Carpenter v. Susi

• Decision Date: 05 March 1956
• Citation: 121 A.2d 336,152 Me. 1
• Parties: Frank S. CARPENTER, in his capacity as Treasurer of the State of Maine, v. Paul E. SUSI, Frank T. Susi, Guy Susi, d/b/a P. E. Susi & Co. and Hartford Accident & Indemnity Co.
• Court: Maine Supreme Court

Page 336

121 A.2d 336

152 Me. 1

Frank S. CARPENTER, in his capacity as Treasurer of the State of Maine, v. Paul E. SUSI, Frank T. Susi, Guy Susi, d/b/a P. E. Susi &

Co. and Hartford Accident & Indemnity Co.

Supreme Judicial Court of Maine.

March 5, 1956.

John G. Marshall, Auburn, for plaintiff.

Dubord & Dubord, Waterville, for defendant Susi.

Locke, Campbell, Reid & Hebert, Augusta, for Hartford Accident & Indemnity Co.

Before FELLOWS, C. J., and WILLIAMSON, WEBBER, BELIVEAU, TAPLEY, and CLARKE, JJ.

WILLIAMSON, Justice.

This action of debt against the surety on a highway construction bond is before us on general motion of the defendant for a new trial. The Treasurer of State brought the action on behalf of Snow's Inc., the supplier, to recover a balance claimed upon an account for tires, tubes, and vulcanizing and retreading services against the P. E. Susi & Co. firm, the contractor, in connection with a highway project in Troy. The plaintiff dismissed the case against the contractor by reason of bankruptcy. The jury assessed damages at the penal sum of the bond and estimated the supplier's damage at $4.150.

There are two main questions. The first concerns the coverage of the bond, and the second, whether the claim is within such coverage.

The sufficiency of the charge of the presiding Justice is not in issue. No exceptions were taken, and indeed the charge is not printed with the record. Under the familiar rule we assume that the case was submitted under proper instructions. First Nat'l Bank of Pittsfield v. Morong, 1951, 146 Me. 430, 82 A.2d 98; Frye v. Kenney, 1939, 136 Me. 112, 3 A.2d 433; Archibald v. Queen Insurance Co., 1917, 115 Me. 564, 99 A. 771. We are called upon to determine the correct rule governing the construction of the bond and to measure the jury verdict by the rule so determined.

In 1952 the State Highway Commission awarded two separate construction contracts to the Susi firm; the first, for a highway in Oakland and Smithfield known as the Oakland project, and the second for a highway in Troy known as the Troy project. The contractor carried on the work on both projects at about the same time. The Oakland project was commenced in November 1952 and completed in December 1953. The Troy project ran from August to December 1952, and from May to November 1953. During the progress of the Troy project the supplier sold the tires and tubes and performed the vulcanizing and retreading set forth in the account. The defendant surety does not question the items or charges against the contractor.

The issue is limited to the extent of defendant's liability under the statutory bond in favor of the Treasurer of State given by the contractor and the surety for the Troy project.

The pertinent part of the statute reads:

'The commission shall have full power in all matters relating to the furnishing of bonds by the successful bidders for the completion of their work and fulfilling of their contracts, and for the protection of the state and town from all liability arising from damage or injury to persons or property.' R.S. c. 20, § 21 (1944), now R.S. c. 23, § 40 (1954).

The bond provides that the principal '* * * shall faithfully perform the contract on his part, and satisfy all claims and demands incurred for the same and shall pay all bills for labor, material, equipment, and for all other things contracted for or used by him in connection with the work contemplated by said contract, and shall fully reimburse the obligee for all outlay and expense which the obligee may incur in making good any default of said Principal, * * *'. The specifications incorporated by reference and made a part of the contract, and in turn a part of the bond, read in part as follows:

'Requirements of Contract Bond. 'The successful Bidder, at the time of the execution of the contract, must furnish a bond payable to the Treasurer of the State of Maine, or his successors in office, in the sum of seventy-five (75) per cent of the amount of the contract awarded, in case a surety company bond is provided, or fifty (50) per cent of the amount of the contract awarded if a certified check or other security is provided, as noted below.

