American Employers Ins. Co. v. School District of Town of Newport

• Decision Date: 08 September 1954
• Citation: American Employers Ins. Co. v. School District of Town of Newport, 107 A.2d 684, 99 N.H. 188 (N.H. 1954)
• Parties: AMERICAN EMPLOYERS INS. CO. v. SCHOOL DISTRICT OF TOWN OF NEWPORT et al.
• Court: New Hampshire Supreme Court

Page 684

107 A.2d 684

99 N.H. 188

AMERICAN EMPLOYERS INS. CO. v. SCHOOL DISTRICT OF TOWN OF NEWPORT et al.

Supreme Court of New Hampshire.

Argued June 1, 1954.

Decided Sept. 8, 1954.

Sheehan, Phinney & Bass, Wm. L. Phinney, Manchester, for plaintiff.

Jacob M. Shulins, Newport, and Richard C. Duncan, Concord, for defendant bank.

Jarlath Slattery, Newport, for the School District and Robert E. Earley and Charles J. Flynn, Nashua, for the trustee in bankruptcy, filed no brief.

BLANDIN, Justice.

The question here is whether the plaintiff is entitled to the entire $13,000 which the School District has paid into Court or whether the bank should have the sum of $9,842.12 with interest, being the balance due it on the note dated October 13, 1948 and given to it by the Standard Construction Company. The application which the company made to secure the bond contained a provision that the plaintiff 'shall as surety on said bond, be subrogated to all rights, privileges and properties of [Standard] * * * as principal and otherwise in said contract, and [Standard] does hereby assign, transfer and convey to said Corporation all the deferred payments, and retained percentages, and any and all moneys and properties that may be due and payable at the time of such breach or default, or that may thereafter become due and payable to [Standard] * * * on account of said contract, or account of extra work and materials supplied in connection therewith, hereby agreeing that all such moneys, and the proceeds of such payments and properties, shall be the sole property of the said American Employers Insurance Company, and to be by it credited upon any loan, cost, damage, charge and expense sustained, or incurred by it as above under its bond of suretyship.' The obvious purpose of this clause seems to have been to protect the plaintiff against just such a situation as has arisen here because of the company default, and to entitle the plaintiff to all moneys due the company at the time of the default or thereafter. We believe it was an unconditional assignment of a right to become effective in accordance with its terms upon the happening of an event. Restatement, Contracts, § 155 comment b. There was a valid contract between the company and the district and the right of the plaintiff upon the contingency occurring became vested when the instrument was signed. Pollard v. Pollard, 68 N.H. 356 39 A. 329; Garland v. Harrington & Trustee, 51 N.H. 409, 414; Restatement, Contracts, § 155. The intent of the parties too, as evidenced by their agreement, was that all moneys, including those withheld for any reason, should when due become the property of the plaintiff and in the circumstances here this is clearly equitable. Note 76 A.L.R. 917; 9 Am.Jur., Building and Construction Contracts, § 115. It follows that the bank's contention that there was no good assignment cannot prevail.

In such circumstances the defendant admits that ordinarily the plaintiff as surety would be subrogated to all the 'securities and remedies' held by the School District. However, the defendant contends that the equities here favor it because the money loaned the construction company was spent to pay for work and materials used on the job, thereby lessening the plaintiff's obligations by that amount. It says that for the plaintiff to recover the whole sum would result in unjust enrichment. This overlooks the fact that the plaintiff has spent far more in completing the work than the $13,000 available which it seeks to recover and that in any event, so far as appears on the record, it will be the loser by thousands of dollars. Furthermore, the defendant as assignee of the company has no rights superior to those of Standard. Plante v. Shortell & Son, 92 N.H. 38, 41, 24 A.2d 498, 139 A.L.R. 1325, and cases cited; Scarsdale National Bank & Trust Co. v. United States Fidelity & Guaranty Co., 264 N.Y. 159, 190 N.E. 330; Dearborn v. Nelson, 61 N.H. 249, 250; Restatement, Contracts, § 167. The agreement between Standard and the School District provided that upon the appointment of the receiver the district could terminate the employment of the company taking possession of the premises, tools and appliances and 'finish the work by whatever method he may deem...