Unity Telephone Co. v. Design Service Co.
Supreme Judicial Court of Maine · 1964-06-12 · cited 11×
This case involved a dispute over liability for damages arising from a failed construction contract for telephone dial equipment buildings, where Unity Telephone Co. contracted with Lander for construction and Design for engineering supervision, and American Surety Co. issued a performance bond for Lander. After Lander defaulted and Surety paid Unity $4,500 under an indemnity agreement, the parties litigated whether Surety could recover from Design via subrogation for Design's negligent supervision, or whether contribution principles applied instead. The court held that subrogation applied because Surety stood in Unity's shoes against Design, whose breach contributed to the damages, and that the equities favored Surety over Design, which had been paid for its risk. As a result, the court awarded Surety $4,500 from Design (with Unity receiving the stipulated remainder), sustaining appeals from both parties on the applicable legal theory. The decision rested on distinctions between joint and several liability, the substitution doctrine of subrogation, and rejection of the compensated surety defense in light of Design's fault.