Hempfield Township School District v. Cavalier

• Decision Date: 28 November 1932
• Docket Number: 185
• Citation: 309 Pa. 460,164 A. 602
• Parties: Hempfield Township School District v. Cavalier (et al., Appellant)
• Court: Pennsylvania Supreme Court

164 A. 602

309 Pa. 460

Hempfield Township School District v. Cavalier (et al., Appellant)

No. 185

Supreme Court of Pennsylvania

November 28, 1932

Argued October 11, 1932

Appeal, No. 185, March T., 1932, by defendant, surety company, from judgment of C.P. Allegheny Co., July T., 1932 No. 3383, in case of School District of Hempfield Township to use, v. Frank Cavalier et al., trading as Cavaliers, Contractors, and Commercial Casualty Company. Affirmed.

Assumpsit on surety bond. Before GARDNER, J.

The opinion of the Supreme Court states the facts.

Verdict and judgment for plaintiff for $10,826.30. Defendant, Commercial Casualty Insurance Company, appealed.

Error assigned, inter alia, was refusal of judgment n.o.v., quoting record.

The judgment is affirmed.

J. M. McCandless, for appellant. -- The interpretation placed upon the clause by defendant is fair and warranted by the definition of the word contract: Watters v. Fisher, 291 Pa. 311.

The rule of strict construction is not to be deemed to allow a liability to be predicated upon inference or strained construction: Com. v. Indemnity Co., 299 Pa. 143; Equitable Trust Co. v. Surety Co., 214 Pa. 159.

The Supreme Court has passed upon the meaning of the word contract: Greene Co. v. Twp., 305 Pa. 79.

Ben Paul Brasley, of Brasley, Rubin, Balter & Cole, for appellee. -- The provision construed means one full year from and after the delivery and acceptance of the work under the contract.

A bond should be strictly construed against a compensated surety: Wheaton Coal Co. v. Harris, 288 Pa. 294.

The bond must be construed according to the apparent intention of the parties: Thommen v. Trust Co., 302 Pa. 409.

Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.

OPINION

MR. JUSTICE MAXEY:

On July 27, 1928, the School District of Hempfield Township, Westmoreland County, entered into a written contract with Frank Cavalier, John Cavalier and James V. Cavalier, trading as Cavaliers, Contractors, for the construction of a high school. On the same day the Cavaliers, as principals, and the Commercial Casualty Insurance Co., hereinafter referred to as the insurance company, as surety, executed and delivered to the school district a completion bond and in addition thereto a contractor's bond for labor and material, pursuant to the Act of May 10, 1917, P.L. 158. On August 21, 1928, the use-plaintiffs, Jerald T. Dougherty and Michael J. Jennings, trading as Dougherty & Jennings, on the one hand, and Cavaliers, Contractors, on the other, entered into a written contract by the terms of which Dougherty & Jennings agreed for the sum of $11,000 to do all the work in connection with the lathing and plastering of the school building. The use-plaintiffs practically completed this work, but they received only $1,500. Cavaliers were entitled to a certain credit of $239.10, leaving the balance due use-plaintiffs of $9,260.90, for which suit was brought against the Cavaliers and against the insurance company. No service was had upon the former and the case proceeded against the latter.

The defense was that by the terms of a proviso in the bond, action "could not be had" on it "after the expiration of one year from the delivery and acceptance of said contract." Defendant's contention is that "said contract" meant the contract between the school district and Cavaliers. The trial judge construed the bond to require the institution of suit thereon within one year from the date of the completion and acceptance of the work under the contract, and gave binding instructions for plaintiffs.

It is an elementary proposition that a written contract should in case of doubt be interpreted against the party who has drawn it: 6 R. C. L., page 854, section 242; White v. Smith, 33 Pa. 186. The defendant company drafted the contract in question.

As the insurance company is a corporation engaged in the business of furnishing surety bonds for a monetary consideration, the contract of surety must be construed strictly against it. See Wheaton Coal Co. v. Harris et al., 288 Pa. 294, 135 A. 637, and Fink v. Farmers' Bank of Harrisburg et al., 178 Pa. 154, 169, 35 A. 636.

In Mechanics Trust Co. v. Fidelity & Casualty Co., 304 Pa. 526, 156 A. 146, this court stated in opinion by the present Chief Justice: "We have frequently said that the trend of modern decisions, federal and state, has been to distinguish between individual and corporate suretyship, where the surety has undertaken, for money, the contract of suretyship which it is its business to sell; in such cases, the contract should be construed most strictly in favor of the obligee."

" The primary rule in the construction of contracts is that the court must, if possible, ascertain and give effect to the mutual intentions of the parties, so far as that may be done without contravention of legal principles. Greater regard is to be had to the clear intent of the parties than to any particular words which they may have used in the expression of their intent:" 13 C.J., page 521, section 482.

" In construing a written contract the words employed will be given their ordinary and popularly accepted meaning, in the absence of anything to show that they were used in a different sense. But they may be given a peculiar meaning when such intent of the parties is shown by the context in which they occur, or by admissible evidence. . . . Where a word has a broad and also a restricted meaning, both of which are consistent with approved usage, the question of which meaning is intended in a particular case must be determined from the context:" 13 C.J., page 531, section 489. "Contracts must receive a reasonable interpretation, according to the intention of the parties at the time of executing them, if that intention can be ascertained from their language. Where the language of a contract is contradictory, obscure, or ambiguous, or where its meaning is doubtful, so that it is susceptible of two constructions, one of which makes it fair, customary, and such as prudent men would naturally execute, while the other makes it inequitable, unusual, or such as reasonable men would not be likely to enter into, the interpretation which makes a rational and probable agreement must be preferred. If one construction would make it unreasonable, while another would do justice to both parties, the latter will be adopted:" 6 R.C.L., page 841, section 230. "It is an established canon of construction that in order to arrive at the intention of the parties, the contract itself must be read in the light of the circumstances under which it was entered into. General or indefinite terms employed in the contract may be thus explained or restricted as to their meaning and application. And the contract must be so construed as to give it such effect, and none other, as the parties intended at the time it was made. This rule appears to be applicable only where the terms employed are susceptible of more than one meaning. In such case it is the duty of the court not only to regard the nature of the instrument, but also to inform itself of the circumstances which surrounded the parties at the time, so as to interpret the language employed from the standpoint which the parties occupied when they executed the contract:" 6 R.C.L., page 850, section 239.

The application of these canons of interpretation lead to the conclusion that the word "contract" in the proviso refers to the work under the contract and not to the written instrument itself. In the contractor's bond for labor and material the first "whereas-clause" reads as follows: "Whereas, the said Cavaliers, Contractors, have entered into a written contract with School District of Hempfield Township, Westmoreland County, the obligor, dated the 27th day of July, 1928, for general contract work -- Hempfield Township Consolidated and Junior High School, Westmoreland County, Pa." There is no doubt as to what was referred to in the first part of that clause as "written contract." ...