United States Fidelity & Guaranty Co. v. Parsons

• Decision Date: 27 May 1929
• Docket Number: 27329
• Citation: 122 So. 544,154 Miss. 587
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. PARSONS et al
• Court: Mississippi Supreme Court

122 So. 544

154 Miss. 587

UNITED STATES FIDELITY & GUARANTY CO. v. PARSONS et al

No. 27329

Supreme Court of Mississippi

May 27, 1929

(Division A.)

1 CONTRACTS. Court, in construing contracts, must, if possible ascertain and give effect to mutual intention of parties.

Court in construction of contracts, must, if possible, ascertain and give effect to mutual intention of parties, so far as that may be done without contravention of legal principles.

2 INSURANCE. Owner's failure to consider subsequent replacement cost was not breach of contract requiring her to carry fire insurance during construction of building.

Owner of building carrying insurance thereon during course of construction under contract in a sum largely in excess of total cost to her of building did not breach contract requiring her to carry fire insurance because of failure to consider estimated value that might be determined some time afterwards from an estimate of what it would then cost to replace building that had been destroyed.

3. MECHANICS' LIENS. Principal and surety were estopped to deny that bond executed in favor of owner's husband pursuant to contractor's application was result of mutual mistake.

Where contractor at time applying for bond knew owner of lot on which house was to be constructed, and, in answer to interrogatory as to name of beneficiary, gave the name of owner's husband either as result of negligence or fraud the principal and surety were both estopped to deny that bond was executed in his favor as a result of mutual mistake or that it was mutual intention of parties that bond should guarantee performance of contract with wife.

4. REFORMATION OF INSTRUMENTS. Failure to discover mistake in contractor's bond executed in favor of agent for owner did not bar right to reform instrument.

Failure of agent of real beneficiary in bond executed by contractor constructing building to read bond and discover that agent was named as beneficiary therein rather than owner held not to bar right to reform bond on ground of mutual mistake, in view of evidence failing to establish gross negligence conclusively estopping parties from asserting right to reform.

5. MECHANICS' LIENS. Interest on sums due laborers and materialmen by contractor follows as necessary incident thereto (Hemingway's Code 1927, section 2223).

Interest on sums due laborers and materialmen by contractor follows as a necessary incident thereto under Laws 1912, chapter 229 (Hemingway's Code 1927, section 2223), though bond guaranteeing performance of contract does not expressly provide therefor.

6. MECHANICS' LIENS. Letter written by materialman to agent for owner before materials were furnished held wholly ineffective as statutory notice (Laws 1918, chapter 128, section 1).

Letter from materialman to agent for owner requesting him to withhold money to pay for materials written before any materials had been furnished contractor held wholly ineffective as a notice under Laws 1918, chapter 128, section 1, so as to create liability of owner for material furnished.

7. FRAUDS, STATUTE OF. Alleged oral promise of owner's agent to answer for debt of contractor cannot be made basis for liability against agent or owner.

Alleged oral promise of agent for owner of property to answer for debt or default of contractor cannot be made the basis of any liability as against agent personally or against owner by reason of the agency, for the reason that it is within the statute of frauds.

Division A

APPEAL from chancery court of Warren county.

HON. J. L. WILLIAMS, Chancellor.

Suit by Mrs. Edna Earl Parsons against United States Fidelity & Guaranty Company, Cambre Bros., and others, wherein defendant last named filed a cross-bill. From the decree, defendant first named appeals, and plaintiff cross-appeals. Affirmed on direct appeal, and reversed in part on cross-appeal, otherwise affirmed.

Affirmed in part; reversed in part.

R. L. McLaurin and Chaney & Culkin, all of Vicksburg, for appellant.

To authorize the reformation of a contract which has been reduced to writing and signed, the proof must be clear, exact, and satisfactory--first, that the writing does not truly express the intention of the parties--that on which their two minds had agreed; and, second, what it was the parties had intended the writing should express.

Guilmartin v. Urquhart, 82 Ala. 571, 1 So. 897; Kelly v. Spencer. 105 So. 802; White v. Henderson-Boyd Co., 165 Ala. 218, 51 So. 764; Hammer v. Lange, 174 Ala. 337, 56 So. 573; Clark v. Hart, 57 Ala. 390, 394; Watson v. Owen, 107 So. 865, 142 Miss. 676; Carheart v. Aldridge, 109 So. 700, 144 Miss. 178; Abraham v. Glass, 115 So. 789; Rogers v. Clayton, 115 So. 106; Progressive Bank v. McGehee et al., 107 So. 876; Lauderdale v. Hallock, 7 S. & M. 629; Jones v. Jones, 41 So. 373; 88 Miss. 874; St. P. F. & M. Ins. Co. v. McQuaid, 75 So. 255, 114 Miss. 430.

A party who accepts a written contract is presumed to know and is bound by its provisions.

Jordan v. Albritton, 111 So. 591, 146 Miss. 651; Elliott on Contracts, sec. 2377; Graham v. Berryman & Wife, 19 N. J. 29; Bainfield v. Bainfield, 24 Ore. 571; Germania Life Insurance Co. v. Bouldin, 56 So. 609; New York Life Ins. Co. v. O'Dom, 56 So. 379; Hartford Fire Ins. Co. v. McCain, 141 Miss. 394; Coombs v. Wilson, 107 So. 874, 142 Miss. 508.

Except as created by statute interest does not exist.

