Dover & Co. v. United Pac. Ins. Co.

• Decision Date: 25 February 1972
• Docket Number: Docket No. 11632,No. 3,3
• Parties: DOVER AND COMPANY, Plaintiff-Appellee, v. UNITED PACIFIC INSURANCE COMPANY, Defendant-Appellant
• Court: Court of Appeal of Michigan — District of US

Page 126

197 N.W.2d 126

38 Mich.App. 727

DOVER AND COMPANY, Plaintiff-Appellee, v. UNITED PACIFIC INSURANCE COMPANY, Defendant-Appellant.

Docket No. 11632.

Court of Appeals of Michigan, Division No. 3.

Feb. 25, 1972.

Released for Publication May 12, 1972.

Sherman H. Cone, Cholette, Perkins & Buchanan, Grand Rapids, for defendant-appellant.

John T. Garey, Saginaw, for plaintiff-appellee.

Before R. B. BURNS, P.J., and LEVIN and T. M. BURNS, JJ.

R. B. BURNS, Presiding Judge.

Plaintiff, a subcontractor, agreed to furnish labor and materials to the principal contractor in completing a construction contract with the State Highway Department. In accordance with State law the principal contractor obtained a surety bond from the defendant. ¹

Plaintiff brought this suit against defendant-surety to recover the unpaid balance on the contract between plaintiff and its defaulting principal contractor. One of the controversies at the trial level concerned the effect of plaintiff's failure to serve notice upon the State Highway Department within a statutorily required 60-day period.

M.C.L.A. § 570.102 (Stat.Ann.1970 Rev. § 26.322) provides:

'In the case of a subcontractor, he shall within 60 days after furnishing the last material or supplies or performing the last work covered by his subcontract, serve a written notice in duplicate upon the board of officers or agents contracting on behalf of the state * * *, that he is a subcontractor for the doing of some part of such work * * * and that he relies upon the security of the bond by this act required to be given by the principal contractor, and the said board of officers or agents shall within 10 days thereafter furnish a copy of such notice to the sureties for the principal contractor.'

Nevertheless plaintiff's motion for summary judgment was granted on the following grounds set out by the trial judge:

'Defendant, a paid surety had Timely notice of plaintiff's claim and * * *Defendant would suffer no injury or damage if held liable to the plaintiff because of the fact that the State of Michigan has retained funds under the prime contract with the Trapp Construction Company (the principal contractor) which would indemnify the defendant from any injury or loss.' (Emphasis supplied.)

Plaintiff's evidence as to timely notice consisted of two letters. A letter dated August 23, 1970 from plaintiff to defendant recited that in August of 1969 plaintiff had last given materials and or services on the contract. The second letter, dated November 20, 1969, and from the State Highway Department, notified plaintiff that it had received plaintiff's claim and had forwarded a copy to the defendant.

The Court in People, for use of Wheeling Corrugating Co. v. W. L. Thon Co. (1943), 307 Mich. 273, 277, 11 N.W.2d 886 made compliance with the statutory notice provision 'a condition precedent to recovery on the bond.'

Reversed and remanded for entry of judgment in accordance with this opinion.

LEVIN, Judge (concurring).

The plaintiff conceded in its answer to the interrogatories put by the defendant surety that it had not served notice of claim on the Michigan State Highway Commission as required by 1905 P.A. No. 187; M.C.L.A. § 570.102; M.S.A. § 26.322.

Statutes requiring notice of claim serve a different purpose than statutes of limitations. Statutes of limitations establish an absolute time limit for the commencement of litigation. Statutes requiring notice of claim are not aimed at forestalling litigation altogether, but mainly seek to provide a governmental authority with early warning so that it can assemble information in support of a defense on the merits while the evidentiary trail is still hot.

In recent years there has been a clear tendency in the cases to enforce notice of claim statutes less strictly than in former times. It has come to be recognized that it frequently would be excessive to treat noncompliance with a notice requirement as being as irremediable as a failure to commence an action within the time period established in a statute of limitation.

In Meredith v. City of Melvindale, 381 Mich. 572, 165 N.W.2d 7 (1969), the Michigan Supreme Court ruled that the plaintiff's substantial compliance with a notice requirement in Melvindale's charter sufficed.

In Stacey v. Sankovich, 19 Mich.App. 688, 697, 173 N.W.2d 225, 230 (1969), we held that the plaintiff had adequately complied with the provision in the Motor Vehicle Accident Claims Act requiring that notice of intent to claim against the accident claims fund be served on the Secretary of State within one year (now 6 months) of the date that the cause of action accrues, ¹ and said:

'The notice requirement was not intended to be jurisdictional.' ²

In Hussey v. Muskegon Heights, 36 Mich.App. 264, 193 N.W.2d 421 (1971), we held that there had been substantial compliance with a statutory provision requiring as a condition to recovery for injury sustained by reason of a defective highway that notice of injury and defect be served on the governmental agency within 60 days. We said, p. 270, 193 N.W.2d p. 424:

'We are satisfied that, as the law now stands, deficiencies in a notice of injury and defect are not of jurisdiction import, and an injured person may not be denied his day in court on that account absent a showing by the governmental agency that it has been thereby prejudiced.'

In Grubaugh v. St. Johns, 384 Mich. 165, 180 N.W.2d 778 (1970), the Michigan Supreme Court held that the 60-day notice requirement of the general highway statute ³ violated the Due Process Clause when it was sought to apply that notice requirement to a plaintiff rendered mentally or physically incapacitated by the alleged tortious act of the governmental agency. In Corona v. Lenawee County Road Commissioners, 36 Mich.App. 579, 194 N.W.2d 46 (1971), that notice requirement was, on the authority of Grubaugh, held violative of the due process rights of the administratrices of the estates of two minor persons killed in an automobile accident; timely notice of claim had been given by an insurance company, but no notice had been given in behalf of the plaintiff administratrices who were not appointed until after the expiration of the 60-day period. Our Court commented that the defendant road commission had not claimed, nor could it claim, any prejudice because of the defect relied on: the failure of the plaintiffs themselves to have given timely notice.

This evolving principle, that failure to comply with a notice requirement is not jurisdictional and that such a failure should not deprive a citizen of his day in court except possibly where the governmental agency can show that it has been thereby prejudiced--developed in cases where personal injuries were suffered, and (with the exception of Grubaugh) a timely but incomplete notice was given--should, in my opinion, be extended to non-tort cases and to cases, as here, where no notice at all was timely given.

There is no claim on the part of the surety in this case that it was prejudiced by the short delay in the giving of the statutorily-required notice. ⁴ Unless the surety can shown that it was prejudiced by the delay, the plaintiff should not be deprived on that account of the substantial sum of money which it earned by performance of its contract with the general contractor for the installation of eight overhead doors in the maintenance garage under construction for the State Highway Commission.

I concur rather than dissent because I am bound by the Michigan Supreme Court's construction of the statute in People for use of Wheeling Corrugating Co. v. W. L. Thon Co., 307 Mich. 273, 275, 277, 11 N.W.2d 886, 887 (1943). In Thon there was a 3-month delay in giving the notice. It was 'conceded that the surety company was not damaged by failure to give timely notice in accordance with the statutory provisions.' The Supreme Court, nevertheless, declared that the statutory language 'is mandatory, and,...