Udick v. United States Fidelity & Guaranty Co.

• Decision Date: 23 May 1923
• Citation: 37 Idaho 181,215 P. 838
• Parties: E. W. UDICK, Respondent, v. UNITED STATES FIDELITY & GUARANTY CO., a Corporation, et al., Appellants
• Court: Idaho Supreme Court

215 P. 838

37 Idaho 181

E. W. UDICK, Respondent, v. UNITED STATES FIDELITY & GUARANTY CO., a Corporation, et al., Appellants

Supreme Court of Idaho

May 23, 1923

BONDS-DELIVERY-QUESTION FOR JURY.

1. A surety company executed a bond for the faithful performance of a building contract and on receiving the premium therefor delivered the bond to one of the contractors, who kept it in his possession without delivering it to the obligee therein named. The local agent of the surety company notified the obligee of the arrival of the bond. The evidence was conflicting as to whether the bond was delivered with instructions to the contractor to give it to the obligee. Until after default of the contractors the surety assumed that the obligee had possession of the bond. Held, sufficient to support a verdict against the surety as against a defense of nondelivery of the bond.

2. Where the evidence is conflicting as to whether a surety bond was delivered to the obligee, the question is for the jury.

APPEAL from the District Court of the Seventh Judicial District, for Canyon County. Hon. Ed. L. Bryan, Judge.

Action by E.W. Udick against Charles Getts and another and United States Fidelity & Guaranty Company to recover on building contractors' bond. From a judgment for plaintiff, the surety company appeals. Affirmed.

Affirmed.

J. T Pence, for Appellants.

Delivery is essential to the validity of bond or undertaking. (Erwin v. Crook, 17 Colo. 16, 28 P. 549; Midland v. Solomon, 71 Kan. 185, 79 P. 1077; Hall v Parker, 37 Mich. 590, 26 Am. Rep. 540;) Sneathen v. Sneathen, 104 Mo. 201, 24 Am. St. 326, 16 S.W. 497; Gilbert v. Anthony, 1 Yerg. (Tenn.) 69, 24 Am. Dec. 439; Garcia v. Satrustegui, 4 Cal. 244; Stearns on Suretyship, secs. 123, 204; Brandt on Suretyship, secs. 4, 34; People v. Van Ness, 79 Cal. 84, 12 Am. St. 134, 21 P. 554; Hydtt v. Grover, 41 Mich. 225, 1 N.W. 1037; Pingree on Suretyship, sec. 49; City of Elkins v. Elkins, 87 W.Va. 350; 105 S.E. 232; 9 C. J. 16, 18.)

Buckner & Warren and Walter Griffiths, for Respondent.

Delivery of fidelity bond to the agent is delivery to the insured or obligee. (Marysville Merc. Co. v. Home Ins. Co., 21 Idaho 377, 121 P. 1026; Prosser Power Co. v. United States Fidelity & Guaranty Co., 73 Wash. 304, 132 P. 48; Stephenson v. Allison, 165 Ala. 238, 138 Am. St. 26, and note p. 53, 51 So. 622; 1 Cooley's Insurance Briefs, p. 449; North St. Louis Planing Mill Co. v. Essex, 157 Mo.App. 18, 137 S.W. 295; Harrigan v. Home Life Ins. Co., 128 Cal. 531, 58 P. 180, 61 P. 99; 13 Dec. Dig., Insurance, 136 (2).)

The delivery of a bond may be constructive as well as manual. (9 C. J. 17, sec. 26, note 51; Fooly v. Van Tuyl, 4 N.J.L. 153; Phoenix Assur. Co. v. McArthur, 116 Ala. 659, 67 Am. St. 154, 22 So. 903; Dibble v. Northern Assur. Co., 70 Mich. 1, 14 Am. St. 470, 37 N.W. 704; 13 Dec. Dig., Insurance, 136 (2); Blackwell v. Lane, 3 Nev. 132, 32 Am. Dec. 695.)

