Beech Grove Improvement Co. v. Title Guar. & Sur. Co.

• Decision Date: 10 May 1912
• Docket Number: No. 7,584.,7,584.
• Citation: 98 N.E. 373,50 Ind.App. 377
• Parties: BEECH GROVE IMPROVEMENT CO. v. TITLE GUARANTY & SURETY CO.
• Court: Indiana Appellate Court

50 Ind.App. 377

98 N.E. 373

BEECH GROVE IMPROVEMENT CO.

v.TITLE GUARANTY & SURETY CO.

No. 7,584.

Appellate Court of Indiana, Division No. 1.

May 10, 1912.

Appeal from Superior Court, Marion County; Clarence E. Weir, Judge.

Action by the Beach Grove Improvement Company against the Title Guaranty & Surety Company. Judgment for defendant, and plaintiff appeals. Affirmed.

Morris M. Townley, for appellant. Caleb S. Denny and George L. Denny, for appellee.

HOTTEL, J.

Appellant brought this action against the appellee and Charles S. Pollard to recover upon a bond given by said Pollard as principal and appellee as surety to secure the faithful performance of a building contract. The complaint is in two paragraphs, each of which alleges the execution of a building contract between appellant and Pollardand also the bond, and embodies therein each of said writings. The sufficiency of either of the paragraphs is not questioned, and their difference is unimportant for the purpose of determining the questions presented by this appeal. The breach of the bond charged, for which a recovery is sought, is the same in each paragraph.

It was agreed between appellant and appellee that Pollard is insolvent, and that there should be a dismissal as to him without prejudicing appellant's right to proceed against appellee. The contract between appellant and Pollard contained the following provision: “Art. VI. The contractor shall complete the several portions, and the whole of the work comprehended in this agreement by and at the time or times hereinafter stated, to wit: All work under this contract to be completed on or before September 18, 1907.” The condition of the obligation of the bond contained the following proviso: “Provided, however, that this bond is issued subject to the following conditions and provisions.” These conditions and provisions, important and controlling in the determination of the question presented, are: “First. That no liability shall attach to the surety hereunder unless, in the event of any default on the part of the principal in the performance of any of the terms, covenants, or conditions of the said contract, the obligee shall promptly and immediately upon knowledge thereof, and, in any event, not later than thirty days after the occurrence of said default deliver to the surety at its office in the city of Scranton, Pa., written notice thereof with a statement of the principal facts showing such default and the date thereof; nor unless the said obligee shall deliver written notice to the surety at its office aforesaid before making to the principal the final payment provided for under the contract herein referred to. Second. That in case of such default on the part of the principal the surety shall have the right, if he so desires, to assume and complete or procure the completion of said contract.”

An answer was filed in two paragraphs, the first of which was addressed to the first paragraph of complaint, and the second to the second paragraph of complaint. Each of these paragraphs of answer admitted the execution of the bond in suit and its breaches, and in addition thereto set out the provisions of the contract, supra, which provided that the work should be done on or before September 18, 1907, and the conditions of the bond, supra, and averred that said Pollard defaulted as to said covenant and condition, in that he did not complete the work in said contract on or before September 18, 1907, but that he continued to work upon said building for a period of about 80 days thereafter, when he abandoned the work thereon, and left said building unfinished and unfit for occupancy; that appellant did not notify appellee promptly and immediately upon knowledge thereof, or within 30 days after September 18, 1907; that said Pollard failed to complete the work under said contract on or before said date, and did not notify appellant of said default until January 14, 1908; that prior to said notice said Pollard had abandoned the work under said contract, and had left said building in an unfinished condition. A demurrer was filed to each of these paragraphs, which was by the court overruled and exception saved to each ruling. Appellant refused to reply and elected to stand upon the court's rulings upon said demurrer, and there was judgment for appellee against appellant for costs. The rulings upon said demurrers present the only error relied upon by this appeal.

The entire question, therefore, depends upon the effect to be given to the above provisions of the bond. Appellee contends that Pollard's failure to complete the building on September 18, 1908, the date specified by the contract for said completion, was such a default as entitled it, the appellee, to immediate notice, or at least notice not later...