U.S. Fid. & Guar. Co. v. Iowa Tel. Co.

• Citation: 156 N.W. 727,174 Iowa 476
• Decision Date: 07 March 1916
• Docket Number: No. 30608.,30608.
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. IOWA TELEPHONE CO. ET AL.
• Court: United States State Supreme Court of Iowa

174 Iowa 476

156 N.W. 727

UNITED STATES FIDELITY & GUARANTY CO.

v.IOWA TELEPHONE CO. ET AL.

No. 30608.

Supreme Court of Iowa.

March 7, 1916.

Appeal from District Court, Wapello County; D. M. Anderson, Judge.

Action at law to recover premiums alleged to be due the plaintiff as surety upon a certain bond given by the Telephone Company to the city of Ottumwa. There was a judgment for plaintiff, and the Telephone Company appeals. The material facts are stated in the opinion. Reversed and remanded.Parker, Parrish & Miller, of Des Moines, and McNett & McNett, of Ottumwa, for appellant.

Tisdale & Heindel, of Ottumwa, for appellee Fidelity & Guaranty Co.

M. C. Gilmore, of Ottumwa, for appellee City.

WEAVER, J.

The facts in this case are not in dispute. In the year 1903 the city of Ottumwa, by its mayor and council, adopted an ordinance designated in the record as Ordinance No. 633, regulating the use of its streets by telephone companies, and requiring telephone wires to be laid underground. Among other things it was therein provided that before the laying of such wires should be begun the company should make application to the council so to do, accompanied by plans and specifications of the proposed improvement, and that upon approval of the application by the council the city engineer should issue the necessary permit. It also provided as follows:

“Sec. 5. In the location, construction or repair of any conduits, manhole, underground connection or distributing pole or excavation shall be necessarily made, placed or continued, and any excavation or obstruction made or placed in any street, alley or public highway at any time or for any purpose by any such person, firm or corporation, shall be properly guarded and any pavement, at any time or for any purpose whatever taken up or displaced by any such person, firm or corporation shall be properly and speedily replaced and put in proper order by it under the supervision of the city engineer; and the person, firm or corporation owning or using the same shall pay all damages for injuries to the person or property of any person, firm or corporation as well as to the city of Ottumwa, resulting from, occasioned by, or growing out of negligence or improper construction in the laying, constructing or repairing of such conduits, manholes, underground connections and distributing poles or the maintenance and use of same, and shall fully indemnify and save harmless the city of Ottumwa from and against all claims, actions or suits at law, or in equity, of any kind or nature, for damages to persons or property, resulting from, occasioned by, or growing out of the construction, erection and maintenance of such conduits, poles, underground connections, manholes and wires, or the negligence or omission of said company, its servants, agents, or employés, to properly guard any excavation or obstruction at any time or for any purpose whatsoever made, placed or caused in any street, alley or public highway, or for the omission to properly and speedily replace and repave any opening or to keep such pavement in proper repair so far as said repair may be made necessary by the interference with said pavement caused by the location, construction, use or repair of such conduits, poles, wires, underground connections and manholes. If any such person, firm or corporation shall fail to repair any street or alley damaged by excavations made by it after five days' notice so to do, made in writing to its local office in said city, then the city shall make such repairs at the expense of such person, firm or corporation and before commencing any work under a permit issued by the city engineer under the provisions of section 3 hereof, such person, firm or corporation shall file with the city council a bond in such sum, not exceeding five thousand dollars, as such city council may fix, with a surety company authorized to do business in the state of Iowa, as surety, or with not less than two personal sureties, to be approved by the city council, conditioned that such company will restore, as required by this ordinance, the streets, alleys and public places to be excavated under such permit, and pay all damages occasioned by the construction of such work.”

In May, 1904, the Iowa Telephone Company, owning a telephone system in the city, made written application for a permit under the terms of Ordinance No. 633 accompanied by the required plans and specifications. The application was approved in a resolution reading as follows:

“Resolution.

