Aetna Indemnity Co. v. George A. Fuller Co.

A motion for re-argument has been filed in this case accompanied by an elaborate brief in support of the motion, and careful consideration has been given it by each of the Judges who sat in the case, without however convincing the Court of any error in the views expressed in the opinion heretofore filed.

The reasons for adherence to these views will be briefly stated.

The eleventh plea of the Aetna Indemnity Company alleged that the bond sued on "was obtained by the fraud and misrepresentation of the plaintiff," and the chief burden of complaint in the brief for re-argument relates to the action of the Court upon the issue raised by the traverse of that plea. The Indemnity Company attempted to show three alleged misrepresentations made by Witherspoon, the agent of the plaintiff, prior to the giving of the bond, to induce the Indemnity Company to become surety for it. These are thus stated in the brief for re-argument:

"(a) That the Fuller Company would finance the whole work; (b) That there would, therefore, be no financial risk to the surety; (c) That bids of three other responsible bidders had been submitted, which were within $2,000 of the contract price agreed on between the plaintiff and the principal upon the bond, the successful bidder, the Southern Construction Company."

The brief concedes that the first two representations, (``a' and ``b') having been ruled out of the case by the granting of the plaintiff's eighth prayer, by which the jury was instructed that "they were not such representations, even if made, as constitute a defence to this action," and this ruling having been sustained on appeal, that they need not be further considered.

The evidence offered and admitted, as to the bids, was as follows: Hunter, the Aetna's general agent, testified that "Witherspoon told him there were four companies who bid on this job, and their bids were within $2,000 of each other, and the Southern Construction Company was one of those bidders, or their bid was one of them." He was then asked: "How about the responsibility of the other bidders?" and the Court sustained an objection remarking that it was leading. He was then further asked: "Did Witherspoon make any statement to you as to the responsibility of the other bidders?" and an objection to this was also sustained. Hunter also testified: "I do not recall any other representation at that time."

Purnell, treasurer of the Southern Construction Company, testified: "Witherspoon told Hunter, Ward and myself that there were four bids within $2,000 of each other on the work on the Friedenwald Building, including the Southern Construction Company's." He was not asked whether any statement was made asto the responsibility of these bidders. Ward, President of the Southern Construction Company, testified: "There were several other bids than that of the Southern for the work covered by its contract. There were the Baltimore Ferro Concrete Company, theFilbert Paving Company, and several others whose names I cannotremember. These bids were received by the Fuller Company, and I had no way of seeing them, but was told by Mr. Witherspoon that the figures were lower than mine and those of my company."

This witness was not asked whether there was anyrepresentation as to the responsibility of the other bidders.

At no time until after the above testimony for defendant was given, were these alleged representations mentioned by the Aetna's counsel in Witherspoon's examination. But at the close of the testimony for defendant, Witherspoon was called in rebuttal and denied that he made any of the representations testified to by Hunter prior to the execution of the bond in suit. Purnell was recalled in surrebuttal, and said that Witherspoon did make them to Hunter in the presence of Ward and himself. If Witherspoon's denial that he made any of the representations alleged by Hunter was true, it went to the very root of the defence of fraud in procuring the bond. But even if he had made the representations so testified to, that, alone, would neither prove, nor tend to prove, fraud inducing the Aetna Company to execute the bond in suit. To constitute a defence on that ground, it was necessary to show either, (1), that no bids from other parties were received; or (2) that if such were received, they were not within $2,000 of each other; or (3) that if received, and within $2,000 of each other, that Witherspoon represented these bidders to be financially responsible, when he knew they were not, or had no knowledge whatever upon that point. There was not a particle of proof upon any one of the three matters above mentioned, nor even an offer to follow up the testimony of Hunter, Purnell and Ward as to the making by Witherspoon of the representation that such bids had been received, by proof of any one of the three matters above. If the representations they allege to have been made were not made, the defence of fraud falls to the ground, and if made, the defence equally falls, in the absence of clear proof that they were false in fact. In the absence of such proof the representations that there were such bidders had no probative force under the plea in question, and had no legal relevancy to that issue.

