J. N. Mccausland & Co v. R. A. Brown Const. Co

• Decision Date: 19 December 1916
• Docket Number: (No. 446.)
• Citation: J. N. Mccausland & Co v. R. A. Brown Const. Co, 172 N.C. 708, 90 S.E. 1010 (N.C. 1916)
• Court: North Carolina Supreme Court
• Parties: J. N. McCAUSLAND & CO. v. R. A. BROWN CONST. CO. et al.

(172 N.C. 708)

90 S.E. 1010

J. N. McCAUSLAND & CO.

v.R. A. BROWN CONST. CO. et al.

(No. 446.)

Supreme Court of North Carolina.

Dec. 19, 1916.

Appeal from Superior Court, Mecklenburg County; Carter, Judge.

Action by J. N. McCausland & Co. against the R. A. Brown Construction Company and others, individuals.From a judgment for plaintiff against all defendants, the individual defendants appeal.Judgment against the individual defendants reversed, and action dismissed.

On the trial, it was made to appear that: In July, 1914, the board of school commissioners of Concord, N. C, contracted with the Brown Construction Company to provide the material and labor for erection and completion of a public school building in said city at a cost of $11,236, and required said contractor to enter into a bond in the sum of $5,000 for the proper performance of the contract, etc.This bond was given by the construction company with the individual defendants as sureties, and said building has been "erected, constructed, and completed, " and same has been duly accepted by the board and paid for.That, during construction of said building, plaintiffs, under a contract with the construction company, furnished the material and labor to put on and complete the roofing on said building, to the amount of $771.41, and the same and every part thereof is now due and owing plaintiff from the construction company.That later the construction company became insolvent, and plaintiff instituted the present action against said company and the sureties on the bond to recover the amount claimed to be due.The court charged the jury, in effect, that, if they believed the evidence, both the company and the individual defendants, sureties on the bond, were liable for the debt.There was verdict for plaintiff against all of defendants for $771.41.Judgment and the individual defendants excepted and appealed.

Clarkson & Taliaferro, of Charlotte, and L. T. Hartsell and W. G. Means, both of Concord, for appellants.

McNiuch & Justice, of Charlotte, for appellee.

HOKE, J.The contract for the erection of the building makes stipulation, among other things:

"That the contractors shall and will provide all the material and perform all the work for the erection and completion of a high school building on the lot of the owners in the city of Concord, etc., at the price of $11,236.00, "'etc.

And, further:

"If at any time there shall be evidence of any lien or claim for which, if established, the owners of the said premises might become liable, and which is chargeable to the contractors, theowners shall have the right to retain out of any payment then due or thereafter to become due an amount sufficient to completely indemnify them against such lien or claim.Should there prove to be any such claim after all such payments are made, the contractors shall refund to the owners 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 again:

"The contractors further agree to furnish the owners free of cost to the owners a satisfactory indemnity bond in the sum of $5,000.00, to guarantee the faithful performance of the contract and to indemnify the owners against liability from accidents to persons or their property during the erection of the building."

The conditions of the $5,000.00 indemnity bond, signed by defendant, is as follows:

"Now, therefore, if the above bounden, R. A. Brown Construction Company shall well and truly perform and fulfill all the covenants and agreements mentioned in said contract and specifications, for the erection and completion of the said building to be performed and fulfilled as therein set forth, and to the written approval of the said architects, and will and shall save and keep harmless the said board of school commissioners of the city of Concord, and the said building and the land on which the same is erected from all and every claim for materials, labor or otherwise incurred by reason of erection and completion of said building, and shall turn over the said building to the said board of school commissioners of the city of Concord, free and clear from all liens or claims for material or labor, and faithfully perform the said contract and save the said board of school commissioners of the city of Concord against all liability from accident to person or property during the erection of said building, then this obligation to be void, otherwise to remain in full force and virtue."

Upon these, the portions of the contract and bond more directly relevant, we are of opinion that plaintiff has shown no cause of action against the sureties.There are many decisions with us to the effect that, in case of these guaranty bonds or written contracts of indemnity, third persons interested and having claims, though not named, may institute action thereon and recover, when it appears by "express stipulation or" by fair and "reasonable intendment that their rights and interests were contemplated and being provided for."Morton v. Light & Power Co., 168 N. C. 582, 84 S. E. 1019;Withers v. Poe, 167 N. C. 372, 83 S. E. 614;Supply Co. v. Lumber Co., 160 N. C. 428, 76 S. E. 273, 42 L. R. A. (N. S.) 707;Voorhees v. Porter, 134 N. C. 591, 47 S. E. 31, 65 L. R. A. 736;Town of Gastonia v. Engineering Co., 131 N. C. 363, 42 S. E. 858;Gorrell v. Water Supply Co., 124 N. C. 328, 32 S. E. 720, 46 L. R. A. 513, 70 Am. St. Rep. 598.

In case of building contracts with bonds guaranteeing performance on the part of the contractor, it is held that, in determining the question of the sureties' liability to third •persons, the contract and bond shall be construed together (Manufacturing Co. v. Andrews, 165 N. C. 285, 81 S. E. 418, Ann. Cas. 1916A, 763), and recoveries on the part of claimants of that character, usually laborers and materialmen, not expressly named, are sustained where it appears that the guaranty bond, in express terms, provides for liability to such persons, as in Morton v. Light & Power Co., supra;Gorrell v. Water Supply Co., supra; or when there is stipulation that claims of this kind shall be paid by the contractor, the case presented in Supply Co. v. Lumber Co., supra, and Gastonia v. Engineering Co., an application of the principle approved by many authoritative decisions elsewhere (Knight & Jillson Co. v. Arthur Castle...