Builders' Lumber & Supply Co. v. Chi. Bonding & Sur. Co.

• Decision Date: 05 February 1918
• Citation: 166 N.W. 320,167 Wis. 167
• Court: Wisconsin Supreme Court
• Parties: BUILDERS' LUMBER & SUPPLY CO. v. CHICAGO BONDING & SURETY CO.

167 Wis. 167

166 N.W. 320

BUILDERS' LUMBER & SUPPLY CO.

v.CHICAGO BONDING & SURETY CO.

Supreme Court of Wisconsin.

Feb. 5, 1918.

Appeal from Circuit Court, Marathon County; A. H. Reid, Judge.

Action by the Builders' Lumber & Supply Company against the Chicago Bonding & Surety Company. Judgment for plaintiff, and defendant appeals. Affirmed.

On the 30th day of March, 1916, Thomas Cerney and Charles Frey, copartners, residents of the state of Illinois and doing business under the firm name of Conducive Paving Company, entered into a contract with the city of Wausau for the construction and laying of a certain paving in that city, and to assure the faithful performance of that contract said Conducive Paving Company made and executed to the said city of Wausau a bond with the defendant Chicago Bonding & Surety Company as surety. Pursuant to a contract made with the said Conducive Paving Company on the 16th day of February, 1916, the plaintiff herein, Builders' Lumber & Supply Company, during the months of August and September, 1916, sold and delivered to said Conducive Paving Company certain materials consisting of lumber, cement, and brick for use in the performance of its said contract with said city, which said materials were so used.

This action is brought by the said Builders' Lumber & Supply Company against the Chicago Bonding & Surety Company to recover an unpaid balance due to it from said Conducive Paving Company on account of such material so furnished and delivered. The defendant interposed a demurrer to the complaint, which demurrer was overruled. The defendant then answered, and upon a trial of the case judgment was rendered in favor of the plaintiff. From this judgment defendant appealed. Such portions of the contract and bond as are pertinent to the liability of the surety company in this action are sufficiently referred to in the opinion.

Kerwin and Eschweiler, JJ., dissenting.Wm. L. Tibbs and Willis E. Lang, both of Milwaukee (Daniel W. Sullivan, of Milwaukee, of counsel), for appellant.

Kreutzer, Bird, Okoneski & Puchner, of Wausau, for respondent.

OWEN, J. (after stating the facts as above).

It is the main contention of appellant that by signing the bond in question it assumed no liability in behalf of laborers or materialmen, and the questions now presented are practically the same as those raised by the demurrer to the complaint; the principal one being whether appellant in signing the bond became obligated to laborers and materialmen for work and material performed and furnished by them.

[1] It is well settled in this jurisdiction that where a contractor's bond expressly obligates the signers thereof to pay for the material and labor entering into the construction called for by the principal contract, those furnishing material for, or bestowing labor upon, such construction, may maintain an action therefor against the sureties on the bond. United States Gypsum Co. v. Gleason, 135 Wis. 539, 544, 116 N. W. 238, 17 L. R. A. (N. S.) 906;R. Connor Co. v. Ætna Indemnity Co., 136 Wis. 13, 18, 115 N. W. 811;Warren Webster Co. v. Beaumont Hotel Co., 151 Wis. 1, 10, 138 N. W. 102;Concrete Steel Co. v. Illinois Surety Co., 163 Wis. 41, 44, 157 N. W. 543.

[2] Appellant insists that, in determining the question whether or not the bond contains a covenant for the benefit of parties other than the city of Wausau, all reasonable doubts which may arise on a reading of the bond must be resolved in favor of the surety and against the claim of increased liability; that sureties are favorites in the law, and a contract of suretyship must be strictly construed to impose upon the surety only those burdens clearly within its terms and must not be extended by implication or presumption. We recognize this rule as appliedto ordinary sureties, but even as to this rule so applied it has been said:

“While it is true that a surety cannot be held beyond the express terms of his contract, yet, in interpreting the terms of a contract of suretyship, the same rules are to be observed as in the case of other contracts. Such construction does not mean that words are to be distorted out of their natural meaning, or that, by implication, something can be read into the contract that it will not reasonably bear; but it means that the contract shall be fairly construed with a view to effect the object for which it was given, and to accomplish the purpose for which it was designed. The old rule of strictissimi juris applies only to the extent that no implication shall be indulged in to impose a burden not clearly inferable from the language of the contract, but does not apply so as to hold that the contract shall not be reasonably interpreted as other contracts are.” Sather Banking Co. v. Briggs Co., 138 Cal. 724, 72 Pac. 352.

It has also been held by this and other courts that a bond of the kind involved in this case, given for a money consideration, has all the essential features of an insurance contract, and that it is not to be construed according to the rules of law applicable to the ordinary accommodation surety. First National Bank v. United States Fidelity Co., 150 Wis. 601, 137 N. W. 742, and cases there cited. By the terms of the bond in question appellant acknowledges itself bound to the city of Wausau in the sum of $20,000, the condition thereof being stated as follows:

“Whereas, the above bounden Conducive Paving Company has made to the city of Wausau a proposal in writing to furnish all the material and do all the work necessary to paving Grand and Forest avenues in said city, in accordance with the plan, profile, details and specifications on file in the office of the city clerk of said city:

Now, therefore, the condition of this obligation is such, that if the above bounden Conducive Paving Company, the said contract being awarded to them, shall fully and faithfully perform all the conditions and covenants contained in the contract as well as the provisions contained therein or other guaranty of such work, and shall refund to said city of Wausau all sums which it may be obliged or adjudged to pay on any claim or demand for damages as provided in said contract, then this bond to be void, otherwise in full force and effect.”

Note the provision:

“That if the above bounden Conducive Paving Company * * * shall fully and faithfully perform all the conditions and covenants contained in the contract, etc., then this bond to be void, otherwise in full force and effect.”

The bond is to be void if, and only if, the Conducive Paving Company “shall fully and faithfully perform all the conditions and covenants contained in the contract.” What are those conditions and covenants? They are not recited in the bond. We cannot ascertain the scope, extent, or nature thereof by confining ourselves to an inspection of that document. Obviously ...