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Show Monday, May 26, 1958 Fife THE DAILY RECORD 3 yA Supreme Court Opinions i the loan proceeds for disbursement to Felt, or to the contractor Cassady, or others as the latter directed, as Prudential Federal Sa vinca A Loan Association, a corporation. they became entitled to the proPlaintiff and Respondent, ceeds. After buyers had been v. found and the above-statepreHartford Accident A Indemnity requisites had been complied with, including also the procureCompany, a corporation, Defendant and Appellant, ment of a title insurance policy and the execution and recordaFelt Syndicate, Inc. tion Plaintiff and Appellant, of a mortgage in its favor, v. Prudential was to release money Hartford Accident A Indemnity on the homes at certain stages of construction. The funds were to Company, a corporation. Defendant and Appellant, be disbursed through Associated No. 8719 Accountants, who had the duty to get lien waivers from subconNo. 8736 tractors, laborers and materialmen. CROCKETT, Justice: Inasmuch as Prudential Savings Hartford. Accident & Indemnity did not desire to hold these 4 Company seeks reversal of judgcent mortgages for their life ments wherein it was held liable per in amounts aggregating in excess of 25 years because both the rate of 390,000 on a performance bond of interest and of repayment was it wrote upon Cassady Co. Inc., too slow and they required their in connection with the latters capital to be more active, the undertaking to construct homes in arrangement was that a larger a residential subdivision known financial institution, Prudential as Morningside Heights in Salt Insurance Company of America, Lake County on which the plain- would, upon the completion of the tiff, Felt Syndicate, Inc., was en- project and the government aptrepreneur and promoter, and the proval and insurance of' loans, the entire 100 mortgages plaintiff, Prudential Federal Sav- purchase from Prudential Savings. ings & Loan Association, was the Cassady began to construct the financer. The cases were consolidated for trial and are so treated homes, using mass production methods in what he called a on this appeal. The principal basis of Hart- "straight line assembly system. fords attack upon the judgments It was his obligation to complete is that the plaintiffs themselves the entire project within six were guilty of breaches of their months. Soon after operations contractual duties, which pre- commenced the project ran into vented its principal, Cassady, difficulties largely because this from preforming his obligations "straight line system did not acthereunder. Inasmuch as the trial commodate itself to the sales procourt found in favor of the plain- gram, either in sequence of contiffs, they are entitled to have us struction or in amount. Buyers, review the evidence and every quite naturally, did not select reasonable inference fairly to be homes just in the order they were drawn therefrom in the light most being built. The result was that homes nearly completed often favorable to them. (1) The difficulties with which we wanted for purchasers, while are 'here concerned had their others already sold, but further the line were beorigin in the failure of the plan down the production buyers' demands to have to develop and build the Morn- hind on them. Cassady indone work ingside Heights Subdivision, above referred to, to work out as sisted that he would not move his the parties expected. Felt Syndi- construction equipment and to work cate, Inc. initiated the enterprise. terial around the project in the order in on the houses It acquired a tract of land and had it platted. The plan was to which they were sold, and that construct 100 homes to be val- the only way he could keep withcosts and meet ued at approximately $10,000 in his construction was by the time schedule his each, a total of $1,000,000, and line production methsell them to veterans who were "straight Prudential meanwhile Savings eligible for government insurance od; authneither had it insisted that Federal on their loans under the Servicemans Readjustment Act of ority nor duty under itsonagreeany 9144. Felt arranged with Pruden- ment to disburse funds the until house buyer tial Federal Savings for financing particular a mortof the homes. After inquiry and had been signed up and in favor. was recorded its investigation of several contrac- gage tors Felt selected Cassady ComCassadys funds gradually bepany, Inc. to construct the homes came tied up in hoires upon which upon terms satisfactory to the he could not receive loan parties. It is of significance that on page 4) it was known that Cassady lacked any extensive financing, and that partly because of that fact, he was required to furnish a performance bond to protect the interests of Felt and Prudential Savings (and also Pacific Coast Title Company whose rights are dealt with in Pacific Coast Title Utah Company v. Hartford, ported concurrently herewith). After some negotiations as to the form of such bond and the terms upon which Hartford would write it, a bond of $763,000 guaranteeing Cassadys performance was executed. Further details of the plan were: that Veterans Administra421 St, tion approval of the plans would be procurred; that Felt would be responsible for selling the homes; that after the buyer had been approved, he would make a suitable down payment and take title from Felt; a policy of title insurance would be procured from Pacific Coast Title Company; thereupon the buyer would execute a note and mortgage, bearing 4 per cent interest, to Prudential Savings, and would also execute to it writ IN THE SUPREME COURT OF THE STATE OF UTAH ten authority to retain d o ODD pro-(Continu- ed SUBSCRIBE NOW Daily taord r Church o . U EM 4-36- 49 |