Anderson v. United States Fid. & Guar. Co.

• Decision Date: 05 August 1940
• Docket Number: No. 4558.,4558.
• Citation: 44 N.M. 483,104 P.2d 906
• Court: New Mexico Supreme Court
• Parties: ANDERSON et al.v.UNITED STATES FIDELITY & GUARANTY CO.

44 N.M. 483

104 P.2d 906

ANDERSON et al.

v.UNITED STATES FIDELITY & GUARANTY CO.

No. 4558.

Supreme Court of New Mexico.

Aug. 5, 1940.

Appeal from District Court, Bernalillo County; Bryan G. Johnson, Judge.

Suit by Clinton P. Anderson and Mountain States Casualty Company against Joseph Gagner and United States Fidelity & Guaranty Company, as principal and surety, respectively, on a bond executed by them guaranteeing faithful performance by Gagner of his contract with the board of education of the city of Albuquerque to build a certain public school building, for the premiums on workmen's compensation and public liability insurance. From judgment dismissing the complaint, following sustaining of demurrer filed by United States Fidelity & Guaranty Company and refusal of plaintiffs to plead further, the plaintiffs appeal.

Affirmed.

Premiums on workmen's compensation and public liability insurance, both of which were required under building contractor's contract with board of education for construction of school building, were not “supplies” within meaning of contractor's faithful performance bond providing for payment of just claims for labor performed and materials and supplies furnished upon or for work under contract, so as to render surety on bond liable therefor. Comp.St.1929, § 17-201.

Owen B. Marron, of Albuquerque, for appellants.

W. A. Keleher and Theo. E. Jones, both of Albuquerque, for appellee.

MABRY, Justice.

Appellants sought judgment for $1,847.25 in the District Court against one Joseph Gagner, and appellee, as principal and surety, respectively, on a bond executed by them guaranteeing faithful performance by Gagner of his contract with the Board of Education of the City of Albuquerque, in which he agreed to build a certain public school building. Appellants alleged that they jointly extended credit to Gagner for the premiums on workmen's compensation and public liability insurance, both of which were required under his contract with the Board of Education.

Appellee demurred, was sustained, and upon refusal of appellants to plead further, the complaint was dismissed as to it. This appeal is from the order sustaining the demurrer and dismissing the complaint.

[1] The question to be determined is whether premiums of workmen's compensation and public liability insurance are recoverable on the contractor's faithful performance bond. Appellants first contend that the use of the word “maintain” in the contract between Gagner and the Board of Education renders the surety liable. It is their position that to “maintain” insurance means to bear the expense thereof, and that consequently, execution of the faithful performance bond included a guaranty of payment of all insurance premiums. It is true that the word has been held to mean, “bear the expense of; to support; to keep up”. Alexander v. Parker, 144 Ill. 355, 33 N.E. 183, 184, 19 L.R. A. 187; Lucas v. St. Louis & S. Ry., 174 Mo. 270, 73 S.W. 589, 61 L.R.A. 452; Merrill v. Spencer, 14 Utah 273, 46 P. 1096; Bice v. Foshee, 19 Ala.App. 421, 97 So. 764. Appellee insists, however, and we think with better reason, that the word “maintain”, also, and primarily, means “to hold by the hand; to hold and keep in any particular state or condition, especially in a state of efficiency or validity.” In Kansas City Structural Steel Co. v. Utilities Building Corporation, 339 Mo. 68, 95 S.W.2d 1176, 106 A.L.R. 244, the court decided the word “maintain” in a similar contract meant to keep in force. In Lucas v. St. Louis & S. Ry. Co., supra [174 Mo. 270, 73 S.W. 591, 61 L.R.A. 452], cited in appellant's brief, we note that the Missouri court quoted from Webster's International Dictionary in which “maintain” is defined to mean: “(1) To hold or keep in any particular state or condition; to support; to sustain; to uphold; to keep up; not to suffer to fail or decline. (2) To keep possession of; to hold and defend; not to surrender or relinquish. (3) To continue; not to suffer to cease or fail. (4) To bear the expense of; to support; to keep up; to supply with what is needed.” Construing the word in connection with the whole of the contract, as we must, we cannot say that it means “to pay for” and must therefore discard this theory of recovery.

[2] Appellants also place reliance on the word “supplies” used in the statute (New Mexico Statutes Annotated, 1929 Compilation, Section 17-201) and in the bond, conceding that insurance premiums are not embraced by the words “labor and materials.” Ample authority exists for this concession. Warner Co. v. Schoonover, 20 Del. Ch. 165, 174 A. 449; Employers' Liability Assurance Corp. v. Cannon, 173 Okl. 493, 49 P.2d 103, 102 A.L.R. 131; Bay State Dredging, etc., Co. v. W. H. Ellis & Son Co., 235 Mass. 263, 126 N.E. 468; Southern Surety Co. v. Metropolitan Sewerage Commission, 187 Wis. 206, 201 N. W. 980, 204 N.W. 476; State ex rel. v. Padgett, 54 N.D. 211, 209 N.W. 388, Employers' Mut. Liability Ins. Co. v. Grahl Const. Co., 203 Wis. 315, 234 N.W. 326.

Appellants' position rests primarily on two cases, Merchants Mutual Casualty Co. v. United States Fidelity & Guaranty Company, 253 App.Div. 151, 2 N.Y.S.2d 370, and McFarland v. Rogers, 134 Me. 228, 184 A. 391, both of which hold insurance premiums covered by the faithful performance...