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Trinity Universal Insurance Co. v. Gould

United States Court of Appeals for the Tenth Circuit
258 F.2d 883 (1958)


Facts

Abney contracted to build a $25,000 house for Gould (plaintiff). Trinity Universal Insurance Company (Trinity) (defendant) stood surety to guarantee Abney’s performance of the contract. The surety bond stipulated that Trinity needed to approve any change in the building plans that increased construction costs by more than 10 percent. The bond also stipulated when the work was to be completed, the method for paying for materials and labor, and other details. As the work proceeded, it deviated from these stipulations in several ways. For example, even after Abney walked off the job five months after missing the scheduled end date, at which point the house was only two-thirds complete, Gould urged him to keep working. The 67 changes that Abney and Gould made to the plans upped the house’s cost by over $38,000. Gould kept Trinity’s local agent apprised of these changes, and the agent passed the news to his superiors, although without discussing costs. The superiors simply told the agent to “go ahead” and “do the best” he could. After another builder completed the construction, Gould tried to recover the $38,000 from Trinity. When Trinity refused to pay, citing the bond’s excess-cost stipulation, Gould sued the surety. The trial court entered judgment for Gould. Trinity appealed the judgment to the Tenth Circuit.

Rule of Law

Issue

Holding and Reasoning (Murrah, J.)

Dissent (Lewis, J.)

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