In re Poisson

• Decision Date: 02 November 1927
• Docket Number: 285.
• Parties: In re POISSON et al. v. BOARD OF EDUCATION OF NEW HANOVER COUNTY et al. TRAVELERS' INSURANCE CO. et al.
• Court: North Carolina Supreme Court

140 S.E. 31

194 N.C. 430

In re POISSON et al.

TRAVELERS' INSURANCE CO. et al. v. BOARD OF EDUCATION OF NEW HANOVER COUNTY et al.

No. 285.

Supreme Court of North Carolina

November 2, 1927

Appeal from Superior Court, New Hanover County; Bond, Judge.

Action by L. J. Poisson and another, receivers of Citizens' Bank & Trust Company, and others, against the Board of Education of New Hanover County and others. From the judgment plaintiff Travelers' Insurance Company and defendant T F. Boyd appeal. Affirmed on appeal of plaintiff, and reversed and remanded on appeal of defendant.

Surety on school construction contract held not liable for money loaned contractor for its business generally.

Surety on school construction contract held not liable for premiums on insurance policies not procured in compliance with construction contract.

Action by creditors of an insolvent contractor to recover of the surety on his bond for materials furnished by said creditors to the contractor for the construction of the high school building in the city of Wilmington. Plaintiffs, receivers of Citizens' Bank & Trust Company, also demand judgment that they recover of the board of education of New Hanover county upon an order, in writing, executed by the contractor, prior to his default, for the payment of money to said trust company, upon their contention that said order is an equitable assignment of money due or to become due by the board of education to said contractor.

The action was heard upon exceptions to the report of the referees. From judgment rendered, plaintiff Travelers' Insurance Company and defendant T. F. Boyd appealed to the Supreme Court.

Isaac C. Wright, of Wilmington, for Travelers' Inc. Co., and Poisson and Shepard, Receivers.

E. K Bryan, of Wilmington, for T. F. Boyd.

CONNOR J.

On or about December 9, 1919, the board of education of New Hanover county entered into a written contract with the Liberty Engineering & Construction Company, a corporation, for the construction of a building in the city of Wilmington, to be known as the high school building. The contract price for said building was $312,322, subject to such additions and deductions as were provided for in the contract. On January 23, 1920, defendant T. F. Boyd became surety on the bond of said Engineering & Construction Company, given in accordance with the provisions of the contract. Pursuant to said contract the said company began the construction of said building and continued therein until May 6, 1921, when it ceased work and abandoned the contract. It was then and is now insolvent.

Upon the default of said Engineering & Construction Company in its contract, it was agreed by and between the board of education and T. F. Boyd that said Boyd, as surety on the contractor's bond, should proceed with the construction of said building in accordance with the contract. The said Boyd, in accordance with said agreement, began work on said building and continued the construction of the building until on or about October 1, 1921, when he ceased work thereon. The contract at that time had not been fully performed, but the board of education took possession of the building and began to use same for school purposes. The board has since had the building completed according to the contract, and is now using same as the high school building of the city of Wilmington.

While defendant Boyd was at work on said building, the architect issued to him, from time to time as the work progressed, and as was provided in the contract, certificates showing that he was entitled to receive from the board of education for the work done by him the sum of $93,527.25; of this amount, the board of education has paid to defendant Boyd the sum of $83,253.28. leaving a balance due him, according to the architect's certificates, of $10,273.97. After deducting from this balance the total amount expended by the board for the completion of the building, according to the contract, since Boyd ceased work thereon, the court finds that there is now due by the board of education, on account of the contract price of the said high school building, the sum of $3,846.32, with interest from January 1, 1922.

Judgments were rendered that plaintiffs other than the receivers of Citizens' Bank & Trust Company, and the Travelers' Insurance Company, recover of defendant T. F. Boyd, as surety on the bond of the contractor, the Liberty Engineering & Construction Company, the amounts of their claims for material furnished to the contractor for the construction of said building, as stated in the judgments, with interest and costs. The total amount of said judgments, exclusive of interest and costs, is $5,941.98. There was no exception to these judgments.

The facts with respect to the claim of the Receivers of Citizens' Bank & Trust Company, as found by the referees, are as follows: On September 13, 1920, the Liberty Engineering & Construction Company, then engaged in the performance of its contract with the board of education of New Hanover county for the construction of the high school building, borrowed from the Citizens' Bank & Trust Company the sum of $4,000, which sum it promised to pay 60 days after date, as evidenced by its note. At the time said money was borrowed and said note was executed, the treasurer of said company stated to the said trust company that he had a pay roll and some material to take care of. The said treasurer, in the name of the Engineering & Construction Company, gave to the Bank & Trust Company an order in writing addressed to the board of education of New Hanover county, requesting said board to pay to said Bank & Trust Company the sum of $4,000. The note was not paid at maturity and was thereafter renewed. The said treasurer thereafter gave to said Bank & Trust Company, as security for the note, an order on Plymouth, and the Bank & Trust Company thereupon surrendered the order on the board of education of New Hanover county. The latter order was not paid, and on February 16, 1921, this order was surrendered, and the following order given to the Bank & Trust Company:

"Wilmington, N. C., February 16, 1921.

New Hanover County Board of Education, Wilmington, N. C.-Gentlemen: Please pay to order of Citizens' Bank & Trust Company the sum of $4,000, for money advanced us in the construction of high school.

Liberty Engineering & Const. Co.

By H. W. Nutt, Treasurer."

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