Maryland Casualty Co. v. Fowler

• Decision Date: 21 June 1928
• Docket Number: No. 6.,6.
• Citation: 27 F.2d 421
• Court: U.S. District Court — Middle District of North Carolina
• Parties: MARYLAND CASUALTY CO. v. FOWLER et al.

27 F.2d 421 (1928)

MARYLAND CASUALTY CO. v. FOWLER et al.

No. 6.

District Court, M. D. North Carolina.

June 21, 1928.

Swink, Clement & Hutchins, of Winston-Salem, N. C., and W. H. Beckerdite, of Concord, N. C., for plaintiff.

Brooks, Parker, Smith & Wharton, King, Sapp & King, Broadhurst & Robinson, and Hines, Kelly & Boren, all of Greensboro, N. C., Glidewell, Dunn & Gwyn, of Reidsville, N. C., and Allen Austin, of High Point, N. C., for defendants.

HAYES, District Judge.

Plaintiff brings this suit in equity to determine its liability, if any, upon a contractor's indemnity bond, which, on July 10, 1922, it executed as surety for E. W. Fowler, principal, in favor of the county board of education of Rockingham county, Wentworth, N. C., in the sum of twenty-two thousand dollars ($22,000). The bond contains, among others, these two provisions:

"Whereas, the principal has entered into a written contract dated June 21, 1922, with the obligee, for the erection of a graded school building, Leaksville township district, Draper, N. C., in accordance with plans and specifications prepared by Willard C. Northrup, architect, a copy of which is hereto annexed, and which contract is made a part hereof, as fully as if recited at length herein:

"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 this obligation shall be void; otherwise, to remain in full force and effect. * * *

"* * * That in the event of any default on the part of the principal in the performance of any of the provisions and conditions of said contract a written statement of such default with full details thereof shall be delivered to the surety promptly, and in any event within ten (10) days after the obligee shall learn of such default. That at the option of the surety it shall have the right within thirty (30) days after the receipt of such statement to proceed, or procure others to proceed, with the performance of such contract. * * * That no right of action shall accrue upon or by reason hereof, to or for the use or benefit of any one other than the obligee herein named."

The contract referred to contains these provisions:

"The contractor shall and will provide all the materials and perform all the work for the erection of a grade school building, Draper, N. C., Leaksville township district, as shown on the drawings revised June 21, 1922, and described in the specifications prepared by Willard C. Northrup, architect, which drawings and specifications are identified by the signature of the parties hereto, and become hereby a part of this contract. * * * Work to be started at once and pushed to completion with all possible speed in accordance with good work, so that the building will be finished by November 15, 1922, or sooner, if possible."

The specifications referred to in the contract and made a part thereof contain these provisions:

"Bond. — Contractor is to furnish and pay for a satisfactory surety bond, equal to fifty (50) per cent. of the contract price, as a guarantee that building will be built as per plans and specifications, and that the contract will be complied with and all bills for labor and material used on this work will be paid for in full."

The contract price for the erection of the building was $44,489.80. The contractor began the erection of the building, but did not complete it on November 15, 1922, and he continued to work on it until about February 20, 1923, at which time he abandoned the work, and on February 24, 1923, the school authorities notified the surety of the abandonment by its principal and demanded that it complete the erection of the building. This the surety refused to do, whereupon the school board let the contract for the completion of the building to another, and the building cost the school board $9,167.50 more than the original contract price, not including materials, aggregating $4,481.73, which Fowler, the contractor, had failed to pay for.

The plaintiff contends that it was not liable under the bond, because the contract was breached when the principal failed to complete the building on November 15, 1922, and the school board failed to give notice of the default within 10...