General Ins. Co. of America v. Singleton

Opinion

BRAY, J.

*

Defendants and appellants Larry Singleton and Vonda Singleton appeal from the orders of the Alameda County Superior Court hereinafter described.

Question Presented

A prior judicial determination that plaintiff was liable to Colwell Company was not required before the court could order settlement with it from receivership assets.

[441]

Record

This action arose out of the construction of a high-rise building in Oakland. Plaintiff and respondent General Insurance Company of America filed a complaint for Specific performance, for declaratory relief and for damages for breach of a written agreement of indemnity against appellants Singleton, defendant Merritt Building & Construction Company and others. Certain pleadings were filed by the defendants including a cross-complaint by defendants Fred L. Brown and Geneva Brown. Inasmuch as this appeal is concerned only with the issues between respondent and appellants, it is unnecessary to consider the issues as to the defendants other than appellants. After a trial the court made the orders hereinafter set forth from which appellants have appealed.

Facts

In 1965 defendants entered into a contract with T. H. Guy Company as owner, to construct a certain building. Plaintiff became the surety for defendants in connection with the construction project, executing a surety bond, naming Merritt Building & Construction Company and Singleton Corporation as principal, and both the owner and lender as obligees.

As inducement for plaintiff’s execution of the surety bond, appellants who were stockholders, officers and directors of Singleton Company, one of the joint venturers of the contractor, together with the contractor and the other defendants, executed a written agreement to indemnify plaintiff for any loss under the surety bond. During the course of and following completion of the construction project, various disputes and controversies arose between the contractor, the owner, the lender and numerous unpaid materialmen and subcontractors, resulting in various lawsuits filed by such parties against both the contractor and plaintiff surety. The contractor became insolvent and a judgment in the sum of $205,841.46 was entered in one of the actions against the contractor and plaintiff. Plaintiff thereupon made demand upon appellants and the other signers of the indemnity agreement, for deposit of collateral security to protect it against loss under the bond, pursuant to the provisions of the indemnity agreement. As of that time plaintiff had a contingent exposure of loss under the bond in connection with eight separate claims in the aggregate amount of $1,104,-366.23, each of which was the subject of one or more pending lawsuits under the bond, filed by claimants against plaintiff.