Tony and Leo, Inc., Respondent, v. United States Fidelity and Guaranty Company and Carl H. Peterson Company, Defendants and Third Party Plaintiffs, Respondents; AID Insurance Services, Defendant and Third Party Plaintiff, Appellant, v. Minnehaha Terrazzo & Cement Corporation, Third Party Defendant, Respondent, 281 N.W.2d 862

Summary

An action arose from the building of a high school. A subcontractor brought an action on a performance bond. The lower court entered a judgment in favor of the subcontractor. The surety appealed contending that the lower court erred by permitting the subcontractors to recover from the surety on the bond and by refusing to permit the surety to recover indemnity from the subcontractors. On appeal, the court held that the lower court decided both issues erroneously. The court found that the record was devoid of evidence of any clear expression by the surety that it intended to release the contractor and thereby the subcontractor from its obligations under the indemnity agreement. Since evidentiary support for the surety's agreement to a novation was lacking, the court was compelled to hold that the subcontractor remained liable to the surety under the provisions of the indemnification agreement and the surety was entitled to judgment against the subcontractor.