Fidelity & Deposit Co., of Maryland v. Crane Co.
| Decision Date | 17 December 1928 |
| Docket Number | 56 |
| Citation | 12 S.W.2d 872,178 Ark. 676 |
| Parties | FIDELITY & DEPOSIT COMPANY OF MARYLAND v. CRANE COMPANY |
| Court | Arkansas Supreme Court |
Appeal from Sebastian Circuit Court, Fort Smith District; J. Sam Wood, Judge; reversed.
STATEMENT OF FACTS.
This is an action by Crane Company against the Fidelity & Deposit Company of Maryland, Francis Plumbing Company, formerly Francis-Hartmeier Company, and W. D. Francis, to recover $ 15,263 for materials purchased for the construction and installation of the steam heating apparatus in the Engineering Building and Agricultural Building of the University of Arkansas. The real purpose of the action is to hold the Fidelity & Deposit Company of Maryland, as surety for the contractor, liable for the value of the materials furnished and used in the construction of the steam heating machinery.
On May 13, 1926, the board of trustees of the University of Arkansas entered into a contract with George Fuller Green Construction Company for the construction of several school buildings of the State University for the sum of $ 395,450. For the faithful performance of the contract, and to protect materialmen, the board of trustees took a bond from the contractor, pursuant to § 6913 of Crawford & Moses' Digest, in double the sum of the contract price. The Fidelity & Deposit Company and the Home Accident Insurance Company became sureties on the bond of the contractor for the faithful performance of his contract. On the same day said board of trustees entered into a contract with the Francis-Hartmeier Company for the construction and installation of the steam heating apparatus in the Engineering and Agricultural Buildings for the sum of $ 29,309.85. The contractor executed a bond, signed by the Fidelity & Deposit Company of Maryland, for the faithful performance of the contract according to its terms, subject to certain conditions precedent, which were subsequently set out. One of these conditions was that the surety should not be liable, directly or indirectly, to any one except the owner. The board of trustees of the University of Arkansas was designated in the contract as the owner. Crane Company furnished materials which were used by the contractor in installing the steam heating apparatus, and the amount and value of such materials was proved by Crane Company.
The court found the issues in favor of the plaintiff, and it was adjudged that it recover from the defendants the sum of $ 11,674.85. The Fidelity & Deposit Company of Maryland has appealed.
Judgment reversed, and cause dismissed.
Pryor Miles & Pryor, for appellant.
Daily & Woods, for appellee.
HART, C. J., (after stating the facts).
Appellant seeks to reverse the judgment on the ground that it had inserted a provision in the bond expressly providing that it should not, as surety, be liable, directly or indirectly, to any one except the owner, which was the board of trustees of the University of Arkansas. The language used in the bond is plain and unambiguous. By incorporating this provision into the bond, nothing is left to interpretation. All doubt as to the intention of the parties is removed.
It is conceded that bonds of this character are contracts, and it is sought to uphold the judgment of the circuit court on the ground that our statute relating to the subject must be read into the bond as a part of the obligation of the surety. Section 6913 provides, in effect, that whenever any public officer shall, under the laws of this State, enter into a contract in any sum exceeding one hundred dollars with any person for the purpose of constructing any public building, such officer shall take from the party contracted with a bond with sureties as provided in the statute, and that the bond shall be conditioned that such contractor shall pay all indebtedness for labor and materials furnished in the construction of said public building.
Counsel for appellant seek to reverse the judgment upon the authority of Union Indemnity Co. v. Covington, ante, p. 533. In that case the court had under consideration the construction to be placed upon §§ 6915 and 6916, providing for similar conditions in the contracts for the construction of churches or charitable institutions, and for the giving of a bond containing a similar condition, and for the filing of the bond in the office of the circuit clerk. It was there contended, as here, that any bond given by the contractor must necessarily contain the provisions of the statute and be construed as a statutory bond. In that case the bond sued on contained a condition that in no event shall the surety be liable to any other person than the obligee or for a greater sum than the penalty of the bond. The court held that the obligations contained in the bond expressly negative the claim that the bond sued on was a statutory bond. The effect of that decision was to hold that, notwithstanding the language of the statute, a surety company might limit its obligation under the bond to the obligee, and that the terms of the statute should not be construed as a part of the contractual obligation of the bond. The court held that the language of the statute was not definite enough to prohibit the parties from agreeing to the execution of a bond which should not embody the provisions of the statute.
Counsel for the plaintiff recognized the force of this decision by contending that a different rule obtains in the case of a public contractor's bond executed pursuant to the statute. They insist that the Legislature, in passing the statute requiring a public contractor's bond to contain certain conditions, has declared such to be the public policy of the State, and that all bonds executed shall be conclusively presumed to be statutory bonds, and any provision therein contrary to the statutory law is null and void. In support of their contention they cite Philip Carey Co. v. Maryland Casualty Co., 201 Iowa 1063, 206 N.W. 808, 47 A. L. R. 495. In that case the court held (quoting syllabus):
"Where the situation is such as to require a statutory contractor's bond, and the bond given conforms in material and essential respects to the requirements of the statute, the parties will be held to have intended to make a statutory bond, notwithstanding the omission from the bond of conditions required by statute, or the inclusion of stipulations contrary to the statute, if the statute...
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