Hartford Accident & Indemnity Co. v. Board of Education

• Decision Date: 19 October 1926
• Docket Number: No. 2517.,2517.
• Citation: 15 F.2d 317
• Parties: HARTFORD ACCIDENT & INDEMNITY CO. v. BOARD OF EDUCATION OF DISTRICT OF BEAVER POND, IN MERCER COUNTY, W. VA.
• Court: U.S. Court of Appeals — Fourth Circuit

15 F.2d 317 (1926)

HARTFORD ACCIDENT & INDEMNITY CO. v. BOARD OF EDUCATION OF DISTRICT OF BEAVER POND, IN MERCER COUNTY, W. VA.

No. 2517.

Circuit Court of Appeals, Fourth Circuit.

October 19, 1926.

George Richardson, Jr., of Bluefield, W. Va. (Bernard McClaugherty and Russell S. Ritz, both of Bluefield, W. Va., on the brief), for plaintiff in error.

Joseph M. Sanders, of Bluefield, W. Va. (D. E. French, of Bluefield, W. Va., on the brief), for defendant in error.

Before PARKER, Circuit Judge, and WEBB and SOPER, District Judges.

PARKER, Circuit Judge.

This is an action at law, instituted by the board of education of the district of Beaver Pond, in Mercer county, W. Va., as assignee of the claims of certain laborers and materialmen, to recover on a contractor's bond, executed by the Hartford Accident & Indemnity Company as surety, to guarantee the performance of a contract to erect a school building. The parties will be referred to in accordance with the positions occupied by them in the District Court.

The plaintiff entered into a contract with the Harrison Construction Company, hereafter called the contractor, to construct a school building at the price of $41,480. This contract, among other things, provided that the contractor should provide and pay for all labor and materials necessary for the execution of the work, and that it should furnish a guaranty company's bond to the amount of $82,960 "to guarantee the faithful performance of the contract and the payment of all subcontractors and labor and material bills." This bond was required, not only by the terms of the contract, but also by the statutes of West Virginia. Section 12 of chapter 75 of the Code of West Virginia provides:

"Sec. 12. Public Building; Bond of Contractor — It shall be the duty of the state board of control, and of all county courts, boards of education, boards of trustees, and other legal bodies having authority to contract for the erection, construction, improvement, alteration or repair of any public building or other structure, or any building or other structure used or to be used for public purposes, to require of every person to whom it shall award, and with whom it shall enter into, any contract for the erection, construction, improvement, alteration or repair of any such public building or other structure used or to be used for public purposes, that said contractor shall cause to be executed and delivered to the secretary of said board or other legal body, or other proper and designated custodian of the papers and records thereof, a good, valid, solvent and sufficient bond, in the penal sum equal at the least to the reasonable cost of the materials, machinery, equipment and labor required for the completion of said contract, and conditioned that in the event such contractor shall fail to pay in full for all such materials, machinery, equipment and labor used by him in the erection, construction, improvement, alteration or repair of such public building or other structure, or building or other structure used or to be used for public purposes, then said bond and the sureties thereon shall be responsible to said materialmen, furnisher of machinery or equipment, and furnisher or performer of said labor, or their assigns, for the full payment of the full value thereof."

Pursuant to the requirement of the contract, the contractor executed bond, with the defendant as surety, in the sum of $82,960. This bond, after reciting the execution of the contract between plaintiff and the contractor, incorporated the provisions of the contract into the bond by the use of the following language: "A copy of which i. e., the contract is or may be attached hereto, and is hereby referred to and made a part hereof." The clause expressing the condition of the bond was that "the principal shall indemnify the obligee against loss or damage directly caused by the failure of the principal faithfully to perform the contract," and this was followed by a provision that the bond was executed upon certain express conditions, among which was the following: "11. No right of action shall accrue upon or by reason hereof, to or for the use or benefit of any one other than the obligee named herein; and the obligation of the surety is and shall be construed strictly as one of suretyship only."

The contractor defaulted in the performance of the contract, and the plaintiff completed the work thereunder. The balance of the contract price remaining in the hands of plaintiff, after deducting the payments to the contractor, was more than sufficient to cover the cost of completing the contract, and the amount remaining after its completion was applied on the claims for labor and materials. This left a balance due on claims of laborers and materialmen amounting to $9,587.40. These claims were duly assigned to plaintiff, upon payment by it of the balance due thereon, and it was to recover on these assigned claims that this action was brought.

The facts as stated were set forth in the declaration, and established by evidence introduced at the trial. Their sufficiency was challenged on the ground that the bond did not guarantee the payment of claims of laborers and materialmen, but merely indemnified plaintiff against loss which it might sustain from breach of contract on the part of the contractor, and that plaintiff had sustained no loss as a result of the contractor's breach of contract; that, with respect to the claims sued on, plaintiff was in no better position than the laborers and materialmen who assigned their claims to plaintiff; and that, as these could not have recovered on the bond, plaintiff could not recover on it. The District Judge overruled a demurrer to the declaration and, the parties orally waiving a jury trial, proceeded to hear the case, both on the law and the facts. At the conclusion of the testimony, the defendant moved the court "to strike out all of the evidence introduced by plaintiff, and to direct a verdict for the defendant," and excepted to the overruling of this motion. The judge made no special findings of fact, other than the statement of facts contained in a written opinion filed by him, but, upon the evidence, held that plaintiff was entitled to recover, and rendered judgment accordingly. The assignments of error relate to the overruling of the demurrer to the declaration, the permitting of an amendment thereto, the denial of the motion for a directed verdict, and the admission of certain testimony relating to the claims assigned to plaintiff.

We cannot consider the assignments of error relating to the denial of the motion for a directed verdict, or those relating to the admission of testimony, for the reason that a jury trial was waived, and the parties did not preserve their right to review questions of law arising on the evidence, by complying with section 649 of the Revised Statutes (Comp. St. § 1587). Trial by jury in actions at law is guaranteed by the Constitution (Amendments, art. 7), and is prescribed by the statutes of the United States (R. S. § 648 Comp. St. § 1584). Section 649 of the Revised Statutes provides that issues of fact may be tried without the intervention of a jury, "whenever the parties, or their attorneys of record, file with the clerk a stipulation in writing waiving a jury." When this statute is complied with by the filing of such written stipulation, a review may be had under section 700 of the...