.
Trident alleged that Simkiss breached its duty to use its "best efforts" to provide Trident with its bonding requirements. This claim was based on Trident's "broker of record" letter to Simkiss by which Trident gave Simkiss all of its insurance business. Trident also asserted that once Simkiss had obtained Reliance as the surety for Trident, Reliance wrongfully failed to issue a number of bid and/or performance bonds requested by Trident. Finally, Trident alleged that Simkiss and/or Reliance wrongfully rescinded a bid bond which had been issued to Trident on the Willow Grove project, allegedly causing Trident to lose the contract. The defendants denied all of these charges.
Although Trident was awarded $177,518.40, Trident raises two multi-faceted questions on appeal. The first is whether the lower court erred in determining that Trident presented insufficient evidence to allow all except one of its contractual claims to go to the jury.
The lower court disallowed Trident's claim against Simkiss on the ground that Trident never properly asserted in its complaint or amended complaint that Simkiss breached its duty to use "best efforts". We agree and, therefore, that issue is not properly before us. See Pa.R.A.P. 302.
The trial court also ruled that Trident failed to present sufficient evidence to support its claim that Reliance breached a written contract, as orally modified, by failing to issue requested bid bonds on many occasions. 3 The only evidence submitted by Trident to prove the existence of an orally modified contract was a letter written by Reliance to Trident and a subsequent conversation. The letter, as relevant, reads:
Allow this letter to serve as your bonding line of credit of $400,000.00 for a single job size and $1,800,000.00 for a total work program.
This line is contingent upon the following conditions:
1. As a whole the work in progress as revealed by quarterly work in progress schedules remains profitable.
2. All bills, except those under dispute, are paid with [sic] 30 days.
This line may be revised when the Nicetown job is much further along towards completion.
The president of Trident, Mr. Pospolyta, was dissatisfied with the $400,000.00 limit and protested it to an officer of Reliance Mr. Witnaur. Pospolyta testified that Witnaur responded, According to Pospolyta, at another meeting with Mr. Witnaur, Pospolyta wanted clarification as to whether Reliance would be responsible for jobs larger than $400,000.00. At trial Pospolyta testified, "Mr. Witnaur said that he will look into it and, you know, resolve it."
Trident claims that the letter constituted a contract, as orally modified removing the $400,000.00 limitation, which required Reliance to grant Trident bid bonds on four specific projects: the Meadow Gardens Project involving a bid of $1,064,864.00; the Widener College project involving a bid of $1,033,300.00; the Wistar II job, a contract of approximately $1,200,000.00; and the Willow Grove project, discussed more fully herein. While it is accurate to state, as appellant repeatedly asserts, that whether a written contract has been modified is a question to be decided by the jury, there must be some evidence on which the jury may base its decision. We agree with the trial court's conclusion that there was not sufficient evidence to raise a jury question on this point. In Pennsylvania, the rule is clear that an "oral contract which modifies or changes or cancels a prior written contract must be proved by evidence which is clear, precise and convincing." Pellegrene v. Luther, 403 Pa. 212, 216, 169 A.2d 298, 300 (1961); accord Hamilton Bank v. Rulnick, 327 Pa.Superior Ct. 133, 475 A.2d 134 (1984). Assuming that the previously mentioned letter did create a contract between Trident and Reliance, Pospolyta's testimony was inadequate as a matter of law to modify its terms.
Trident states its second issue as follows: "With regard to the issue that the trial court did submit to the jury, is plaintiff [Trident] entitled to judgment against both defendants [Simkiss and Reliance] where plaintiff presented evidence that each defendant breached its own contract with plaintiff thereby causing plaintiff damage and the jury's findings supported liability?"
The trial court found that Trident had produced sufficient evidence to allow one contract claim to go to the jury. That claim involved a bid bond allegedly issued to Trident, and then rescinded, for the Willow Grove job, a project of the United States Navy. The jury answered the following special interrogatories on this claim.
