New Britain Lumber Co. v. American Surety Co.

The complaint alleges that the William H. Allen Company, Inc., as principal, and the defendant, as surety, executed a bond to the chairman of the school board in the town of Newington, conditioned that the principal would indemnify the town against any loss directly arising by reason of the failure of the principal to faithfully perform its contract with the town for the construction of a new high school, and would pay for all materials and labor used in the execution of the contract; that the plaintiff, knowing of the execution of the bond and relying thereon, furnished building materials which were used in the construction of the high school, and that the Allen Company has failed to pay for the materials so used. The defendant demurred to the complaint upon several grounds which, as stated in its brief, may be summed up in two main contentions: (1) that the plaintiff had no right of action directly against the surety, but must proceed under the statute to collect from the town, and (2) that it was not alleged that the plaintiff had filed a statement of its claim within sixty days after ceasing to furnish materials, as required by the statute. The demurrer refers in terms to Chapter 121 of the Public Acts of 1927, but both parties agree that the applicable statute is Chapter 170 of the Public Acts of 1925, appended in the footnote.^*

The bond which was annexed to the complaint as an exhibit reads as follows:

"KNOW ALL MEN BY THESE PRESENTS, That we, William H. Allen Company, Inc., of the city of New Britain, state of Connecticut, (hereinafter called the Principal), and the American Surety Company of New York (hereinafter called the Surety), as Surety, are held and firmly bound unto the Chairman, School Board, Town of Newington (hereinafter called the Obligee), in the sum of Seventy Four Thousand and 00/100 ($74,000.00) Dollars, for the payment whereof said Principal and Surety bind themselves firmly by these presents.

"WHEREAS, the Principal has entered into a written contract dated May 2d 1928, with the Obligee, for furnishing materials and for the construction of a new High School, in the Town of Newington, Connecticut, in accordance with the specifications therefor prepared by Delbert K. Perry and Earle K. Bishop, Architects, a copy of which is hereto annexed:

"NOW THEREFORE, The condition of this obligation is such, that if the Principal shall indemnify the Obligee against any loss or damage directly arising by reason of the failure of the Principal to faithfully perform said contract, and shall pay for all materials and labor used or employed in the execution of the said contract, then this obligation shall be void; otherwise to remain in full force and effect.

"PROVIDED, HOWEVER, That no claim, suit or action by reason of any default shall be brought against the Principal or Surety after the twenty-fifth day of April, 1930."

Accompanying the bond, and attached to the complaint as an exhibit, was the contract between the contractor and the town, the owner. It is entitled "The Standard Form of Agreement between Contractor and Owner for Construction of Buildings," and contains the following pertinent provisions:

"Article 6. The Contract Documents — The General Conditions of the Contract, the Specifications and the Drawings, together with this Agreement, form the Contract, and they are as fully a part of the Contract as if hereto attached or herein repeated."

"Article 30. Guaranty Bonds. The Owner shall have the right, prior to the signing of the Contract, to require the Contractor to furnish bond covering the faithful performance of the Contract and the payment of all obligations arising thereunder, in such form as the Owner may prescribe and with such sureties as he may approve."

The bond sued upon in this case was conditioned for the faithful performance of a contract to erect a public building for the town of Newington. Under the statute cited in the footnote, the agent contracting in behalf of the town was obligated by law to require from the contractor, as a condition precedent to the execution of the contract, a bond with sufficient surety conditioned for the faithful execution of the contract, and for the payment for all materials and labor used or employed in the execution thereof. The bond given in this case was, therefore, one required by the statute. An examination of the provisions of the bond shows that its language is substantially the language of the statute; and the bond runs to the officer who made the contract in behalf of the town, thus literally complying with the terms of the statute. The bond, being one required by the statute as a condition precedent to the execution of the contract, and the language of the instrument being almost identical with the language of the statute, the bond and statute are to be construed together; and the language of the bond is to be interpreted in the light of the statute and with a view to effectuating the legislative intent manifested therein. 5 McQuillin on Municipal Corporations (2d Ed.) p. 460; 44 Corpus Juris, 356; St. Louis, Use of Contracting Supply Co., v. Hill-O'Meara Construction Co.,175 Mo. App. 555, 158 S.W. 98; United States, Useof Hill, v. American Surety Co., 200 U.S. 197,26 Sup. Ct. 168, 171. Where a statutory bond is given, the provisions of the statute will be read into the bond. Philip Carey Co. v. MarylandCasualty Co., 201 Iowa 1063, 206 N.W. 808, 810;People v. Metropolitan Surety Co., 211 N.Y. 107,105 N.E. 99, 107; Nye-Schneider-Fowler Co. v. Roeser,103 Neb. 614, 173 N.W. 605, 607; MononaCounty v. O'Connor, 205 Iowa 1119, 215 N.W. 803, 805. "If the law has made the instrument necessary, the parties are deemed to have had the law in contemplation when the contract was executed." Fogarty v. Davis, 305 Mo. 288, 295, 264 S.W. 879, 880. "The liability of the surety under a statutory bond is measured and defined by the statute; and [the] construction of the statute is a construction of the bond. In such a case, the statute becomes a guide to the surety as to the extent of the obligation assumed." Schisel v. Marvill, 198 Iowa 725, 729, 197 N.W. 662, 663.

