Barringer v. Fidelity & Deposit Co. of Maryland
| Decision Date | 22 June 1931 |
| Docket Number | 13182. |
| Parties | BARRINGER v. FIDELITY & DEPOSIT CO. OF MARYLAND. WATERS v. SAME. |
| Court | South Carolina Supreme Court |
Appeal from Florence County Court; R. W. Sharkey, Judge.
Separate actions by J. L. Barringer, Jr., trading as the J. L Barringer Hardware Company, and by W. M. Waters, against the Fidelity & Deposit Company of Maryland. Judgments for the plaintiffs, and the defendant in each case appeals.
Affirmed.
The following is the order of Judge Sharkey in the county court:
On April 15, 1926, the defendant, Fidelity & Deposit Company of Maryland, as surety, entered into an obligation with J. M Lawton, as principal, whereby they became bound unto Atlantic Coast Line Railroad Company as the owner of certain premises situate in the city of Florence, known as the Atlantic Coast Line Y. M. C. A., in the penal sum of $16,760. The bond referred to a contract between J. M. Lawton and Atlantic Coast Line Railroad Company, dated April 4, 1925 the condition of the bond being that J. M. Lawton should "well and faithfully perform and carry out each and every provision of said contract to be by him performed." By the terms of the contract, J. M. Lawton (who will be referred to hereafter as the contractor), among other things, agreed to ""provide all transportation and material" in connection with the extension of the said Atlantic Coast Line Y. M. C. A. These provisions also appear in the contract: "In case the contractor should become financially embarrassed and unable to prosecute the work diligently, or fail to pay promptly bills or wages incurred for the work," etc. Also quoting from section 9 (b): "The contractor agrees to pay and hold the Railroad harmless from all debts or claims against the contractor *** for materials furnished for said work." The contract refers to certain specifications which are attached thereto. All of these documents, being interdependent, are parts of one transaction and must be considered together.
Thereafter, the plaintiff furnished to the contractor certain materials which were used in the construction of the extensions to said building, and upon the purchase price of which a balance of $732.05 remains unpaid. For the amount, last named, with interest, plaintiff has brought suit against the defendant, basing his demand for relief upon the facts set forth above. After denying the material allegations of the complaint, defendant has interposed two additional defenses:
First: That the bond on which the suit is brought was intended solely for the protection of Atlantic Coast Line Railroad, and that plaintiff herein, as a third party and a stranger to the contract has no right of action against the defendant.
Second: That even if the bond can be construed to confer a right of action in favor of plaintiff, plaintiff having failed to file his claim within a period of one year after date of final payment, and having also failed to bring suit thereafter within the said period, is barred from maintaining this action.
There is no issue of fact for determination, the parties by a stipulation in writing, having agreed upon the facts involved, and having also agreed that this cause shall be tried by the court without a jury. By a further stipulation counsel for the parties hereto have agreed that the decision of the Court in this case shall also determine the issues in the case of W. M. Waters v. Fidelity & Deposit Company of Maryland now pending in this Court. These stipulations will be filed with the record. Pursuant to said stipulations a separate order is being filed in the last named case.
Stated in general terms, the principle relied on by plaintiff is that a third person may enforce a promise made for his benefit, even though he is a stranger both to the contract and to the consideration. This rule has been frequently discussed and applied by the courts in connection with contractor's bonds. The general principle, thus stated, has become too firmly imbedded in our system of jurisprudence to admit of argument. The question for determination here is whether this principle is applicable, in other words, whether the contract and bond were intended for the benefit of a third person furnishing materials to the contractor. This is necessarily a question of construction. In the light, however, of the language used in these instruments, the question presents but slight difficulty. The bond is conditioned for the faithful performance of every provision of the contract. The contract binds the contractor to "provide all material" in connection with the construction of the said improvements. I conclude, therefore, that the bond in this case was intended to secure the payment of claims for materials, and that plaintiff, a third party has a cause of action against defendant on the said bond. Mack Mfg. Co. v. Massachusetts Bonding & Insurance Company, 103 S.C. 55, 87 S.E. 439. Standard Oil Company v. Powell Paving & Contracting Company, 139 S.C. 411, 138 S.E. 184.
This conclusion is not affected by the distinction which defendant undertakes to make between contracts for public and for private work. The doctrine which has been so frequently recognized by our courts is one of general application to all building contracts, whether of a public or private nature. Neither is it affected by the clause in the bond, which defendant construes as expressing an intent to exclude the third party from any right to maintain this action. This clause is as follows: "The surety on this obligation hereby waives all notice of any default of the said contractor and it is expressly understood and agreed that no remedial provision of the annexed contract is made or intended for the benefit or advantage of the surety herein, but solely for the security and advantage of the Railroad Company aforesaid."
This provision clearly denotes an intention on the part of the surety to waive, so far as the Railroad Company is concerned, the benefit of any remedial provisions contained in the contract, and it could not, under any construction, be held to have any bearing on the right of a third party furnishing material to maintain an action on the bond.
The defendant also contends that the bond in effect required that all claims thereon should be filed within one year after the final payment to the contractor, and that this claim, not having been so filed, plaintiff cannot maintain this action. The following is a clause of the bond which is pertinent to this point: "This obligation shall remain in full force and effect for a period of one year after the date of the payment of final estimate pursuant to the annexed contract."
Section 8 of the contract, among other things, required the contractor to furnish the Railroad Company releases or waiver of liens or claims of any and all persons furnishing materials, who might have a lien therefor, and further provided that should there prove to be any such claim after final payment was made, the contractor should refund to the Railroad Company all moneys that the latter might be compelled to pay in discharging any lien or claim arising from material furnished. It becomes necessary to consider and construe the above quoted provisions from the bond and contract in connection with section 338 of the Code of Civil Procedure of 1922, which is as follows: "No clause, provision or agreement in any contract of whatsoever nature, verbal or written, whereby it is agreed that either party shall be barred from bringing suit upon any cause of action arising out of said contract if not brought within a period less than the time prescribed by the Statute of Limitations, for similar causes of action, shall bar such action, but the same may be brought notwithstanding such clause, provision or agreement if brought within the time prescribed by the Statute of Limitations in reference to like causes of action."
It seems to me that the clause of the bond under consideration is tantamount to a denial of the right of plaintiff to bring his action within the time prescribed by the Statute of Limitations, which period in this instance is six years, and therefore, that it is an attempt to contravene the Statute of Limitations. The Supreme Court, in the case of City of Sumter v. U.S. F. & G. Co., 116 S.C. 29, 106 S.E 778, 779, had under consideration a bond in which this provision was included: "That in no event shall the surety be liable for a greater sum than the penalty of this bond, or subject to any suit, action, or other proceeding thereon that is instituted later than the 1st day of February, A. D. 1917." In that case the Court, after quoting section 338 of the Code, declared, See, also, the case of State A. & M. Society v. Taylor, 104 S.C. 167, 88 S.E. 372. In this connection there is another reason for holding the defendant Surety Company to a strict accountability for the payment of this claim. Our Supreme Court has held in a number of cases that all Surety Companies in business for profit occupy the same position as that of an insurer of performance by the principal; that the contract should be governed by the same rules as an insurance contract, and that the law of principal and surety is not usually applicable. According to this line of authorities the doctrine that a surety is a favorite of the law and that the contract must be construed strictly as to him has no application to the case at bar. State A. & M. Society of S.C. supra; Massachusetts Bonding & Insurance Company v. Law et al., 149 S.C. 402, 147 S.E. 444. Therefore, construing the contract now before the Court most strictly against the defendant...
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