Fid. &. Deposit Co. Of Md. v. Bd. Of Educ. Of Pender County

• Decision Date: 09 March 1932
• Docket Number: No. 283.,283.
• Citation: 162 S.E. 763,202 N.C. 354
• Court: North Carolina Supreme Court
• Parties: FIDELITY &. DEPOSIT CO. OF MARYLAND. v. BOARD OF EDUCATION OF PENDER COUNTY et al.

162 S.E. 763

202 N.C. 354

FIDELITY &. DEPOSIT CO. OF MARYLAND.

v.BOARD OF EDUCATION OF PENDER COUNTY et al.

No. 283.

Supreme Court of North Carolina.

March 9, 1932.

Appeal from Superior Court, Pender County; Midyette, Judge.

Action by Fidelity & Deposit Company of Maryland against the Board of Education of Pender County and others, in which defendants filed a counterclaim. From the judgment, plaintiff appeals.

Modified and affirmed.

The plaintiff, the surety company, instituted this action against the board of education and the individual members thereof and certain creditors. The cause was submitted to a referee. In substance, the findings of fact are as follows: On January 21, 1924, the board of education of Pender county entered into a contract with Walter Clark, a contractor, for the erection of a two-story brick and frame high school building at Atkinson, N. C. Said building was to be completed on or before August 15, 1924, and the contract price specified was $49,618. The plaintiff executed a bond in the sum of $14,404 conditioned upon the faithful performance of said contract. Clark began the construction of said building, but did not complete it on August 15, 1924. On October 29, 1924, Clark disappeared and the plaintiff was notified by the architect that the building was not completed, and thereafter the plaintiff waived its option to complete the said school building, and the board of education thereupon completed the same. The plaintiff has paid to creditors furnishing labor and material for said building the sum of $3,050.33. There are other claims outstanding. The contract provided that the board of education should retain 15 per cent. of the contract price. When Clark abandoned the work on October 25, 1924, the board had paid a total of $46,550 upon the contract price, whereas, in fact 85 per cent. of the contract price aggregated $42,175.30. Hence the board had paid out $4,375.20 in excess of the retained percentage. The trial judge found as a fact that on October 8 the board paid to Clark the sum of $5,506.38, and at that time had notice of outstanding unpaid bills for material and labor amounting to $3,057.40. It was further found as a fact that the defendant board of education failed to hold the retained percentage as required by the contract, and that, in failing to do so, the plaintiff was thereby injured. It was further found that, on October 25, the board of education issued to Clark, the contractor, a check in the sum of $132.50 upon the certificate of the architect, and that said check was cashed by the Murchison National Bank, and said funds were used in making the pay roll. It was further found as a fact that the defend-ant board, at the time of the default, had on hand $3,057.56, and that said board actually expended in completing the building the sum of $3,079.56.

The plaintiff brought this action to recover the sum of $3,050.33 upon the theory that the failure of the board to hold the retained percentage released the surety from liability. The board set up a counterclaim against the plaintiff, alleging that it had suffered damage in the sum of $2,000 by reason of failure of the contractor to complete the building on time. Both parties filed exceptions to the referee's report, and...