Jackson v. Whitfield, 51 Miss. 205; Hamer v. Kirkwood, 25 Miss. 95; Howcott v. Collins, 23 id. 398; Houston v. Crutcher, 31 id. 51; Work v. Glaskins, 33 id., 539; 17 Corpus Juris, page 811, sec. 136; Corpus Juris, page 815, sec. 137; Corpus Juris, pages 813 and 814; Mason v. Callender, 2 Minn. 350-363, 72 Am. Dec. 102; Dresser v. Bates, 250 F. Rep. 553.

Where there are several employees in an agency and if one of them had knowledge of certain conditions which might impute knowledge to the principal, this would not be sufficient to bind the company where it appears that another agent took the application and attended to all the details.

3 Cooley's Briefs on Insurance, page 2524; Queen Insurance Co. v. May (Texas), 35 S.W. 829; Insurance Co. v. Ende, 65 Tex. 123; Loan Agency v. Taylor, 88 Tex. 49, 29 S.W. 1057.

Wm. I. McKay, of Vicksburg, for appellees.

Where a building contract provided that the owner should carry fire insurance, the court must, in construing such contract, if possible, ascertain and give effect to the mutual intention of the parties.

13 C. J., pp. 521 and 523; 13 C. J. 542-544:

Where contractor at time applying for bond knew owner of lot on which house was to be constructed, and, in answer to interrogatory as to name of beneficiary, gave the name of owner's husband either as result of negligence or fraud, the principal and surety were both estopped to deny that bond was executed in his favor as a result of mutual mistake or that it was mutual intention of parties that bond should guarantee performance of contract with wife. Knowledge of the agent is knowledge of principal.

Big Creek Drug Co. v. Ins. Co., 115 Miss. 333, 76 So. 548; Stewart v. Coleman & Co., 81 So. 653; Aetna Ins. Co. v. Smith, 78 So. 289; Ins. Co. v. Anderson, 82 So. 146; Ins. Co. v. Stevens, 93 Miss. 439.

To enable a surety to avoid his contract by reason of fraudulent or false statements, it is essential that the obligee be connected therewith. 32 Cyc. 64. "Fraud practiced by the principal alone upon the surety will not affect the liability of the latter."

32 Cyc. 64-65; Graves v. Tucker, 10 Sm. & M. 9; Robb v. Halsey, 11 Sm. & M. 140; Dun v. Smith, 12 S. & M. 603; Clopton v. Elkin, 49 Miss. 104; State v. Allen, 69 Miss. 525; Pearl v. Cortright, 81 Miss. 300; Point Pleasant v. Greenlee & Harden, 129 Am. S. R. 971; United States v. Hodson, 10 Wall. 395, 19 L.Ed. 937; Daniels v. Tearney, 102 U.S. 415, 26 L.Ed. 187; Herman on Estoppel. P. 443; Montgomery v. Dillingham, 3 Sm. & M. 647; Dillingham v. Jenkins, 7 Sm. & M. 479; Atkinson v. Foxworth, 53 Miss. 749; 23 R. C. L., p. 343, 21 Ann. Cas. 271; 21 C. J., p. 1211; Herman on Estoppel, p. 473; 21 Cyc. 1598; 31 Cyc. 1244; 36 Miss. 389.

Where an agent makes a mistake, such mistake is not negligence of the principal, estopping him from having the contract reformed.

McCain v. Columbia Finance, etc. Co., 97 S.W. 343.

Whether the deviation from the agreement was intentional or not equity has the right to correct.

23 R. C. L., p. 338; 23 R. C. L. 329; 20 Am. & Eng. Ency. of Law (2 Ed.), page 823.

The mere failure to read a contract or to have it read is not necessarily such negligence as will bar relief therefrom on the ground of mistake.

11 Ann Cas. 1162; citing Taylor v. Godfrey, 62 W.Va. 667, 59 S.E. R. 634; Lloyd v. Hulick, 69 N.J.Eq. 784, 63 A. R. 616; Pyne v. Knight, 130 Ia. 113, 106 N.W. R. 505; Nichols, etc., Co. v. Berning, 37 Ind.App. 109, 76 N.E. R. 776; 23 R. C. L., pp. 351-352; 28 L. R. A (N. S.) 885; 34 Cyc. 949 and 950; Kelley v. Ward, 60 S.W. R. (Tex.) 311; Pom., Eq. Jur., sec. 845; Institution v. Burdick, 87 N.Y. 40; Kilmer v. Smith, 77 N.Y. 226; Silbar v. Ryder, 63 Wis. 106, 23 N.W. 106; Mfg. Co. v. Langworthy, 18 Wis. 444; Gammage v. Moore, 42 Tex. 171; Canedy v. Marcy, 13 Gray 373; Harrell v. DeNormandie, 26 Tex. 121; Farley v. Deslonde, 69 Tex. 461, 6 S.W. 786; Aetna Indemnity Co. v. Ry. Co., 136 Am. S. R. 389; Aetna v. Brannon, 2 L. R. A (N. S.) 548, 9 Am. S. R. 450; Brimm v. McGee, 119 Miss 52; 2 Pom. Eq. Jur., secs. 852-870; Ins. Co. v. Hoffheimer, 46 Miss. 645; Simmons v. North, 3 Sm. & M. 71; Cummings v. Steele, 54 Miss. 647; Summers v. Alexander, 120 P. (Okla.), 601; Mutual L. Ins. Co. v. Hargus, 99 S.W. R. 580; McMaster v. N.Y. L. Ins. Co., 183 U.S. 25, 46 L.Ed. 64, 22 S.Ct. R. 10; 183 U.S. 25, 46 L.Ed. 64, 22 S.Ct. 10: ...