155 Ga. 76 | Ga. | 1923
Lead Opinion
(After stating the foregoing facts.)
We will first consider the assignments of error in the cross-bill of exceptions. The first of these assignments of error is to the overruling of the demurrer filed by the Maryland Casualty Company, on the gound that the petition did not set out a cause of action against that compány. It is insisted that the bond sued on provided that in case of suit service of process should be made on or' before the 18th day of March, 1916, and that the record shows that such service was not had until the 30th day of March, 1916. It appears from the record that the suit was filed before the 18th day of March, 1916, but that service was not perfected on the defendant on or before that date. It appears that on March 24, 1916, the surety company filed a traverse of the return of service which was made upon the attorney of the defendant in error instead of upon its agent residing within the jurisdiction of the court in the City of Atlanta. It also appears that immediately after the traverse of the return of service on March 30, 1916, the plaintiff obtained an order of court making the case returnable to the next succeeding May term of court, and providing for proper service upon the surety company. It also appears from the record that service was perfected on the surety
Exceptions to the auditor’s report were overruled in so far as he ruled that the Maryland Casualty Co. had not been released and discharged from liability by réason of the failure of the petitioner to retain in his hands 15 per cent, of the contract price; and that the contract and bond did not require petitioner to retain in his hands 15 per cent, of the contract price, but required the owner simply not to pay to the contractor in excess of 85 per cent, of the value of labor and material put into the building. The grounds of exception by the surety company are, among others, that the contract and bond sued upon required the plaintiff to retain in his hands 15 per cent, of the contract price; and that, the auditor having found as a matter of fact that petitioner had failed to retain in his hands 15 per cent, of the contract price, the law and the evidence demanded a ruling that the surety company had been discharged by reason of such failure on the part of petitioner to comply with the contract and bond. We are of the opinion that these exceptions are without merit. We think that the meaning of the contract in this respect is, that the plaintiff was not required to retain 15 per cent, of the contract price for the protection of the surety, but that the requirement for the payment of 85 per cent, was for labor and material, and under the language of the contract the owner of the building was not required to retain the 15 per cent, of the contract price; and we are therefore of the opinion that the contract does not require that lo per cent, of the contract price of the building should be retained until the building was completed. The contract expressly provides that “ 85 per cent, of all labor and material in the building shall be paid at the end of each week after the job is started;” and we are of the opinion that the surety company was not released from the obligation of its bond because the plaintiff failed to retain 15 per cent, of the contract
There are only two questions of law involved .in the main bill of exceptions, to wit: First. Was the Maryland Casualty Co., the surety on the contractors’ bond, released by the failure to give proper notice under the bond? Second. Was the plaintiff required to show that he actually paid out the money sought to be recovered, prior to bringing the action? Exceptions of law were filed to the auditor’s report, because the auditor found
The auditor ruled that plaintiff was not required, under the terms of the contract as evidenced by the bond, to show that he had actually paid out the sums of money which he is seeking to recover, prior to the beginning of the present action. The exception to this ruling of the auditor was sustained by the trial court, and the plaintiff excepted on the ground that it was not incumbent upon him to actually pay out the sums, the recovery
In the case of Massachusetts Bonding & Ins. Co. v. Realty Trust Co., 137 Ga. 693 (73 S. E. 1053), s. c. 139 Ga. 180 (77 S. E. 86), s. c. 142 Ga. 499 (83 S. E. 210), it was held that the surety company and the lienors could be brought into one equitable action in order to settle all the rights involved, without first paying off liens then outstanding and then bringing suit against the surety company. The defendant, however, insists that there is a distinction between that and the present case; and it is argued that there the bond guaranteed faithful performance, while in the present case the condition of the bond is “that if the principal shall indemnify the obligee against any loss or damage arising by reason of the failure of the principal to faithfully perform said contract, then this obligation shall be void, otherwise of full force and effect.” The defendant insists that the bond in the present case does not guarantee faithful performance, but is an obligation to compensate the obligee for any loss or damage which he may sustain after the money is actually paid out by him; and the defendant relies on the case of McGarry v. Seiz, 129 Ga. 296 (58 S. E. 856), s. c. 136 Ga. 849 (72 S. E. 243), as supporting this contention.. In the Seiz case the bond provided: “ The surety shall not be liable under this bond to any except the obligee; but it is agreed that the obligee, in estimating his damage, may include the claims of mechanics and materialmen, arising out of the performance of the contract, and paid by him, only when the same, by the statutes of the State where the contract is to be performed, are valid liens against the property.” That case is clearly distinguishable from the present case, because in the Seiz case it is expressly provided in the bond that certain claims may be included only when they have been paid; but the ruling in that case is not applicable in a ease
Judgment reversed on the main hill of exceptions, and affirmed on the cross-hill.
Dissenting Opinion
dissenting. McDaniel & Calmes contracted to build for A. H. Waldon a residence for the lump sum of $6280. A bonding company contracted to indemnify Waldon on that contract. The bond was conditioned on the faithful performance of the contract on the part of McDaniel & Calmes. The contractors were to pay in full for all labor and material. They failed to complete their contract. The indemnity bond in terms provided, that, “in the event of any default on the part of the principal, a written statement of the particular facts showing such default and the date thereof shall be delivered to the surety.” In addition to failing to complete the building, the contractors failed to pay in full for labor and material. This failure to pay for labor and material resulted in laborers’ and materialmen’s liens and judgments against the owner; and these'were very important facts which should have been communicated to the surety, without notice of which the surety could not protect itself by seeing that the liens and judgments were justified under the facts and