The form of bond shall be that provided by the Commission and the Surety shall be acceptable to the Commission. This bond shall guarantee due execution and faithful performance and completion of the work to be done under the contract, and the payment in full of all bills and accounts for material and labor used in the work, and for all other things contracted for or used in connection with the contract; the contract shall not be considered in force until such bond has been filed and accepted by the Commission. * * *''

'Responsibility for Damage Claims. '* * * The Contractor shall promptly pay all bills for labor, materials, machinery, board of workmen, water, tools, equipment, teams, trucks, automobiles, freight, fuel, light and power and for all other things, contracted for or used by him on account of the work herein contemplated, and if at any time during the progress of the work or before final payment of any money due the Contractor under the terms of this contract, any claim for labor, materials, board of workmen, water, tools, equipment, teams, trucks, automobiles, freight, fuel, light and power, or for any other things specified as aforesaid, or for damages by reason of any acts, omissions or neglect of said Contractor in the prosecution of the work, shall be presented to said Commission, the Commission may retain such sum or sums from the moneys due the Contractor under this contract as would be necessary to discharge all such claims whether for labor or materials or for damages as aforesaid, and until the validity of such claims shall be established and finally determined, and if determined and finally established as valid, all such claims shall be paid from the amount so retained if it be sufficient for that purpose; otherwise, or if at any time the Commission shall be satisfied that any of such claims are invalid and groundless, any amount so retained shall be paid to said Contractor, or in case of default of contract to the contractor's surety, and neither the said Commission nor any member thereof shall be liable to any individual, firm or corporation making such claim for failure or refusal to hold and retain any money due under this contract for the purpose of payment of such claim * * *''

In support of its motion the defendant bonding company in substance contends: (1) that claims for repairs or replacements of contractor's equipment are not covered by the bond; (2) that tires and tubes adding to the value of the equipment and making it available for future work after the completion of the contract are not covered; and (3) that in any event there can be recovery for repairs and parts required in use of the contractor's regular equipment if, and only if, the items were consumed in the course of the particular contract.

The plaintiff on its part argues that the tires and tubes and other items were 'contracted for or used by (the contractor) in connection with the work contemplated. * * *' Consumption in this view is not required.

The precise question has not been determined in our Court. Two cases in which the provisions of a like bond have been considered are Foster v. Kerr & Houston, 1935, 133 Me. 389, 179 A. 297 and McFarland v. Rogers, 1936, 134 Me. 228, 184 A. 391. In Foster the Court held that the bond covered certain suppliers who furnished labor or materials to the contractor for use in the construction of a highway bridge. The bond was given under a statute like that now in effect, and the contract provisions stated in the opinion closely parallel the present contract. The Court, in construing the bond, said, 133 Me. at page 395, 179 A. at page 300: '* * * that a bonding company agreeing for a consideration is a surety, and that its guaranty is not to be interpreted under the rule strictissimi juris.' And again, quoting with approval from 21 R.C.L. 1160, "* * * because it is essentially an insurance against risk, underwritten for a money consideration by a corporation adopting such business for its own profit, the contract will be construed most strongly against the surety and in favor of the indemnity which the obligee has reasonable grounds to expect."

In McFarland the surety on a contractor's bond running to a municipality was held liable for unpaid premiums on public liability and workmen's compensation insurance which were required by the specifications forming a part of the contract. The Court said, 134 Me. at page 231, 184 A. at page 392:

'Though of course we cannot import into a bond an obligation not covered by its terms, yet the rule is laid down in [the Foster case], that the liability of a bonding company, agreeing for a consideration to act as surety, is not to be measured by the rule of strictissimi juris. Such an agreement will be construed most strongly against the surety.'

The surety urges that the liberal construction rule should be tempered since the bond was drafted by the State and not by the bonding company, and hence a chief reason for the rule does not exist. The point, however, is not open to the surety. It was decided otherwise under like conditions in Foster and reaffirmed in McFarland.

From our study of the bond in light of the statutes, and the contract including the specifications, and having in mind the purposes for which it was intended, we conclude that items of the nature described in the claim before us are covered by the bond if, and only if, they are substantially consumed in connection with the contract. In other words, the surety is obligated to pay such claims when substantial consumption in the construction of the particular highway project is proved.

Under the contract for the Troy project the contractor 'agrees to supply all equipment, appliances, tools, labor and materials and to perform all work required...