Dayton L. & M. Co. v. New Capital Hotel, Inc.

• Decision Date: 22 November 1927
• Citation: 222 Ky. 29
• Parties: Dayton Lumber & Manufacturing Company v. New Capital Hotel, Incorporated, et al.
• Court: Supreme Court of Kentucky

222 Ky. 29

Dayton Lumber & Manufacturing Company v. New Capital Hotel, Incorporated, et al.

Court of Appeals of Kentucky.

Decided November 22, 1927.

1. Mechanics' Liens. — Where contractor's bond contained provision that it was issued subject to plans and specifications referred to and made a part thereof, plans and specifications and provisions in bond must be considered together in determining liability of obligee and surety under bond for claims of materialmen.

2. Mechanics' Liens. — Under bond by construction company made to hotel company, indemnifying hotel company for loss from breach of contract, and issued subject to specifications requiring bond to guarantee payment of claims for labor and material, bond was for benefit of hotel company, not materialmen, but obligating surety to indemnify hotel company against loss by being compelled to pay materialmen's claims on contractor's failure to do so, and, where hotel company was not forced to pay such claims by reason of materialmen's failure to file lien, surety on bond could not be compelled to pay claim.

3. Mechanics' Liens. — In suit by materialmen against hotel company and surety on contractor's bond, made subject to specifications requiring bond to guarantee payment of claims for materials, which was executed for benefit of hotel company, company was not liable for claims of materialmen failing to file lien on ground that, in sending out plans and specifications, materialmen were advised that bond would be required for their benefit.

Appeal from Franklin Circuit Court.

LESLIE W. MORRIS for appellant.

O'REAR, FOWLER & WALLACE for appellees.

OPINION OF THE COURT BY JUDGE LOGAN.

Affirming.

Plans and specifications for the construction of the New Capital Hotel in Frankfort, Ky., were prepared and sent to contractors with the request that bids be submitted for the construction of the hotel building. The plans and specifications contained a provision among the general conditions as follows:

"The successful bidder will be required to attach to the contract document a surety company bond in the sum of 50 per cent. of the contract price, which bond is to guarantee the faithful performance of all of the conditions of the contract and to guarantee the payment of all claims for labor and material used in the erection of the contract."

Bids were submitted and the contract was awarded to John Parks & Co., of Chattanooga, Tenn., and a contract was entered into between the hotel company and the construction company. The hotel company required of the construction company a surety bond guaranteeing the faithful performance of the contract by the construction company. This bond was executed by the construction company as principal with the United States Fidelity & Guaranty Company of Maryland as surety. This bond recites that the surety is held and firmly bound unto the New Capital Hotel, Incorporated, in the full and just sum of the contract price, to the payment of which sum, well and truly to be made, the principal binds itself and the surety binds itself. There is a further provision in the bond that the principal has entered into a certain written contract with the hotel company to provide all materials and to perform all the work shown on the drawing and described in the specifications entitled "Hotel Building," prepared by certain architects, and that the surety guaranteed that the principal would well and truly indemnify and save harmless the hotel company from any pecuniary loss resulting from the breach of any of the terms, covenants, and conditions of the contract on the part of the principal to be performed, and that, if the principal should well and truly perform the covenants and conditions of the contract, the bond should be void. There is this proviso in the bond:

"Provided, however, that this bond is issued subject to the plans and specifications herein referred to and made a part hereof."

During the course of the construction of the hotel the appellant herein sold to John Parks & Co., the contractors, materials amounting to $2,208.25 for which it did not receive payment. Appellant filed no mechanic's lien on the property of the hotel company, and gives as a reason for its failure to do so that it was acquainted with the plans and specifications under which the building was to be constructed,...