United States Fid. & Guar. Co. v. Elliott

• Decision Date: 09 May 1919
• Docket Number: No. 9837.,9837.
• Court: Indiana Appellate Court
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. ELLIOTT et al.

70 Ind.App. 130

123 N.E. 178

UNITED STATES FIDELITY & GUARANTY CO.

v.ELLIOTT et al.

No. 9837.

Appellate Court of Indiana, Division No. 2.

May 9, 1919.

Appeal from Circuit Court, Henry County; Fred C. Gause, Judge.

Action by the school towns of Middletown and Fall Creek Township against Howard C. Elliott, the United States Fidelity & Guaranty Company, and others for an accounting. Judgment for plaintiffs, and defendant Guaranty Company alone appeals. Affirmed.

Pickens, Moores, Davidson & Pickens, of Indianapolis, and Barnard & Brown, of New Castle, for appellant.

Forkner & Forkner, of New Castle, for appellees.

NICHOLS, J.

The appellees, the school towns of Middletown and of Fall Creek township, in Henry county, entered into a contract with the appellee Howard C. Elliott for the construction of a joint high school building. The appellant became surety on the contractor's bond to save the school corporations from any loss resulting from the breach by the contractor of the terms and conditions of the contract.

The contract provided that the work should be done under the direction of the architect employed by the school corporations that payment should be made “only upon certificate of the architect,” and that the school corporations should pay 85 per cent. of the value of the labor and materials monthly as the work progressed, and the balance within 30 days after the completion of the building. The contractor failed to carry out his contract, and left the work unfinished. In order to avoid a reletting of the contract, the appellant, with Elliott and the school corporations, entered into a written agreement as follows:

“For the consideration hereinafter named, the within Howard C. Elliott assigns and transfers all his rights and interests in the contract to the United States Fidelity & Guaranty Company of Baltimore, Md., and said company, in consideration of said assignment, assumes said contract, and, without waiving any claims it may have against said Elliott, agrees to perform the said contract in all particulars, and agrees to protect the school town of Middletown and the trustee of Fall Creek school township, Henry county, Ind., from material and labor claims now unpaid, and such as shall accrue in the course of the construction and completion of said building, and from all liability thereon. And in consideration of the foregoing assignment and agreements the said school town and school township agree to permit the said guaranty company to complete the same and pay the balance of the contract price, under this contract, as it shall become due under proper estimates of the architect; the building to be completed by August 1, 1915. Dated at Middletown, Indiana, January 18, 1915.”

This action was commenced by said school corporations against the appellee Elliott and 17 others, including the appellant, for an accounting among the parties, for an adjudication of claims asserted by certain appellees, who were materialmen, subcontractors, and laborers, against the funds held by the plaintiffs to pay for the erection of said building and to determine a controversy between the plaintiffs and appellant as surety of said Elliott growing out of the payment by plaintiffs out of funds claimed by appellant of $2,000 to the Citizens' State Bank, a creditor of Elliott. This payment to the bank is the only question involved in this appeal. The appellant claims that this payment was not authorized by the contract and bond or justified by law.

The appellant, after taking over the work, completed the building to the satisfaction of the architect, and the school corporations thereupon accepted it. The complaint, after setting out the above facts, further alleged that the entire cost of the building was $45,841, that the plaintiffs before suit had paid $35,322 on partial estimates upon claims for labor, material, and to the contractor and upon orders and assignments given by him, and that plaintiffs were ready and willing to pay to the parties entitled thereto, upon proper adjudication, any other additional sum that might be found or decreed by the court upon a final hearing. Then followed a schedule of claims remaining unsettled, aggregating $8,359.38, about which there was no controversy, and which were all paid before this appeal was taken.

The plaintiffs, on motion of appellant, filed a bill of particulars which showed payments on architect's certificates numbered 1 to 9 aggregating $33,212.29, and also a payment on an “assignment to Citizens' State Bank of Newcastle, Ind., dated October 14, 1914, for $2,000.”

Appellant filed an answer the material part of which alleged that the said payment of $2,000 to the bank...