155 S.E. 730 | N.C. | 1930
Civil action in the nature of a creditors' bill, brought under 3 C. S., 3846(v), to recover from surety on contractor's bond for materials furnished and used in and about the construction of a public roadway.
The purpose of the suit is to hold the defendant liable for the claims of plaintiff, and interveners, by reason of a bond executed to the State Highway Commission to secure the faithful performance of a roadbuilding contract, and to protect laborers and materialmen.
Upon denial of liability and issues joined, a reference was ordered and the matters heard by Frank H. Kennedy, Esq., who found the facts favorable to plaintiff and interveners, and reported same, together with his conclusions of law, to the court.
A number of exceptions were filed to the report of the referee, all of which were overruled, and from a judgment confirming the report, the defendant appeals, assigning errors. On 20 August, 1927, the J. F. Mulligan Construction Company, contractor, entered into a written agreement with the State Highway Commission to construct and complete a section of road in Randolph and Davidson counties, known as project No. 5210, in which it was stipulated, among other things, that "the contractor shall and will provide and furnish all the materials . . . and perform the work and required labor to construct and complete" said road project; and to insure compliance with the terms of the contract in all respects, the State Highway Commission took from the contractor, as principal, and the Great American Indemnity Company, as surety, a bond in the sum of $16,610 conditioned on the faithful performance of said contract, and that the contractor "shall well and truly pay all and every person furnishing material or performing labor in and about the construction of said roadway all and every sum or sums of money due him, *738 them, or any of them, for all such labor and materials for which the contractor is liable."
The contractor sublet different portions of the work to Ed. Smith, P. R. Huffstetler and Aderholdt Bros. The claims of plaintiff and interveners are for materials furnished to these subcontractors and used by them in and about the construction of said roadway.
The case, therefore, presents the question as to whether the bond in suit is broad enough to cover claims for materials furnished to subcontractors and used by them in and about the construction of the roadway. We think it is.
The defendant concedes that, under the decisions in Electric Co. v.Deposit Co.,
This interpretation, we apprehend, is too liberal to the defendant and too restrictive of the rights of laborers and materialmen. Under the road-building contract, the principal contractor agreed to become liable to the State Highway Commission for all materials and work required to complete said roadway, and, in this sense, construing the contract and bond together, the expression, "for which the contractor is liable," is thought not to exclude claims of persons furnishing materials or performing labor in and about the construction of said roadway, whether furnished directly to the principal contractor or indirectly through subcontractors, for, in either event, the materials furnished or labor performed would be in ease of the contractor's liability to the State Highway Commission. Hill v.Surety Co., supra; Moore v. Material Co.,
The principle is well established that in determining the surety's liability to third persons on a bond given for their benefit and to secure the faithful performance of a construction contract as it relates to them, the contract and bond are to be construed together. Mfg. Co. v. Andrews,
The bond in suit was intended, first, to insure the faithful performance of all obligations assumed by the contractor to the State Highway Commission; and, second, to protect third persons furnishing materials or performing labor in and about the construction of said roadway which the contractor agreed to provide and furnish. Trust Co. v. Porter,
Bonds of this nature are construed liberally for the protection of laborers and materialmen and with a view to accomplishing the purposes for which they are given, to the end that public works may be paid for and not erected with the use of labor and materials belonging to others. ElectricCo. v. Deposit Co., supra. It is not thought that the surety can complain at such construction, or that any hardship is imposed thereby, because in entering into the contract the surety is chargeable with notice, not only of the financial ability and integrity of the contractor, but also with notice as to whether he possesses the plant, equipment and tools required in undertaking the particular work, or will be compelled to sublet a portion of it, or rely upon others for labor and materials, all of which are factors to be considered in determining the risk, and upon which the surety fixes the premium for executing the bond. Wiseman v. Lacy,
Speaking to the policy of the law in this respect, Dean, J., inPhiladelphia v. Stewart,
The bond in suit, as it relates to laborers and materialmen, is not limited to "persons who have contracts directly with the principal,"as was the case, for example, in Glass Co. v. Fidelity Co.,
It follows from the foregoing view of the case, which coincides with the holding of the referee and the court below, that the judgment must be
Affirmed.