Jimco, Inc. v. Gentilly Terrace Apartments, Inc.Jimco, Inc. v. Gentilly Terrace Apartments, Inc.
Franklin, Moore, Beychok & Cooper, Sheldon D. Beychok, New Orleans, for Peerless Insurance Co., defendant-appellee.
CHASEZ, Judge.
This is a suit arising under the Private Works Act. There was a contract entered into between Gentilly Terrace Apartments, Inc., as owner, and Vincent A. Miceli, Sr., as contractor, for the construction of a building on property owned by Gentilly Terrace Apartments, Inc. The contract was bonded and the sureties were Marquette Casualty Company and Peerless Insurance Company. Plaintiff, Jimco, Inc., was a furnisher of material used in the
Jimco, Inc. originally sued the owner, Gentilly Terrace Apartments, Inc., and the two sureties, Marquette Casualty Company and Peerless Insurance Company, in the amount of $5,182.72 for payment of the materials furnished. The contractor was not joined as a defendant due to the fact that he had been placed in bankruptcy.
There were two bonds furnished in connection with this contract. Marquette Casualty Company executed a bond which guaranteed payment of all liens or privileges timely recorded. The bond furnished by Peerless Insurance Company was a performance bond only. There was no provision in the Peerless bond to protect laborers and material furnishers; in fact, the bond specifically excluded them as follows:
“This bond is executed and accepted upon the following express conditions precedent:
* * * * * *
“7. It is understood and agreed that this bond obligation does not cover the payment of labor and material bills in connection with this contract.”
Marquette Casualty Company who furnished the bond guaranteeing liens became insolvent and plaintiff, Jimco, Inc., attempted to recover from Peerless Insurance Company who furnished the performance bond. From a judgment in favor of Peerless Insurance Company plaintiff has appealed.
There is only one issue for our consideration, i. e., whether defendant, Peerless Insurance Company, as surety on a performance only bond, should be held liable to materialmen, suppliers and laborers on their admittedly duly recorded liens.
The basis for plaintiff‘s insistence that Peerless should be held liable on the bond is that the bond involved is a statutory bond; that is, it argues that although no bond is required by law on private building contracts, if a bond is furnished then it is statutory and all omitted portions of the bond requirements of
Defendant, Peerless, however, denies that the bond is statutory and submits that it is a mere conventional obligation binding on the parties to it.
This court agrees with Peerless Insurance Company that the bond is conventional rather than statutory. Under the Public Contract Law the State of Louisiana is obligated to require that a surety bond be filed for faithful performance of the contract with the additional obligation of payment to laborers, materialmen and the like and “no modifications, omissions, additions in or to the terms of the contract * * * shall in any manner affect the obligation of the surety“.
This, however, is not the case when dealing with a bond on a private work. There is no statute in Louisiana making it mandatory that a private owner enter into a written building contract, record it and furnish bond to construct an edifice. De Frances Marble & Tile Co. v. Coxe, La.App., 148 So.2d 83 (1st Cir.1962); Certiorari denied March 12, 1963.
“A bond on a private work is not a statutory bond in the sense that a bond on a public work is statutory for there is no mandatory requirement that one be furnished, * * *”
and cited the De Frances Marble case as recognizing this distinction. In the De Frances Marble case the surety had agreed to allow suits to be brought within two years of the date of registry of the acceptance by the owner even though the statute (
“Accordingly, the recorded stipulation voluntarily by Employers placed in its bond, thereby publicly notifying such suppliers of materials or artisans of its agreement to pay any such unpaid claims within a period of two years is a conventional obligation assumed by it giving to such claimants a direct action on the bond for the assertion of such claims and is in no way dependent upon the statutory requirement restricting the assertion of such claims to one year.”
Having decided the bond is not statutory that it necessarily follows that it is a conventional bond, i. e., a conventional obligation between the parties. The parties in this case chose to execute two bonds—one to cover performance of the contract, one to cover any liens which might arise. There is nothing in the building contract law which precludes such an arrangement.
The bond sued on by Jimco, the plaintiff, is an obligation of suretyship. Vincent A. Miceli, Sr. is the principal; Peerless Insurance Company is the surety; Gentilly Terrace Apartments, Inc. of New Orleans, Louisiana, as owner; and Capital Bank and Trust Co. of Baton Rouge, Louisiana, and Meadow Brook National Bank of West Hempstead, New York, as lenders, are the dual obligees. Because the bond sued upon is a suretyship obligation, the conditions of the undertaking are determined by the terms of the contract establishing it. Suretyship can not be established by inference.
“Surety can not be presumed; it thought to be expressed, and is to be restrained within the limits intended by the contract.”
Any intention to extend the coverage of a contractor‘s bond beyond the provisions of the statutes
Peerless did not expressly undertake to guarantee the plaintiff‘s claims but, in fact, expressly excluded any claims of lien holders.
The only obligees on the bond are Gentilly Terrace Apartments, Inc. of New Orleans, Louisiana, and the two banks, Capital Bank and Trust Co. of Baton Rouge, Louisiana, and Meadow Brook National Bank of West Hempstead, New York.
Our courts have repeatedly held that a performance bond given by a contractor or a subcontractor for the faithful performance of his work which carries a provision for the payment of the material and labor that go into the work does not give a right of action on the bond to the furnishers of
Plaintiff, Jimco, Inc., was not expressly given a right of action on the Peerless bond and it, therefore, has none because this contract of suretyship is a conventional obligation and is governed by the express language of the contract and the intent of the parties.
For the above mentioned reasons, the judgment in favor of the defendant, Peerless Insurance Company, and against plaintiff, Jimco, Inc., dismissing plaintiff‘s suit, at his cost, is affirmed. Plaintiff is to pay costs of this appeal.
Affirmed.