Hollerman Mfg. Co. v. Standard Accident Ins. Co., 5973.

• Decision Date: 19 December 1931
• Docket Number: No. 5973.,5973.
• Citation: 239 N.W. 741,61 N.D. 637
• Parties: HOLLERMAN MFG. CO., Inc., v. STANDARD ACCIDENT INS. CO.
• Court: North Dakota Supreme Court

61 N.D. 637

239 N.W. 741

HOLLERMAN MFG. CO., Inc.,

v.STANDARD ACCIDENT INS. CO.

No. 5973.

Supreme Court of North Dakota.

Dec. 19, 1931.

Syllabus by the Court.

1. In an action on a building contractor's bond, where the specifications are made a part of the contract and a bond is given to secure the performance of the contract, which bond refers to the contract with the specifications included as follows, to wit: “Which contract is hereby referred to and made a part hereof as fully and to the same extent as if copied at length herein,” the obligations of the contract become the obligations of the bond, and the surety company is liable on the bond for any default of the principal in the performance of the contract.

2. Where it appears from the specifications, the contract, and the bond, considered and construed together, that the parties intended the bond executed as security for payment to persons having contracts directly with the principal for labor or materials, the surety company is liable on the bond for default of the principal by reason of his failure to pay for such labor or material.

Appeal from District Court, Logan County; Hutchinson, Judge.

Action by the Hollerman Manufacturing Company, Incorporated, against the Standard Accident Insurance Company, a corporation of Detroit, Mich. Judgment for the defendant, and the plaintiff appeals.

Reversed, and judgment ordered for the plaintiff.

Arthur B. Atkins, of Napoleon, and Coventry & Thompson, of Linton, for appellant.

Dullam & Young, of Bismarck, and Guesmer, Carson & MacGregor, of Minneapolis, Minn., for respondent.

Carr & Rittgers, of Jamestown, and Clapp, Elmquist, Briggs, Gilbert & Macartney, of St. Paul, Minn., amici curiæ.

BURKE, J.

This is an action upon a builders' contract and bond to recover for material furnished by the plaintiff to the contractor. The only question involved is whether the bond secured the payment of the material so furnished to the contractor by the plaintiff. The contract is as follows, to wit:

“* * * Article No. 1. The Contractor agrees to provide all the materials and to perform all the work shown on the drawings and described in the specifications entitled ‘General Construction, of a Church Building for the Church of St. Mary, Hague, North Dakota,’ prepared by Charles A. Hausler, Architect & Engineer, St. Paul, Minnesota, acting as, and in these contract documents entitled the Architect & Engineer, Harry Firminger Associate, and to do everything required by the Contract, the Specifications, and the Drawings, which Specifications and Drawings are hereby amended as follows: Accepting Alternates No. Three (3), Four (4), Five (5), Six (6), Nine (9) and Thirteen (13) in accordance with the proposal submitted by the Contractor, dated May 8th, 1929, a copy of which proposal is hereto attached and provided further that the Owner reserves the right to accept or reject any additional alternates in accordance with the proposal hereto attached providing he notifies the Contractor of such acceptance or rejection within Thirty (30) days of date of this contract.

Article No. 2. The Owner agrees to pay the Contractor in current funds for the performance of the Contract, Fifty Three Thousand, Six Hundred Seventy Dollars ($53,670.00), subject to additions or deductions as provided in said specification and to make payments on account thereof as provided by and in accordance with the requirement of the said specification. * * *

Article No. 4. The Contractor and the Owner agree that the General Conditions of the Contract, the Specifications and the Drawings together with this agreement, form the Contract, and that they are as fully a part of the same, as if hereto attached or herein repeated; and that the following is an exact enumeration of the specifications and drawings: Specifications-Pages 1 to 34 inclusive. Drawings-Sheets No. 1 to 17 inclusive.

Article No. 5. It is further understood and agreed that the Contractor shall execute and deliver to the Owners a good and sufficient surety bond equal in amount to the amount of the contract, and extending for a period of Two (2) years from execution thereof and conditioned for the faithful performance of said contract; and that the Contractor shall satisfy all claims and demands, incurred for the same, and shall fully indemnify and save harmless the Owner from all cost and damage which he may suffer by reason of failure so to do, and in making good any such default, and shall pay all persons who have contracts directly with the principal for labor or materials, then this obligation shall be null and void; otherwise it shall remain in full force and effect. * * *”

By article 4 of the contract, it is specifically provided that the specifications and drawings, together with said agreement, is made the contract as fully as if attached thereto or repeated in the said agreement.

On page 3 of the specifications there is a paragraph providing that “the successful bidder will be required to enter into a written contract with the Owners for doing the work or furnishing the materials aforesaid within ten (10) days after notice by the Owners has been given that the contract is ready for execution. The successful bidder shall be required within the ten (10) days aforesaid to furnish a surety company bond for the full amount of the contract price, conditioned for the faithful performance of the contract and for payment for all labor and material used in connection therewith and such other conditions as may be required by law. Bond to remain in force for a period of two (2) years from date of contract.”

On page 14 of the specifications, there is a paragraph providing that “the contractor is to pay for all water used in the entire work covered by these specifications.”

And again on the same page, “The cement used thruout the construction of all work herein specified unless otherwise expressly stated, shall be one brand, and brand must be approved by the Architect and Engineer. Architect & Engineer will designate testing laboratory to make test, and contractor shall pay for same.”

The material part of the bond executed by the contractor reads as follows:

“Whereas, the above bounden principal has entered into a certain written contract with the above named Obligee, dated the 20th day of May, 1929 to furnish all materials and perform all work in connection with construction of a Church Building for the Church of St. Mary, Hague, North Dakota which contract is hereby referred to and made a part hereof as fully and to the same extent as if copied at length herein.

Now, therefore, the condition of the above obligation is such, That if the above bounden Principal shall well and truly keep, do and perform each and every, all and singular, the matters and things in said contract set forth and specified to be by the said Principal kept, done and performed at the time and in the manner in said contract specified, and shall pay over, make good and reimburse the above named Obligee, all loss and damage which said Obligee may sustain by reason of failure or default on the part of said Principal, then this obligation shall be void; otherwise, to be and remain in full force and effect.”

It is the contention of the appellant that the specifications are made a part of the contract and that, in determining the liability upon the bond the specifications, the contract and the bond must all be construed together as one instrument, and that the specifications and the contract are as much a part of the bond and to the same extent as if copied at length in said bond. On the other hand, the respondent contends that the bond is an indemnity to the obligee alone and does not cover labor and material furnished to the contractor, and that, while the contractor did agree to give bond for the satisfaction of all claims and demands incurred, the bond was not in accordance with said contract; that the obligee could have insisted upon the kind of a bond mentioned in the contract, but that since he did not it was waived.

Respondent relies upon the following cases: Builders' Material & Supply Co. v. J. B. Evans Const. Co., 204 Mo. App. 76, 221 S. W. 142, 143. The conditions in the bond in this case, upon which the respondent relies, are set out by the court in italics, as follows: “ Now, therefore, the condition of this obligation is such, that if the principal shall indemnify the obligee against any loss or damage directly arising by reason of the failure of the principal to faithfully perform said contract, then the obligation shall be void * * *”-and the court held that this was simply an agreement to indemnify the obligee and no one else. It does not make the...