Fitger Brewing Co. v. American Bonding Co. of Baltimore
| Decision Date | 30 June 1911 |
| Docket Number | 17,041 - (145) |
| Citation | 131 N.W. 1067,115 Minn. 78 |
| Parties | FITGER BREWING COMPANY v. AMERICAN BONDING COMPANY OF BALTIMORE and Another |
| Court | Minnesota Supreme Court |
Action in the district court for St. Louis county against defendant corporation and John W. Hilliard, to recover $2,613.60 amount paid for lien claims after the same had been adjudged valid. From an order, Dibell, J., sustaining defendant's demurrer to the complaint, plaintiff appealed. Reversed.
Limitation on right to sue -- demurrer.
The bar of a contract limitation on the right to bring an action may be invoked by demurrer.
Limitation on right to sue -- construction in bond of indemnity.
A limitation on the right to sue thereon, contained in a surety bond furnished for compensation and in form selected by the surety, will be construed strictly against a claim which impairs the suretyship or indemnity.
Limitation on right to sue.
Where a proviso in such bond limits the right to bring suit thereon to a period of six months after the first breach of the contract secured, the breach of the contract referred to is a breach creating liability on the bond.
Complaint -- demurrer.
It not appearing from the complaint that this action was barred by the limitation contained in the bond, a demurrer interposed thereto should have been overruled.
P. C Schmidt, J. A. P. Neal, and Thomas J. Davis, for appellant.
Fitzhugh Burns and Washburn, Bailey & Mitchell, for respondents.
This action was brought to recover for payment made by plaintiff upon lien claims after the same had been adjudged valid charges against his property. The claimed liability of defendant Hilliard, the general contractor, arose out of a breach of his contract in failing to refund to plaintiff the amount paid on lien claims. The claimed liability of the defendant the American Bonding Company of Baltimore arose upon a bond given by it, as surety, and Hilliard, as principal, conditioned upon the performance by Hilliard of his contract, through the required payment by plaintiff of the lien claims. The defendant company interposed a general demurrer to the complaint. The district court, by its order, sustained the demurrer on the ground that it conclusively appeared from the complaint that the action on the defendant's bond was not brought within the period limited by the terms of the bond for bringing actions thereon. The case is brought to this court by the appeal of the plaintiff from such order.
The plaintiff questions the correctness of the order sustaining the demurrer, and claims (1) that, the limitation being by contract, the bar is not invoked by demurrer, but must be set up by answer as a defense; and (2) that it does not appear from the complaint that the action is not brought within the period limited by the bond.
1. The established rule in this state is that the bar of a limitation, when fixed by statute, may be invoked by a general demurrer. No reason is suggested or is apparent why a different rule should be adopted as to a valid limitation established by contract. The same principle applies in each case. A demurrer should be given a uniform effect as a pleading. If it conclusively appears by the complaint that the action on the bond was not brought within the time limited by the terms of the bond for bringing actions thereon, the general demurrer was properly sustained.
2. A more difficult question arises when we undertake to determine by an examination of the complaint whether the time limited by the bond for bringing an action thereon had expired before this action was brought.
The contract and bond involved are set out in full in the complaint. The contract between the plaintiff and the defendant Hilliard is a usual building contract, by which Hilliard agreed to furnish all labor and material and erect a building in the city of Duluth for the plaintiff, according to plans and specifications, for an agreed price. The contract provided that the building should be completed January 1, 1909, that the owner might withhold from any payment due the contractor an amount sufficient to indemnify it against any lien claim, and, "should there prove to be any such claim after all payments are made, the contractor shall refund to the owner all moneys that the latter may be compelled to pay in discharging any lien on said premises made obligatory in consequence of the contractor's default," and contained the further agreement: "The contractor to furnish to the owner a satisfactory bond executed by some good surety company in the sum of ten thousand dollars for the faithful performance of this contract on his part."
It further appears by the complaint that on April 23, 1909, the plaintiff duly notified the defendant company "of the breach of said contract by said contractor, and of his failure to pay claims for labor and material used in the performance of said building contract;" that certain lien claims were duly filed, and in a suit brought were duly adjudged valid claims against plaintiff's property in the aggregate sum of $3,791.89; that plaintiff paid this amount and caused the judgment to be satisfied and discharged; that the amount so paid was $2,613 in excess of the unpaid balance of the contract price of said building; that the defendant company was duly given notice of such suit and leave to defend therein; that the defendant Hilliard failed and refused to refund the amount so paid. From the facts so alleged, the defendant company claims it is made to appear by the complaint that a lien claim was filed against said property April 23, 1909, and thereby there was a breach of the contract; that this breach was known to and treated as such by the plaintiff on that date; that the plaintiff's right to sue on the bond was limited to a period within six months after April 23, 1909, the date of the "first breach of said contract;" and that this action, having been brought long after the expiration of such period, is barred by the limitation contained in the bond.
We are of the opinion that this position is not warranted by a fair construction of the terms of the bond. It is clear that by the terms of the bond -- reference being had to the first proviso set out above -- a right of action on the bond did not arise from the failure of the contractor to perform his contract and the resulting existence of valid liens on the property for unpaid material or labor, but arose from payment of such claims by the owner. The company, through this...
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