172 Ind. 97 | Ind. | 1909
Appellant brought this action November 28, 1904, and appeals from a judgment, rendered upon its refusal to plead further, after the demurrer of the Pederal Union Surety Company, for want of facts, had been sustained to its complaint.
It is averred that a committee from St. Joseph’s Church of Shelbyville, and Castle & Convery, in April, 1903, entered into a written contract, by which the latter agreed to furnish the material and labor for, and to place a steam heating plant in, the church building. The contract contained many provisions that are not pertinent to the questions involved in this action, prescribing the character of the improvement, the price, time, etc. It also contains a clause as follows:
“The parties of the second part agree to pay for all labor and materials used in said work when due, and that all labor done and materials furnished shall be of*100 the best quality of their several kinds, and the parties of the second part agree to deliver said building to said first party freed from all liens or rights thereto. ’ ’
Thereafter said contractors, as principals, together with the appellee surety company, as surety, executed a bond in the sum of $1,800, payable to said church, as obligees-, and conditioned as follows:
“Whereas said principals have entered into a written contract, dated April 24, 1903, with said obligee, for the plumbing, steam heating and electric wiring for St. Joseph Catholic Church, a copy of which contract is hereto annexed: Now, therefore, the conditions of this obligation are such that if said principals shall faithfully perform said contract on their part, according to the terms, covenants and conditions thereof (except as hereinafter provided), then this obligation shall be void, otherwise to remain in full force and effect. Provided, however, and upon the following further expressed conditions: (1) That the surety shall be notified, in writing, of any act on the part of said principals or their agents or employes which may involve a loss for which said surety is responsible hereunder, within ten days after the occurrence of said act, with a verified statement of the facts, to be delivered to the surety company at its office in the city of Indianapolis, Indiana. ’ ’
Other conditions) not pertinent to this discussion, follow.
Both contract and bond are made a part of the complaint, and it is averred that appellants furnished material to said contractor which was used in said building, and for which it has not been paid. The complaint also exhibits an itemized account of such material, and avers a breach of the contract, in that Castle & Convery are now notoriously insolvent, have violated the terms of their contract, and have failed faithfully to perform the same, by refusing to pay for said material, which contract said appellee surety company had guaranteed said Castle & Convery should faithfully perform, whereby said surety company became liable for the amount of said account. The complaint also avers “that, prior to and at the time plaintiff sold and delivered the ma
In some cases the strict construction in favor of private sureties is not applied, but the more liberal rule of interpretation, as applied with respect to insurance contracts, is adopted. We think there is a middle ground which may be occupied with justice to all persons. In construing the contract it is not unreasonable to construe it in the light of its preparation by the obligor, with the safeguards in its favor, and to construe ambiguous language against it, following the rules applied as to insurance contracts, having in view also the rights, duties, responsibilities and functions which belong to the relation of suretyship, and stipulations which are fairly entered into, either by the compensated or gratuitous surety, should be as much for the benefit of one as the other.
This rule is fairly laid down in Clay v. Edgerton, supra, where the court said: “On this point, much confusion has
In Bigelow v. Benton, supra, the court said: “The contract on which this suit is brought was clearly a contract of guaranty. It was so declared upon its face, and such is its import. It was made with reference to a negotiation then pending between the plaintiffs and Durkee. The defendant prescribed the precise terms and conditions of his guaranty, and no rule is better settled than that the terms of the guaranty must be strictly complied with, or the guarantor will not be bound. It is a claim slrictissimi juris.”
“Nothing can be clearer, both upon principle and authority, than the doctrine, that the liability of the surety is not to be extended; by implication, beyond the terms of his contract. To the extent, and in the manner, and under the circumstances, pointed out in his obligation, he is bound, and no further. * * * He has a right to stand upon the very terms of his contract.” Justice Story in Miller v. Stewart (1824), 9 Wheat. *680, 6 L. Ed. 189. And see Greenfield Lumber, etc., Co. v. Parker, supra.
In Dobbin v. Bradley (1837), 17 Wend. 422, Bronson, J., speaking for the court said: The question is not whether the conditions, by which he has thought proper to qualify his liability, were either reasonable or unreasonable; nor whether they could in any way prove beneficial to the defendant. He had a right to judge of that matter for himself, and we have no authority to review his judgment. ’ ’
But the condition is not an unreasonable one. The agreement was, in substance, that the principal should pay all claims when due. The condition was that written notice of default therein should be given the surety within ten days after its occurrence.
In the case of California Sav. Bank v. American Surety Co. (1898), 87 Fed. 118, appellant sued appellee upon a fidelity bond. The bond contained the following stipulation : ‘ ‘ ‘ That the company shall be notified in writing, at its office in the city of New York, of any act on the part of the employe which may involve a loss for which the company is responsible hereunder, as soon as practicable after the occurrence of such act shall have come to the knowledge of the employer.’ ”
It was held that this condition was a material requirement, and failure to comply therewith released the surety, the court said: “It is believed that in fidelity insurance, which is of recent origin, notice of the fraudulent acts of the employe is of equal, if not greater, importance [referring to notice of loss in fire insurance eases], for the reason that prompt notification may often enable the insurer to avoid,
We can see no reason why these rules do not apply with full force to the case before us. It certainly was no hardship to require the party to whom the claim was owing to give notice to the guarantor, upon whom he was relying for payment, of such liability, and thus enable the guarantor at once to take such steps as were available to secure itself from loss. The complaint avers that appellant knew of the execution of the bond before the materials were furnished, and relied upon it for protection.. It therefore cannot plead ignorance of the condition, even if such a plea was available.
The complaint was insufficient, and the demurrer properly sustained. The judgment is affirmed.