Orinoco Supply Co. v. Shaw Bros. Lumber

Nov 20, 1912
Versions:160 N.C. 428
76 S.E. 273
1912 N.C. LEXIS 184
HoKE, J.

In respect to the liability of the Illinois Surety Company, the complaint, after stating the contract on the part *430 of J. T. B. Sbaw to provide all the material and perform all the work for the erection and completion of the rectory, continues :

“3. That amongst other provisions contained in said contract, the said Sbaw contracted and agreed to pay for all sucb labor and material, and to save the said J. C. Buxton and others, committee as aforesaid, harmless from any and all claims and liens which might arise out of contracts made by said Shaw with material furnishers and laborers,” and expressly provided : “Should there prove to be any such claims (for material or labor) after all payments are made, the contractors shall refund to the owner all moneys that the latter may be compelled to pay in discharging any lien on said premises obligated in consequence of the contractor’s fault.”

“4. That on 25 January, 1911, in pursuance of the contract as aforesaid, the said Illinois Surety Company executed, as surety, together with the said Shaw as principal, a bond in the sum of $2,500 in favor of the said vestry of St. Pauls Church of Winston-Salem, N. C., as aforesaid, conditioned that the said Shaw should and would 'faithfully perform and carry out said contract according to the true intent and meaning thereof, and according to plans and specifications prepared by the said W. L. Brewer, architect, as aforesaid, and shall faithfully build and construct said rectory according to said plans and specifications and according to the terms of said contract.’

“5. That the plaintiff, at the request of the said J. T. B. Shaw and Shaw Brothers Lumber Company, furnished certain material, which was used by the said J. T. B. Shaw in carrying out his contracts, as aforesaid, for the construction and completion of the rectory, as aforesaid, and that there is now due to the said plaintiff and unpaid, on account of the furnishing of the material as aforesaid, the sum of $346.56, with interest thereon from 1 July, 1911.”

And by an amendment, makes further averment as follows: “That the plaintiff, prior to the bringing of this action, had filed a lien in the office of the Clerk of the Superior Court of Forsyth County against J. C. Buxton and others, forming a committee for the vestry of St. Pauls Church, and had insti *431 tuted a suit, wbicb is bow pending, and in wbicb suit tbe Illinois Surety Company is a party defendant, for tbe purpose of foreclosing said lien.

“2. Tbat prior to tbe institution of tbe action against tbis defendant, tbe plaintiff bas instituted a suit against tbe contractor, J. T. B. Sbaw, and since tbe filing of tbe complaint therein bas obtained judgment against said Sbaw, issued execution, wbicb bas been returned nulla, bona "

There have been several later decisions of tbe Court applying tbe principle tbat under certain circumstances tbe beneficiaries of a contract could recover thereon, though not named as parties, a principle tbat usually prevails when it appears by express stipulation or by reasonable intendment tbat tbe rights and interests of such beneficiaries were contemplated' and being provided for, as in Gastonia v. Engineering Co., 131 N. C., 363; Gorrell v. Water Supply Co., 124 N. C., 328. In the case before us it appears tbat tbe contractor bad agreed to pay “for all labor and material supplied for tbe erection of the building, and to save the trustees of tbe church harmless from any and all claims and liens wbicb might arise out of contracts made by him” with material furnishers and laborers, etc., and tbe bond sued on, signed by tbe surety company, contains express stipulation “tbat said contractor shall faithfully perform and carry out said contract according to tbe true intent and meaning thereof.” These provisions, in our opinion, clearly contemplate tbat tbe contractor shall pay tbe material men and laborers and constitute such claimants tbe beneficiaries of tbe contract and bond within tbe principles of tbe authorities cited.

Tbe cases of Clark v. Bonsal, 157 N. C., 270, and Peacock v. Williams, 98 N. C., 324, and others of like purport, were on contracts wbicb were in strictness contracts of indemnity, providing and intending to provide protection for tbe contracting party alone, and giving no indication that tbe interests of third persons were contemplated or tbat they were intended to be in any way directly benefited.

On tbe position tbat a cause of action does not arise on tbis instrument unless and until it is shown tbat tbe obligee principal, tbat is, tbe church, bad suffered pecuniary injury by reason *432 of the contractor’s default, it was held in Hilliard v. Newberry, 153 N. C., pp. 104-106, that this restriction on liability does not obtain where, in addition to saying the principal harmless, there is also an agreement to do some definite thing which has not been complied with — in this instance, to pay for the labor and material, citing Burroughs v. McNiel, 22 N. C., 297; 16 A. and E., p. 179; Pingrey on Suretyship and Guaranty, sec. 182.

Under these authorities, therefore, and on the facts as they now appear, we are of opinion that a good cause of action has been stated against the appellant and that the judgment overruling the demurrer must be affirmed.

Affirmed.