(1) Did Simkiss agree to and issue the bid bond in the amount of at least $1,137,939.00 to Trident in the Willow Grove job after Trident had applied for such a bond?
(2) If your answer to the foregoing interrogatory is yes, how much money, if any, did Trident lose in the Willow Grove job alone as a result of not being able to file that bid?
(3) If your answer to the first interrogatory is yes, how much money, if any, did Trident lose, over and above the profit on the Willow Grove job as the result of not being able to file that bid?
(4) Did Reliance itself, as opposed to Simkiss, approve the rescission of this bid bond on October 17, 1974?
The lower court entered judgment in favor of Trident against both defendants. It later granted Simkiss' motion for judgment n.o.v. and imposed judgment against Reliance only on the theory that Simkiss was acting as the agent for a disclosed principal (Reliance) in both the issuance and rescission of the bond. Following the Restatement (Second) of Agency (1958), § 320, the lower court held that Simkiss was not a party to the contract and, therefore, was not liable to Trident for any loss suffered by the breach of the contract.
The resolution of the issue raised by Trident depends on whether the lower court was correct in its conclusion that Simkiss was, as a matter of law, acting as an agent, with apparent or actual authority, for Reliance in both the issuance and rescission of the bond. The result we reach on this issue is also pivotal to an issue raised by Reliance in its cross-appeal. Reliance claims that Simkiss lacked the actual or apparent authority to issue or rescind the Willow Grove bid bond on behalf of Reliance and, therefore, Reliance had no liability under the contract.
We find no merit to Reliance's claims that Simkiss had no authority to issue a bid bond for the Willow Grove project. The lower court found that, as a matter of law, Simkiss had apparent authority to issue and rescind the bond and, thus, as to Trident, Reliance must be held responsible. The lower court cited section 8, Restatement, Second, of Agency, in support of its conclusion. That section reads:
Apparent authority is the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other's manifestations to such third persons.
See Sauers v. Pancoast Personnel, Inc., 294 Pa.Superior Ct. 306, 309, 439 A.2d
1214, 1215 (1982)("Apparent authority exists when the principal has led a third party into believing that the licensee was the principal's agent.") Upon review of the record, pleadings, and evidence of the course of conduct in this case, we affirm the lower court's conclusion that Simkiss had apparent authority to issue and rescind the bid bond.
Reliance and Simkiss had an agency agreement which gave Simkiss the authority to enter and rescind bond agreements, subject to certain limitations. Simkiss acted as Reliance's agent for all bonds provided to...
To continue reading
Request your trial
-
Bd. of Trs., Roofers Local No. 30 Combined Welfare Fund v. Int'l Fid. Ins. Co.
...held that a contract of suretyship is solely between the principal debtor and the surety/obligor.”); Trident Corp. v. Reliance Ins. Co., 350 Pa.Super. 142, 504 A.2d 285, 290 (1986) (“[T]he suretyship contract is formed at the time the surety's offer is accepted by the principal[.]”); First ......
-
Bolus v. United Penn Bank
...the act is legal and the third party has no notice of the limitations on the agent's authority. The Trident Corporation v. Reliance Insur. Co., 350 Pa.Super. 142, 504 A.2d 285, 289 (1986). A principal's limitation on the agent's authority in amount only that is not communicated to the third......
-
Great American Ins. Co. v. General Builders, Inc.
...10 (1983). "The surety contract is formed at the time the surety's offer is accepted by the principal." Trident Corp. v. Reliance Ins. Co., 350 Pa.Super. 142, 504 A.2d 285, 290 (1986). In Nevada, the surety's obligation to the obligee may take the form of a surety bond. See NRS 691B.020 (au......
-
Deeter v. Dull Corp., Inc.
...have held that a contract of suretyship is solely between the principal debtor and the surety/obligor. See Trident Corp. v. Reliance Ins. Co., 350 Pa.Super. 142, 504 A.2d 285 (1986); First National Bank & Trust Co. of Ford City v. Stolar, 130 Pa.Super. 480, 197 A. 499 (1938). A suretyship i......