Aetna Indemnity Company of Hartford, Connecticut v. Indianapolis Mortar and Fuel Company

• Decision Date: 06 June 1912
• Docket Number: 21,786
• Citation: 98 N.E. 706,178 Ind. 70
• Parties: Aetna Indemnity Company of Hartford, Connecticut, v. Indianapolis Mortar and Fuel Company et al
• Court: Indiana Supreme Court

98 N.E. 706

178 Ind. 70

Aetna Indemnity Company of Hartford, Connecticut, v. Indianapolis Mortar and Fuel Company et al

No. 21,786

Supreme Court of Indiana

June 6, 1912

From Marion Circuit Court; Charles Remster, Judge.

Action by the Indianapolis Mortar and Fuel Company against Thomas J Markey and Company, and the Aetna Indemnity Company of Hartford, Connecticut. From a judgment for plaintiff, the defendant Aetna Indemnity Company of Hartford, Connecticut appeals.

Affirmed.

W. H H. Miller, C. C. Shirley, Samuel D. Miller and W. H. Thompson, for appellant.

Ryan & Ruckelshaus, Groninger & Groninger, for appellee.

OPINION

Monks, J.

This action was brought by appellee, Indianapolis Mortar and Fuel Company, against Thomas J. Markey & Co., as principal, and appellant, as surety, on bonds given to secure the performance of certain contracts between the city of Indianapolis and said Thomas J. Markey & Co. for the construction of various sewers in said city. Appellant filed a separate answer in seven paragraphs. Said appellee's demurrer for want of facts to the third, fourth, fifth and sixth paragraphs of said answer was sustained. A trial of said cause by the court resulted in a finding in favor of appellee, and over a motion for a new trial judgment was rendered against appellant. The errors assigned and not waived call in question the action of the court in sustaining the demurrer to the third, fourth, fifth and sixth paragraphs of appellant's separate answer.

It is said in appellant's brief that "the several assignments of error in this case present but one question, and that is, whether upon the completion of the work or of the approval of the final assessment roll the liability of appellant upon its bond ceased and terminated." It appears from the record that the action was brought after the acceptance of the work and the completion of the assessment roll. Appellant claims that its liability terminated on the acceptance of the work or the approval of the assessment roll. If this contention of appellant is correct, the judgment must be reversed, if not, it must be affirmed.

There was a provision in the contracts that the contractor should pay for material furnished and labor performed in the construction of said sewers. The bonds sued on were given to secure the performance of said contracts. The contracts and bonds must be construed together. Closson v. Billman (1904), 161 Ind. 610, 614, 69 N.E. 449, and cases cited.

It is settled in this State, that a bond given to secure the performance of a contract for a public improvement, which provides, as in this case, that the contractor shall pay for all materials used in such improvement, inures to the benefit of those furnishing said materials who may maintain an action thereon in their own names. Hines v. Consolidated Coal, etc., Co. (1902), 29 Ind.App. 563, 64 N.E. 886; Williams v. Markland (1896), 15 Ind.App. 669, 44 N.E. 562; Young v. Young (1899), 21 Ind.App. 509, 514, 52 N.E. 776; American Surety Co. v. Lauber (1899), 22 Ind.App. 326, 329, 331, 53 N.E. 793; Brown v. Markland (1899), 22 Ind.App. 652, 53 N.E. 295; King v. Downey (1900), 24 Ind.App. 262, 56 N.E. 680; Ochs v. M. J. Carnahan Co. (1908), 42 Ind.App. 157, 76 N.E. 788, 80 N.E. 163; Knight & Jillson Co. v. Castle (1909), 172 Ind. 97, 103, 105, 87 N.E. 976, 27 L. R. A. (N. S.) 573, and cases cited; Closson v. Billman, supra.