It must not be forgotten that these alleged representations were made to Hunter in the presence of Ward and Purnell; that Hunter said he could not say whether Witherspoon gave him the names of any other bidders, though he may have done so; nor that Ward said he named the Baltimore Ferro Concrete Company, the Filbert Paving Company and several others whose names he could not then remember. The Aetna Company could thus have informed itself, before the execution of the bond, whether the parties so named were bidders, and at what figures, and could have taken the usual and ordinary means of ascertaining their financial responsibility. Whether it did so, does not appear, but it does appear that its counsel failed to call any of these parties as witnesses to prove the charge of fraud, and this failure is deeply significant that if called they could not have sustained the charge. It must be observed also that Witherspoon nowhere was asked what other bids he received, but merely whether he made the statements testified to by Hunter, and his denial of these statements throws no light upon the question, not raised anywhere in the record, as to whether any other bids were in fact received. If he had, in rebuttal, attempted to prove that other bids were received, it is at least questionable whether he could have done so, and he was certainly not called on to deny what had not been testified to for the defendant. Hence the reference in the brief for re-argument to the case of Hiss v. Weik, 78 Md. 439, is not in point. Witherspoon could not be expected in testifying for plaintiff, either in chief or on cross-examination, to anticipate the testimony of Hunter, Purnell and Ward, nor in rebuttal to go beyond the subject-matter of rebuttal. If any unfavorable inference is to be drawn from the non-production of pertinent evidence in this case, it could be most properly drawn against the Aetna Company for its failure to call the parties whose evidence as to their bids would have been the best obtainable, and by whom, if the alleged representations were false, their falsity could have been clearly proved. What was said in the opinion heretofore filed, as to the situation if this were an action of deceit, might have been omitted without affecting in any way the correctness of the ruling on the fourth, fifth and sixth exceptions, or on the instructions. Without proof that the alleged representations were false the mere fact that they were made is without any probative force upon that issue, or any other issue in the case, and the testimony there excluded was therefore properly characterized as irrelevant to the issues.

We can perceive no conflict between the present case and the cases cited in the brief. Casualty Co. v. Gehrman,96 Md. 634; Bankers Life Ins. Co. v. Miller, 100 Md. 1; Dulaney v.Fidelity Co., 106 Md. 17; Mutual Life Ins. Co. v. Mullan,107 Md. 457, and Same v. Rain, 108 Md. 353.

In all those cases there was proof offered and admitted of the falsity of material representations relied on as inducing the contract. Here there was none offered.

Turning to the instructions commented on in the brief, being the plaintiff's first prayer and the Aetna's sixteenth prayer as modified by the Court, no ground for reversal can be found in either. Both gave the Aetna Company more than it was entitled to, because both allowed the jury to find for the defendant, the Aetna Company, if the alleged representations were untrue, when, as we have shown, there was no evidence offered of their untruth.

If the plaintiff had offered a prayer that there was no evidence legally sufficient to support the allegations of the Aetna's eleventh plea, and that their verdict therefore, upon the issues raised on that plea, should be for the plaintiff as against the Aetna Company, that issue might well have been thus disposed of.

Regarding the question of reasonable time for the Aetna to act, the record shows that on August 23rd the plaintiff, by letter, notified the Aetna Company that a bill had been filed by a Fireproofing Company against the Construction Company, alleging its insolvency and asking for a receiver. On August 24th plaintiff wrote the Aetna Company that the Southern had stopped work on the contract and that plaintiff was informed the Southern would consent to a receivership and be wound up. On August 29th plaintiff again wrote, stating a receiver had been appointed and that the Southern had answered consenting thereto and admitting its insolvency; that no reply had been received to any of these letters, and that it was imperative for the protection of the interests of the Aetna that some action be taken at once. On September 1st plaintiff again wrote, stating no reply had yet been received to any of these letters; that plaintiff assumed from this silence that the Aetna did not deem it to their advantage to perform the contract or sublet, and that in order to keep the damages down as low as possible the plaintiff would, on Tuesday, September 4th, get to work, holding them responsible on the bond. If the last letter had never been written, we are of opinion that reasonable notice had been given for the Aetna to act.

There was evidence that Monday, September 3rd, was Labor Day, but there was no evidence that there was no delivery of letters in New York either on Sunday or on Labor Day, as is assumed in the brief. To the contrary, it is common knowledge that in all cities and large towns the Postoffice is open for general delivery at certain stated hours on Sundays, and that there is one delivery by carriers on holidays. Neither is there any evidence, as is also assumed in the brief, that the Aetna's office would not be open on Labor Day for the receipt of mailmatter, or that no Sunday call would be made at the Postoffice for that purpose, and it may well be regarded as surprising that a corporation engaged in so large and hazardous a business should make no such provision, especially in view of the repeated warnings from plaintiff in the letters of August 23rd, 24th and 29th of the necessity of prompt action for the protection of their own interests as sureties on the bond.

In conclusion, we are of opinion that no injustice has been done in the disposition of this case and that a re-argument was properly denied.