Conditions, irregularities and defects in the execution and delivery of a bond may be waived by the surety. (Mull v. United States Fidelity & Guaranty Co., 35 Idaho 393, 206 P. 1048; Allen v. Pheoenix Assur. Co., 14 Idaho 728; McKune v. Continental Cas. Co., 28 Idaho 31, 95 P. 829; People's Fire Ins. Co. v. Goyne, 79 Ark. 315, 96 S.W. 365, 16 L. R. A., N. S., 1180 and note; Berliner v. Travelers Ins. Co., 121 Cal. 451, 53 P. 922; Campbell v. Merchants & Farmers' etc. Ins. Co., 37 N.H. 35, 72 Am. Dec. 324; Rissler v. Am. Century Ins. Co., 150 Mo. 366, 51 S.W. 755; Ohio Farmers' Ins. Co. v. Vogel, 166 Ind. 239. 117 Am. St. 382, 9 Ann. Cas. 91, 6 N.E. 977, 3 L. R. A., N. S., 966; Schultz v. Caledonian Ins. Co., 94 Wis. 42, 68 N.W. 414; Chismore v. Anchor Fire Ins. Co., 131 Iowa 180, 108 N.W. 230.)

A surety for hire cannot invoke the rule of strictissimi juris, and its rights are measured by the law applicable to insurance contracts. (American Surety Co. v. Pangburn, 182 Ind. 116, Ann. Cas. 1916E, 1126 and note, 105 N.E. 765; 21 R. C. L. 1160, 1161; Philadelphia v. Fidelity & Deposit Co., 231 Pa. 208, Ann. Cas. 1912B, 1085 and note, 80 A. 62; Empire State Surety Co. v. Lindenmeir, 54 Colo. 497, Ann. Cas. 1914C, 1189, 131 P. 437; Chicago Lbr. Co. v. Douglas, 89 Kan. 308, 131 P. 503, 44 L. R. A., N. S., 843.)

FLYNN, Commissioner. Budge, C. J., and Dunn and Wm. E. Lee, JJ., concur.

OPINION

FLYNN, Commissioner.

Getts and Gentler contracted with respondent to build a dwelling-house and agreed to furnish a bond for the faithful performance of the contract. They applied to appellant U. S. Fidelity & Guaranty Company for a bond which was issued in the sum of $ 2,000. The appellant executed the bond, respondent being named as the obligee therein, and its local agent delivered it to Getts and received from Getts the full premium therefor. Getts retained the bond in his possession without delivering it to respondent. Neither Getts nor Gentler signed the bond. The contractors defaulted and respondent was obliged to pay lien claims in more than the penal sum of the bond, for which sums so paid less the balance unpaid on the contract price he recovered judgment by default against the contractors and a judgment of $ 2,000 on the bond against appellant. The appellant stands on the nondelivery of the bond and concedes that the mere failure of the principals to sign would not exonerate it from the obligations of surety. The evidence is conflicting as to whether the appellant's local agent in delivering the bond to Getts told him to hand it to respondent. The local agent admits that he informed respondent of the arrival of the bond from the Salt Lake office of the company. Until about the time of the completion of the building respondent thought the bond was in the possession of the local agent and the agent thought it was in respondent's possession. During the course of the building operations, the appellant thought its local agent made inquiry of respondent as to the progress of the work and the probable date of its completion, the surety company sending to the agent printed blanks for such information. Respondent testified that before making the first payment under the contract he called the local agent on the telephone and asked whether the bond had been executed and was told that the bond was all right, and that he received the same information in the same way before making the second and third payments. These conversations were denied by the agent. Respondent testified that shortly after the building started Getts told him he had applied for the bond and paid for it. When the house was practically completed, Getts on demand offered to give the bond to respondent if he would go to his house and get it, but told him it would do him no good, as neither Getts nor his partner had signed it. Appellant retained the premium for seven or eight months until after the building was completed when it returned the premium to Getts' attorney, who redelivered the bond to the appellant.

The outstanding thought engendered by the record is that appellant from the time the bond was executed until the completion of the building and knowledge of the contractors' default treated the bond as an existing obligation.

Delivery is essential to the validity of a bond, but "there is no precise or set form in...