Hosp. for the Women of Md. v. U.S. Fid. & Guar. Co.

• Decision Date: 05 March 1940
• Docket Number: No. 21.,21.
• Citation: 11 A.2d 457
• Parties: HOSPITAL FOR THE WOMEN OF MARYLAND, for Use of ROBERT S. GREEN, Inc. v. UNITED STATES FIDELITY & GUARANTY CO. et al.
• Court: Maryland Court of Appeals

11 A.2d 457

HOSPITAL FOR THE WOMEN OF MARYLAND, for Use of ROBERT S. GREEN, Inc.

v. UNITED STATES FIDELITY & GUARANTY CO. et al.

No. 21.

Court of Appeals of Maryland.

March 5, 1940.

Appeal from Baltimore Court of Common Pleas; Eugene O'Duhne, Judge.

Action by the Hospital for the Women of Maryland, for the use of Robert S. Green, Incorporated, against the United States Fidelity & Guaranty Company and another on a contractor's bond. From a judgment for costs, after a demurrer to the declaration was sustained without leave to amend, plaintiff appeals.

Affirmed.

Argued before BOND, C. J, and OFFUTT, MITCHELL, JOHNSON, and DELAPLAINE, JJ.

Albert A. Sapero, of Baltimore (Bernard DeBoskey, of Baltimore, on the brief), for appellant.

J. Kemp Bartlett, Jr., of Baltimore (Bartlett, Poe & Claggett, of Baltimore, on the brief), for appellee United States Fidelity & Guaranty Co.

Seymour O'Brien, of Baltimore (Miles & O'Brien, of Baltimore, on the brief), for appellee Cummins Construction Corporation.

MITCHELL, Judge.

This appeal is from a judgment for costs entered in the Court of Common Pleas of Baltimore City, after a demurrer interposed by the appellees to the declaration filed by the appellant, had been sustained by the trial court, without leave to amend. The question presented, therefore, is whether the demurrer was properly sustained.

The declaration alleges that on September 22, 1938, Cummins Construction Corporation (herein designated contractor) entered into a written contract with Hospital for the Women of Maryland (herein designated owner), whereby the said contractor agreed to furnish all labor and materials required to make certain additions and alterations in connection with the hospital building of the owner, located in Baltimore City; that as a condition precedent to the execution of said contract it was provided that the contractor would execute a contract bond, with a surety, binding the contractor and surety to the faithful performance of the contract, and that in compliance with said condition the contractor, together with the United States Fidelity and Guaranty Company as surety, executed and delivered to the owner a bond conditioned: (a) For the performance of the contract; (b) for the indemnification of the owner for any expense incurred through the failure of the contractor to complete the work specified, or for any damages growing out of the carelessness of the contractor or its servants; (c) for any liability for the payment of wages due or materials furnished said contractor; and (d) that the said obligors "shall pay all just debts for labor and materials incurred through sub-contract or in any other manner, by or on behalf of the principal"—herein called contractor.

It is then alleged that the contractor in the course of the performance of the contract employed as sub-contractor the firm of Shipley and Dreisch, and that said sub-contractor contracted with Robert S. Green, Inc., the equitable plaintiffs, for the furnishing of various materials and supplies necessary for the performance of said sub-contract, for which the subcontractor has not paid the equitable plaintiffs, although the materials and supplies were used in the construction of the building and alterations thereto of the owner, with the knowledge of the contractor; and, finally, that demand for payment was made upon the sub-contractor; that the latter was unable to pay the equitable plaintiffs for said materials and supplies, and that accordingly, suit was brought against the said contractor and surety, they having refused to comply with a demand for payment upon each of them for the same.

The aforegoing allegations being admitted by the demurrer, it becomes necessary for us to construe the legal effect of that particular clause in the bond which provides that the obligors "shall pay all just debts for labor and materials incurred through sub-contract or in any other manner, by or on behalf of the principal." And for the purpose of such construction, it will be helpful to refer to some of the established principles which this Court, as well as appellate courts of other jurisdictions, have followed in passing upon analogous questions.

Among these principles may be enumerated the following: (1) That since the advent of corporate bonding companies whose business it is to become surety upon bonds for a profit, the old doctrine that a surety is a favorite of the law and that a claim against him is strictissimi juris has been greatly minimized; (2) that the business of surety corporations being in all essentials practically that of insurers, the liability upon bonds executed by them has been liberally extended beyond that to which sureties were formerly held, Smith v. Turner, 101 Md. 584, 61 A. 334; Etna Indemnity Co. v. Waters, 110 Md. 673, 699, 73 A. 712; Southern Maryland Bank v. Nat. Surety Co., 126 Md. 290, 94 A. 916; American Fidelity Co. v. State, 128 Md. 50, 97 A. 12; (3) that the liability of a surety upon his bond is dependent upon his covenants and agreements, or, in other words, that an ordinary conventional bond is a simple contract, Hartford Accident & Indemnity Co. v. Net and Twine Co., 150 Md. 40, 132 A. 261; Southern Maryland Bank v. Nat. Surety Co., supra; Duffy v. Buena Vista Ice Co., 122 Md. 275, 90 A. 53; Booth v. Irving Nat. Exch. Bank, 116 Md. 668, 82 A. 652; and (4) that, ordinarily, the cardinal rule in the interpretation of contracts is to ascertain the intention of the parties and to give effect to that intention if it can be done consistently with legal principles.

In 12 Am.Jur. 745, sec. 226, it is said: "In the absence of a statute the only duty of the courts is to discover the meaning of a specific contract and to enforce it without a leaning in either direction when the parties stood on an equal footing and were free to do what they chose. * * * Contracts should neither, on the one hand, be so narrowly or technically interpreted as to frustrate their obvious design nor, on the other hand, be so loosely or inartificially interpreted as to relieve the obligor from a liability fairly within the scope or spirit of their terms." And in sec. 227 of the same authority it is stated: "Generally speaking, the cardinal rule in the interpretation of contracts is to ascertain the intention of the parties and to give effect to that intention if it can be done consistently with legal principles. Whatever may be the inaccuracy of expression or the inaptness of the words used in the instrument in a legal view, if the intention of the parties can be clearly discovered, the court will give effect to it and construe the words accordingly. * * * The law presumes that the parties understood the import of their contract and that they had the intention which its terms manifest."

In the light of the aforegoing precepts, and bearing in mind that the contract bond in the...