McCausland v. . Construction Co.McCausland v. . Construction Co.
The court charged the jury, in effect, that if they believed the evidence, both the company and the individual defendants, sureties on the bond, were liable for the debt.
There was verdict for plaintiff against all of defendants for (710) $771.41. Judgment, and the individual defendants excepted and appealed. The contract for the erection of the building makes stipulation, among other things, “That the contractors shall and will provide all the material and perform all the work for the erection and completion of a high school building on the lot of the owners in the city of
(711) Upon these, the portions of the contract and bond more directly relevant, we are of opinion that plaintiff has shown no cause of action against the sureties. There are many decisions with us to the effect that in case of these guarantee bonds or written contracts of indemnity third persons interested and having claims, though not named, may institute action thereon and recover when it appears by “express stipulation or by fair and reasonable intendment that their rights and interests were contemplated and being provided for.” Morton v. Water Co., 168 N.C. 582; Withers v. Poe, 167 N.C. 372; Supply Co. v. Lumber Co., 160 N.C. 428; Voorhees v. Porter, 134 N.C. 591; Town of Gastonia v. Engineering Co., 131 N.C. 363; Gorrell v. Water Supply Co., 124 N.C. 328.
In case of building contracts with bonds guaranteeing performance on the part of the contractor, it is held that in determining the question of the sureties’ liability to third persons the contract and bond shall be construed together. Mfg. Co. v. Andrews, 165 N.C. 285, and recoveries on the part of claimants of that character, usually laborers and materialmen, not expressly named, are sustained where it appears that the guarantee bond, in express terms, provides for liability to such persons, as in Morton v. Light and Power Co., supra; Gorrell v. Water Supply Co., supra; or when there is stipulation that claims of this kind shall be paid by the contractor, the case presented in Supply Co. v. Lumber Co., supra, and Gastonia v. Engineering Co., an application of the principle approved by many authoritative decisions elsewhere. Knight Jillson Co. v. Arthur Castle, 172 Ind. 97, reported also in 42 L.R.A., U.S., 573, with note by the editor; Ocho v. Carnahan Co., 42 Ind. App. 157; Brown v. Markland, 22 Ind. App. 652; Jordon v. Kavanaugh, 63 Iowa 152, and cases cited in note to Cleveland Roofing Co. v. Gaspard, Anno. Cases, 1916 A, 39 vol., pp. 745-758, or where the language of the instrument is sufficiently ambiguous to permit of construction and the terms of the obligation and the attendant facts and circumstances, relevant and permissible in their proper interpretation, show by fair and reasonable intendment that claimants of that character are to be provided for; and instance presented in Shoaf v. Ins. Co., 127 N.C. 308, and the cases of Voorhees v. Porter and Withers v. Poe may be referred, in part, to same position. But the principle does not extend to bonds of indemnity in strictness, for the owner or obligee named, as where there is stipulation in express terms that the indemnity is for the owner alone. Mfg. Co. v. Andrews, supra, or when, from a perusal of the relevant clauses of the contract, it is clear that the interest of the owner or obligee named is alone considered and protected. Clark v. Bonsal, 157 N.C. 270, or where there is a stipulation to relieve from liens, and the contract, as in this instance, concerns a building for the public, and the (712) assertion of a lien is forbidden and prevented by a public policy, the private right in such cases being properly subordinated to the public interests. Hardware Co. v. Graded Schools, 151 N.C. 507; Smith v. Bowman, Utah, reported in 9 L.R.A., U.S., 889; Townsend v. Roofing Co., 18 Ind. App. 568.
On careful consideration of this contract and the bond to secure same, it is clear that, so far as the sureties on the bond are concerned, the obligation is one strictly of indemnity towards the owner, and that the claims of laborers or materialmen were in no way considered or provided for except in so far as necessary to effect the primary purpose. In the contract, the stipulation is, first to provide the material and labor to complete the building, simply the usual form of obligation between the
Further on the subject, there is provision if at any time there shall be evidence of any lien or claim for which, if established, the owner might become liable and which is chargeable to contractors; and, again: “The bond is to guarantee the faithful performance of the contract and to indemnify the owners against liability from accidents,” etc. And the bond given, providing for the faithful performance: “and will save and keep harmless the said board of school commissioners of the city of Concord, and the said building and the land on which the same is erected, from all and every claim for material, labor, or otherwise incurred, etc., and shall turn over the said building to said board free from all claims for material,” etc. Not a word in either contract or bond, or the two together, looking to any obligation assumed to the materialmen or for their benefit, but only so far as required to protect the owners and the building and land on which it is situate from liens or claims which might be made effective against them.
The facts in evidence showing that every condition of the bond has been met, the building completed according to specifications and turned over to public authorities free from any and all claims against them, the building or the land on which the same is situate, no liability should attach to the sureties, and the judgment as to them must be reversed. Townsend v. Cleveland Co., 18 Ind. App., supra.
We are not inadvertent to a line of authorities cited for plaintiffs that in claims of this kind statutes and bonds looking to the protection of materialmen and laborers should receive a liberal interpretation, notably, the case of United States to the use of Hill v. Surety Co., 200 U.S. 197. In that case a Federal statute required that persons making formal contracts with the United States for the construction or repair of public buildings should enter into a bond stipulating, among other (713) things: “That the contractor or contractors shall promptly make payments to all persons supplying labor or materials in the prosecution of the work provided for in the contract,” etc., and the bond had been given in terms as required by the law. Applying, as stated, the principle of a liberal interpretation of such statutes and contracts, the Court held that there was nothing to restrict liability in the bond to claimants who furnished material, etc., directly to the contractor, but that the statute, by correct construction, would extend to and provide for claimants who had supplied subcontractors for use in the building, etc. But neither this nor the other authorities cited, nor the principle upon which they proceed, apply to a case like the present, in which the bond is clearly one of indemnity towards the owner. And, in reference to our own statute requiring that a bond to protect such claimants shall be
There is error, and the judgment against the sureties is reversed and action dismissed.
Reversed.
Cited: Lumber Co. v. Johnson, 177 N.C. 47 (1c, 2e); Dixon v. Horne, 180 N.C. 587 (1c, 2e); Warner v. Halyburton, 187 N.C. 415 (2c, 5c); Noland Co. v. Trustees, 190 N.C. 252 (3c); Brick Co. v. Gentry, 191 N.C. 640 (2c, 5cc); Trust Co. v. Construction Co., 191 N.C. 665 (2c); Supply Co. v. Plumbing Co., 195 N.C. 635 (5o); Lumber Co. v. Lawson, 195 N.C. 844 (1c, 2p); Foundry Co. v. Construction Co., 198 N.C. 178, 179 (1c, 2e); Bank v. Courtway, 200 N.C. 527 (1c); Plott v. Ferguson, 202 N.C. 452 (p).
(714)