This proceeding comes before the court on preliminary objections filed by each of the three defendants in the action. As required by rule 1028 defendants have raised all pertinent objections to plaintiff’s complaint at one time and have literally “shelled the woods.” We shall deal herein with the objections filed by defendant Dillsburg Borough Authority.
The facts in brief are as follows: Under date of November 16, 1948, Dillsburg Borough Authority entered into a contract in writing with Sharpsburg Construction Company for the construction and installation of a sewage system in the Borough of Dills-burg. Bonds conditioned for performance of the work
The first objection is a motion to strike off the complaint for the reason that plaintiff has failed to attach the contract or material parts thereof as required by rule 1019 (h). The original contract is attached to the pleadings but the complaint states that the contract documents, consisting of a bound volume of 302 pages, are not attached due to their size and bulk and are in the possession or readily available to defendants and
The second objection is that the averments of paragraph 6 of the complaint and a portion of paragraph 7, to wit: . . . “and presumably let in accordance with law” are impertinent and mere surplusage in that it is alleged that the contract was entered into without true competitive bidding. This objection is well taken and is sustained. Plaintiff may not in one paragraph bring a suit based upon a contract as a valid and binding obligation and in another paragraph allege that the contract was not legally entered into by the parties.
The next objection raised by defendant is in the nature of a motion for a more specific complaint, alleging that the averments of paragraph 15 and the prayers of the complaint are so vague, indefinite and uncertain that defendant should not be required to answer them and further that the averments do not constitute a simple and concise statement of the facts as required. These averments in general ask for an accounting and it may be that plaintiff is so entitled. These objections are therefore dismissed at this time.
The third and final group of objections, is in the nature of a demurrer to the complaint for failure to state a valid cause of action. A number of grounds are alleged which we shall take up seriatim.
Paragraph 8 of the demurrer alleges that exhibit B of the complaint is not a valid legal assignment since
“An estoppel may be raised by acquiescence, where a party aware of his own rights, sees the other party acting upon a mistaken notion of his rights. ‘The rule is well recognized that when a party with full knowledge, or with sufficient notice or means of knowledge of his rights and of all the material facts, remains inactive for a considerable time or abstains from impeaching the transaction, so that the other party is induced to suppose that it is recognized, this is acquiescence, and the transaction, although. originally impeachable, becomes unimpeachable’ ”: Kennedy’s Estate, 321 Pa. 225, 232.
The doctrine of estopped also applies to objections nos. 9 and 10, which will also be dismissed. These objections assert that the acceptance of the assignment by C. S. Williams for the authority is not valid since it shows no authority for his action and consequently is not binding on the Dillsburg Borough Authority, and further that no written consent of the Capitol Engineering Corporation to this assignment is averred as required by the contract document. In addition, as to objection 9, it has been well established that in the absence of proof to the contrary the law presumes that a public official’s actions were pursuant to proper authority and that the antecedeftt steps necessary to give validity to his official acts were duly taken: McIntosh Road Materials Co. v. Woolworth et al., 365 Pa. 190.
Objections 12, 13 and 14 assert generally that plaintiff’s complaint must fail and the demurrer must be sustained because there is no averment that the work has been completed, which is a condition precedent in order to maintain an action under the general conditions of the contract documents. Defendant further contends that since the complaint itself alleges that the authority declared the contract in default, under the terms of the contract documents all moneys remaining in the hands of the authority constituted a fund
“Paragraph 3-06 (a) Unless otherwise stipulated, the contractor shall provide and pay for all materials, labor, water, tools, equipment, light, power, transportation and other facilities necessary for the execution and completion of the work.”
“Paragraph 3-17 (a) If the contractor should . . . persistently or repeatedly refuse or should fail . . . to supply enough properly skilled workmen or proper materials, or if he should fail to make prompt payments to subcontractors or for material or labor or persistently disregard ... instructions of the engineer, or otherwise be guilty of a substantial violation of any provision of the contract. . . then the owner . . . may, . . . terminate the employment of the contractor and take possession of the premises and of all materials, tools and appliances thereon and advance the work by whatever method he may deem expedient, (b) In such case the Contractor shall not be entitled to receive any further payment until the work is finished. If the unpaid balance of the Contract price shall exceed the expense of finishing the work, including compensation for additional managerial and administrative services, such excess shall be paid to the Contractor. If such expense shall exceed such unpaid balance, the Contractor shall pay the difference to the Owner. The expense incurred by the Owner as herein provided, and the damage incurred through the Contractor’s default, shall be certified by the Engineer.”
Paragraph 3-20 (a) The Owner may withhold or, on account of subsequently discovered evidence, nullify the whole or a part of any certificate to such extent as may be necessary to protect himself from loss on
The law seems well settled that when a contractor is held in default and the surety upon his bond is called upon to complete the work, the surety under the contract succeeds to the rights of the defaulting contractor and is entitled to any and all sums due the defaulting contractor to indemnify itself against all losses on account of the contract.
“When default on the contract was declared against Wells and those under him, the surety was called upon to complete the contract in accordance with the obligation assumed by it with the city; the surety, on electing to complete, stood in a new relation to the contract. It was in direct relation to defendant as a party contracting to complete the work, becoming so on the contractor’s default. In agreeing to finish the work, it exercised its rights under the contract and bond, stepping into the shoes of the contractor, operating under the contract as though a party originally alternately bound by its terms: See Phila. vs. Nichols Co., 214 Pa. 265, 273. It was not a new engagement but a continuation of the old one, wherein the surety succeeded to all the rights of the contractor under the contract, as well as liabilities to the owner thereunder. As to any money retained, the surety then stands to that fund in the same position as the owner of the property to which the contract relates. The surety’s relation, through compulsion (default), dates even with the owner’s relation. From this fund and the unpaid contract price it is entitled to sufficient to save itself from loss on its suretyship engagement; nor can
“This neither partner did; but, on the contrary, knowing the surety was completing the work, and because thereof became entitled to all payments then or thereafter due . . .” Markee et al. v. Philadelphia, 270 Pa. 337, 341.
“Assuming that the construction obligation was a completion bond and the surety had been called in to complete (which it had not been in this case), if the surety completed the building it would have been entitled to be reimbursed for its outlay in completing the contract whatever that outlay may have been. . . . In that respect it would also stand in the position of the owner [Wells, to use, v. Phila., supra], and might subject any sums or securities in the owner’s hand to accomplish that purpose”: Sundheim v. Philadelphia School District, et al., 311 Pa. 90, 99.
It seems manifestly apparent under the contract and the law applicable thereto that this action is premature and that if plaintiff has a right of action it can be brought only after the work has been completed and the cost of completion ascertained. Since the demurrer in effect must be sustained it is unnecessary to pass upon objection no. 15 at this time.
We therefore enter the following order insofar as defendant Dillsburg Borough Authority is concerned:
And now, to wit, March 20, 1951, it is ordered, adjudged and decreed that defendant’s objections nos. 1, 4, 5, 6, 8, 9 and 10 are dismissed. Objections no. 2, 3, 7, 11, 12, 13 and 14 are sustained. Judgment, however, is not to be entered on the demurrer until 45 days after the filing of a certificate of completion as required by the contract documents; notice of the filing thereof to be given to plaintiff in writing. During this