The bonds sued on being given for the protection of materialmen and laborers, as well as for the protection of the city, were dual in their nature, and the right of action of the materialmen is not affected by any act or omission of the city. Dewey v. State, ex rel. (1883), 91 Ind. 173; Conn v. State, ex rel. (1890), 125 Ind. 514, 25 N.E. 443; United States Fidelity, etc., Co. v. American Blower Co. (1908), 41 Ind.App. 620, 84 N.E. 555; United States v. National Surety Co. (1899), 92 F. 549, 34 C. C. A. 526; United States, etc., Co. v. Omaha Bldg., etc., Co. (1902), 116 F. 145, 53 C. C. A. 465; Chaffee v. United States Fidelity, etc., Co. (1904), 128 F. 918, 63 C. C. A. 644; United States v. California Bridge, etc., Co. (1907), 152 F. 559; Getchell & Martin Lumber Co. v. Peterson & Sampson (1904), 124 Iowa 599, 615, 100 N.W. 550; School District, etc., v. Livers (1899), 147 Mo. 580, 49 S.W. 507; Steffes v. Lemke (1889), 40 Minn. 27, 41 N.W. 302; City of Duluth v. Heney (1890), 43 Minn. 155, 45 N.W. 7; Village of West Duluth v. Norton (1894), 57 Minn. 72, 58 N.W. 829; Kaufmann v. Cooper (1896), 46 Neb. 644, 65 N.W. 796, and cases cited; Des Moines, etc., Iron Works v. Marxen & Rokahr (1910), 87 Neb. 684, 128 N.W. 31; King & Co. v. Murphy (1896), 49 Neb. 670, 68 N.W. 1029; Doll v. Crume (1894), 41 Neb. 655, 59 N.W. 806; Lyman v. City of Lincoln (1894), 38 Neb. 794, 57 N.W. 531; Griffith v. Rundle (1900), 23 Wash. 453, 63 P. 199, 55 L. R. A. 381, 386, 390; City of Philadelphia v. Stewart (1902), 201 Pa. 526, 51 A. 348.

The board of public works of the city of Indianapolis was authorized to require the bond sued on by § 8698 Burns 1908, Acts 1905 p. 219, § 95, and as the bonds secured the claims of materialmen and laborers, the rule above stated applies. United States Fidelity, etc., Co. v. American Blower Co., supra.

Under the provisions of the bonds and contract sued on, the rights and liabilities of appellant and appellee are the same as those of the surety and materialmen to a bond executed under the provisions of § 8959 Burns 1908, Acts 1905 p. 219, § 265. There is nothing in the bonds, contracts or statute providing that appellee shall notify the surety on the bonds, or the city, that it had furnished material used in said work, and of the failure of the contractor to pay for the same, and that it had a claim therefor before the completion of the work or before the final acceptance of the work by the city, and to enable appellee to recover in this action it was not necessary that such notice be given.

While § 19 of the specifications for said work, which, with all other specifications for said work, is referred to in the contracts and made a part thereof, provides that "before final acceptance of the work, the contractor shall submit satisfactory evidence to the board that all bills for materials and labor have been paid," it is evident from what we have said and the cases above cited that the failure of the board of works to require the contractor to "submit satisfactory evidence that all bills for material and labor have been paid" did not release appellant as surety on the bonds sued on.

The contention of appellant, that its liability on the bond terminated on the acceptance of the work or the approval of the assessment roll is based on the following provisions contained in the specifications for said work, which are referred to in the contract and made a part thereof "46. Bond. Within five (5) days after the successful bidder shall have been notified of the acceptance of his bid he shall file with the Board of Public Works an approved bond in an amount not less than fifty (50) per cent of the estimated contract price, but in no case shall a bond be accepted for less than five hundred dollars ($ 500) conditioned to guarantee the full and complete performance of his work according to the terms of the contract; said bond to be in full force and effect, up to and including the final acceptance of the work, or the approval of the final assessment roll, after which it will become null and void, subject to the following conditions, to wit: (a) In the case of asphalt, wooden block, bitulithic, standard macadam, bituminous macadam and brick pavements, before the contractor shall be released from his bond, he shall file with the city controller improvement bonds as provided by § 38 of the general specifications. In case cement walks, gutters, curbs, and other appurtenances are constructed in connection with the contract for any of the above roadway pavements, the deposit of improvement bonds, designated for such roadway pavements, shall also be considered as a guarantee fund covering said...