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New York Indemnity Co. v. May

Supreme Court of Arizona

January 26, 1931

THE NEW YORK INDEMNITY COMPANY, Appellant,
v.
N. D. MAY and CALANTHA MAY, His Wife, Appellees

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment affirmed.

Messrs. Moore, Elliott & Shimmel, for Appellant.

Messrs. Holzworth, McNabb & Phillips, for Appellees.

OPINION

[37 Ariz. 463] LOCKWOOD, J.

N. D. May and Calantha May, his wife, hereinafter called plaintiffs, brought suit against New York Indemnity Company, a corporation, hereinafter called defendant, and Guaranty Building & Finance Company, hereinafter called the [37 Ariz. 464] contractor, on an obligation guaranteeing

Page 315

the performance of a certain written contract of the latter. The case was tried to a jury, and separate verdicts rendered in favor of plaintiffs against defendant and the contractor in the sum of $12,000 each, and, from the judgment rendered on the former verdict and the order denying defendant's motion for a new trial, the latter has taken this appeal.

Taking the evidence in the strongest manner in favor of plaintiffs, as we must do under the verdict of the jury, the facts essential to a determination of this case may be stated as follows:

On December 31st, 1928, plaintiffs entered into a certain building contract with the contractor for the construction of a store building and some bungalows. This contract was not signed, however, until on or about January 4th, 1929, and at that time the contractor furnished an indemnity bond with one J. L. Walker as surety in the sum of $5,000, conditioned in the usual form for the faithful performance of the contract. At the same time plaintiffs and the contractor entered into a written agreement to the effect that Walker would be released from his bond if the contractor within ten days secured another surety on the bond satisfactory to plaintiffs.

The building contract actually executed provided a contract price of $14,200, payable in advance, $3,500 of which was to be paid by the transfer of certain negotiable securities owned by May, and $11,700 by the execution of a mortgage upon the property upon which the buildings were to be constructed. Out of this $14,200 the contractor was to pay $1,200 balance due from May upon the lots, and the same amount for furniture to be placed in such buildings; the balance being compensation for the erection of the buildings themselves. These securities were delivered to the contractor on the 4th of January, and thereafter sold and assigned by it to one Wyn Wylie.

[37 Ariz. 465] Shortly after the execution of the contract, the contractor applied to defendant herein for a surety bond, to be used to replace the Walker bond. The application was for a $5,000 bond upon a $10,700 contract, an alleged copy of the contract being submitted with the application, dated January 4th, and purporting to be signed in script by plaintiffs and the contractor. The provisions in regard to the payments to be made, however, were entirely different from those set up in the contract actually executed by plaintiffs and the contractor, and the alleged contract contained no reference to the amount to be paid on the lots or for furniture.

Plaintiffs had no connection whatever with the application for the bond, nor did they know anything about the change in form of the contract submitted. It appears from the evidence that the contractor had a new form of contract drawn and the May's names signed thereto by someone, and delivered it to defendant, alleging that it was the true one. After some investigation defendant executed a typewritten document which we quote in full as follows:

"Bond New York Indemnity Company.

"Know all men by these presents:

"That we, Guaranty Building and Finance Company, of the County of Maricopa, State of Arizona, as principals and New York Indemnity Company as surety, are held and firmly bound unto N. D. May and Calantha May, or their assigns, for which payment, well and truly to be made, we bind ourselves, our heirs, ...


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