We are not dealing in this case with a situation like that presented in Byram Lumber Supply Co. v.Page, 109 Conn. 256, 146 A. 293, which was a case where a private property owner procured a bond to be given by his contractor conditioned that the contractor, the principal in the bond, should "pay all persons who have contracts directly with the principal for labor or materials." We held that the purpose of the provision in that bond was to give rise to a direct obligation of the surety to subcontractors, and that the plaintiff in that case was entitled to recover, as a third party beneficiary of the contract, under the rule stated in this State by the decision in Baurer v. Devenis,99 Conn. 203, 205, 121 A. 566.

Nor are we here dealing with a case where a bond, though required by statute, is by its terms broader and more comprehensive than the statutory provision, as in Philadelphia v. Stewart, 195 Pa. 309,45 A. 1056, 1057; Hilton v. Universal ConstructionCo., 202 Mo. App. 672, 216 S.W. 1034, 1037; Philadelphia v. Harry C. Nichols Co., 214 Pa. 265,63 A. 886, 888; Clatsop County ex rel. Hilderbrand v.Feldschau, 101 Or. 369, 199 P. 953, 957, 18 A. L. R. 1221, and similar cases.

In the instant case, we are dealing with a bond so framed in the language of the statute as to permit of no question that the extent of the liability of the surety under the bond is coterminous with the statute. There is no basis for any assumption that a greater liability was contemplated as against the surety than against the municipality. In Pelton King, Inc. v. Bethlehem, 109 Conn. 547, 556,147 A. 144, we traced the history of this statute and pointed out that "the primary purpose of the statute is to protect and benefit those who furnish materials and labor to the contractor on public work, in that they may be sure of payment of their just claims, without defeat or undue delay. . . . The above-mentioned purpose is accomplished, as to claimants, by construing the statute as entitling them to direct payment from the municipality."

But the statute prescribes that any person having any claim for materials or labor furnished in the execution of any such contract shall file with the officers or agents contracting for any such construction a statement of such claim within sixty days after ceasing to furnish materials or labor, and thereupon such officer or agent shall cause such claim to be paid if he shall find the same to be correct, and the amount thereof shall be recovered with costs from the surety under such bond. The filing of a statement of claim within sixty days is thus made a condition precedent to recover from the municipality. The general rule is that where a statute gives a right of action which did not exist at common law, and fixes the time within which the right must be enforced, the time fixed is a limitation or condition attached to the right — it is a limitation of the liability itself as created, and not of the remedy alone." DeMartino v. Siemon,90 Conn. 527, 528, 97 A. 765; Crocker v. Hartford,66 Conn. 387, 390, 391, 34 A. 98; Radezky v. Sargent Co., 77 Conn. 110, 113, 58 A. 709; Forbes v. Suffield, 81 Conn. 274, 276, 70 A. 1023; Simmons v.Holcomb, 98 Conn. 770, 774, 120 A. 510; Walsh v. Waldron Sons, 112 Conn. 579, 584, 153 A. 298. The statute prescribes a specific course of conduct and a materialman is protected only if he follows such course. The statute does not, by its terms, give the materialman any independent alternative right against the surety, and the bond, being a statutory bond, and read, as it must be, in connection with the statute, cannot be construed as extending to the materialman any greater right against the surety than against the municipality. It follows, as a consequence, there being no allegation in the complaint that the plaintiff had filed a statement of its claim within sixty days after ceasing to furnish material, that the complaint sets forth no cause of action against the surety. We are not called upon to decide in this case whether, if such statement of claim had been seasonably filed, the plaintiff would have had a cause of action against the surety as well as against the town.

There is no error.

In this opinion MALTBIE, C. J., and HINMAN, J., concurred.