Maryland Cas. Co. v. City of Seattle

• Court: Washington Supreme Court
• Writing for the Court: ROBINSON, Chief Justice.
• Citation: Maryland Cas. Co. v. City of Seattle, 118 P.2d 416, 11 Wn.2d 69 (Wash. 1941)
• Decision Date: 30 October 1941
• Docket Number: 27860.
• Parties: MARYLAND CUSUALTY CO. v. CITY OF SEATTLE et al.

118 P.2d 416

11 Wn.2d 69

MARYLAND CUSUALTY CO. v. CITY OF SEATTLE et al.

No. 27860.

Supreme Court of Washington

October 30, 1941

Department 1.

Suit by the Marlyand Casualty Company against the City of Seattle, a municipal corporation, and others to determine the amount of plaintiff's liability as surety on performance bond executed pursuant to statute to secure the city and persons performing labor and furnishing material in connection with the construction of a sewer, wherein London Guarantee &amp Accident Company, Limited, a corporation, filed a cross-complaint seeking recovery from the surety and also from reserve fund in hands of the city of the amount of unpaid premiums on contractor's public liability and property damage policy. From an adverse judgment, cross complainant appeals.

Judgment affirmed.

Appeal from Superior Court, King County; Howard M Findley, Judge.

Harold A. Seering, of Seattle, for appellant.

Skeel McKelvy, Henke, Evenson & Uhlmann, of Seattle, for respondent.

ROBINSON Chief Justice.

Arcorace & Coluccio, contractors, entered into a written contract with the city of Seattle to construct a sewer. The instrument read, in part, as follows:

'The contractor shall not commence work under this contract until he has obtained all insurance required under this paragraph and such insurance has been approved by the owner and the state director, nor shall the contractor allow any sub-contractor to commence work on his sub-contract until all similar insurance required of the sub-contractor has been so obtained and approved.

'(b) Property Damage Insurance

'The contractor shall take out and maintain during the life of this contract, such Public Liability and Property Damage Insurance as shall protect him and any subcontractor performing work covered by this contract, from claims for damages for personal injuries including wrongful death, as well as from claims for property damages, which may arise from operations under this contract, whether such operations be by himself or by any sub-contractor or anyone directly or indirectly employed by either of them. The amount of such insurance shall be as follows:

'Public Liability Insurance in an amount not less than $10,000.00 for injuries, including wrongful death, to any one person, and, subject to the same limit for each person, in an amount not less than $20,000.00 on account of one accident, and Property Damage Insurance in an amount not less than $1,000.00.'

The performance bond of the contractors was executed by Maryland Casualty Company as surety. The bond contained the following provisions:

'This bond is executed in pursuance of Sections 1159 and 1161 of Remington & Ballinger's Annotated Codes and Statutes of the State of Washington, as amended by Chapter 28, Laws of 1915, and is subject to all the provisions thereof, and of the Charter of the City of Seattle, so far as the same is not in conflict with the laws of this state, and is entered into with the said City for the use and benefit of said City and also for the use and benefit of all laborers, mechanics, sub-contractors, materialmen, and all persons who shall supply such person or persons or sub-contractors with provisions or supplies for the carrying on of the work covered by the contract entered into on the 13th day of December, 1935, between the above named, the undersigned and bounden principal, and the said City of Seattle, for the construction of Henderson Street Trunk Sewer, Units 3, 4, 6 and 7, as ordered by Ordinance 64831, approved July 3, 1934.

'And the conditions of the obligations are such that, if the above named principal Arcorace & Coluccio shall faithfully perform said contract which is hereby expressly referred to and made a part hereof, and shall pay all laborers, mechanics, sub-contractors and materialmen, and all persons who shall supply such person or persons, or sub-contractors, with provisions and supplies for the carrying on of such work, and comply with all the requirements of the laws of the State of Washington and the Charter and Ordinances of the City of Seattle, and amendments thereto not in conflict with the laws of this state; provided, however, that the conditions of this obligation shall not apply to any money loaned or advanced to any such contractor or sub-contractor, or other person, in the performance of any such work, whether specifically provided for in the contract or not, then this obligation to be null and void; otherwise to remain in full force and effect.' (Italics ours.)

Upon comparison, it will be found that the conditions of the bond are in almost the identical language used in the statute.

The contractors procured their public liability and property damage policies from the London Guarantee & Accident Co., Ltd. They failed to pay certain premiums. The guarantee and accident company filed a claim with the city against the bond of the contractor and the retained percentage or reserve fund in the hands of the city; and in this suit, which was brought by the contractors' surety to determine the amount of its liability and settle all claims, filed a cross-complaint seeking recovery from the contractors' surety, and also from the reserve fund, of the amount of the unpaid insurance premiums. The trial court held that there could be no recovery from the contractors' surety or the reserve fund, and this appeal followed.

On appeal, it is not contended that the reserve fund is liable, but that the respondent bonding company is liable, upon either of two theories, namely: (1) That, since the bond incorporated the contract by reference and guaranteed its faithful performance, and the contract required the contractors to 'maintain' the insurance during the life of the contract, the surety on the bond is obligated to pay the insurance premiums, the contractors having failed to do so; and (2) that the insurance is a 'supply,' within the meaning of the word 'supplies,' as used in the statute and bond.

We think the first contention unsound, for this reason: The obligation to pay the insurance premiums was an...