Be it resolved by the city council of the city of Ottumwa, Iowa, that the map and specifications of the proposed underground conduit system to be constructed as a part of the general telephone system in Ottumwa, Iowa, of the Iowa Telephone Company in pursuance of Ordinance No. 633, be and the same is approved and said company authorized to proceed with said improvements as shown therein, and the city engineer is authorized and directed to issue the necessary permit therefor in compliance with said ordinance upon its executing to the city a bond in the sum of five thousand ($5,000) dollars conditioned as in said ordinance provided and upon the approval thereof by the mayor.”

Thereupon the telephone company for the purpose of complying with the requirements of the city and to perfect its right to enter upon the work of laying the telephone wires as provided in the ordinance, made application to the United States Fidelity & Guaranty Company, plaintiff herein, to become surety upon its bond to the city, and stating that the bond was to be given as indemnity against damage that the telephone company “may cause through the placing of an underground conduit system for their telephones.” Attached to the application was a copy of the proposed bond identical in its language with the bond thereafter executed and upon which this action is based. The application also contained the following clause:

“And in consideration of the United States Fidelity & Guaranty Company consenting or agreeing to execute or guarantee the bond herein applied for, we do hereby covenant, promise and agree to pay the following premium or fees agreed upon, to wit: Fifty and no/100 dollars per annum, and at the termination of the case to furnish said company with satisfactory and conclusive evidence that there is no further liability on said bond, and to indemnify and keep indemnified, the said company from and against any loss, cost, charges, suits, damages, counsel fees and expenses of whatever kind or nature which said company shall or may for any cause at any time, sustain, or incur, or be put to, for or by reason or in consequence of said company having entered into or executed said bond.”

This application having been accepted by the plaintiff the bond was executed and upon presentation thereof to the city council was duly approved. The bond is entitled, “Bond to Comply with Ordinance No. 633,” and is in the following words:

“Know all men by these presents, that we, the Iowa Telephone as principal and the United States Fidelity & Guaranty Company of Baltimore, Md., as surety, are held and firmly bound unto the city of Ottumwa, Iowa, in the penal sum of five thousand ($5,000) dollars well and truly to be paid at Ottumwa, Iowa, we bind ourselves, our heirs, executors, administrators and assigns by these presents.

The condition of this obligation is such, that whereas, the said Iowa Telephone Company is about to place part of its lines underground in the city of Ottumwa, Iowa, in pursuance of Ordinance No. 633 in relation thereto under the direction of the city engineer and by permission of said city council which has fixed the bond required by said company under the provisions of said ordinance, at five thousand ($5,000) dollars:

Now, if the said Iowa Telephone Company shall and will in all respects comply strictly with the provisions of said Ordinance No. 633 in the laying of its wires, conduits, erection of its poles, and other appliances, and shall and will restore the street and alleys of said city as required by said ordinance, as well as all other public places that may be excavated in the conduct of said work and shall pay all damages that the city may sustain by reason of any neglect either in the construction of said improvement or in the maintenance thereof thereafter, and shall in all other respects fully and completely comply with said ordinance, then this bond to be void, otherwise to be and remain in full force and effect.”

The bond having been accepted the telephone company entered upon the work of laying its wires under the streets, and completed the same on or about November 15, 1905, since which time it has continued to use and maintain said underground system of conduits and wires substantially as originally constructed. About the time the work was begun the company paid to the plaintiff the agreed premium of $50 on the bond for the period of one year ending August 15, 1905, but has paid no further premium thereon since that date. No claim has ever been made or is now made by the city that the work was not properly done, or that the city has sustained any injury or damage by reason of any default on the part of the company in the performance of its duty in that respect, or in the maintenance or repair of its said system in and under the city streets.

This action was begun by the surety company in 1907 to recover from the telephone company the unpaid premiums alleged to have accrued upon the bond, and from time to time since that date it has filed supplemental petitions increasing its demand to cover other yearly premiums alleged to have become due pending the very leisurely progress of this litigation. The petition as amended states an ordinary cause of action at law for the recovery of unpaid premiums on the bond, together with a brief history of the facts in connection with its execution. In July, 1914, only seven years after the filing of the petition the defendant...