Maule Industries, Inc. v. Gaines Const. Co., 3804
| Decision Date | 30 October 1963 |
| Docket Number | No. 3804,3804 |
| Citation | 157 So.2d 835 |
| Parties | MAULE INDUSTRIES, INC., a Florida corporation, et al., Appellants, v. GAINES CONSTRUCTION CO., Inc., a Florida corporation, et al., Appellees. |
| Court | Florida District Court of Appeals |
Stanley Arthur Beiley, of Salley & Paul, Richard M. Winokur, of Bolles & Prunty, Miami, and Crofton, Brewer & Holland, Titusville, for appellants.
Monroe E. McDonald, of Sanders, McEwan, Schwarz & Mims, Orlando, and Ralph Geilich, of Williams & Geilich, Melbourne, for appellees.
Maule Industries, Inc., a Florida corporation, and one of the appellants here, was plaintiff in the suit below and sought to impress and foreclose a lien on property of the land owner; to determine existence and priority with other lienors who were made parties-defendant; to determine liability on the part of one of the appellees, United States Fidelity & Guaranty Company, who was defendant below under a payment bond executed by said defendant in connection with the construction work out of which the claims for lien arose; and to determine priority as to a mortgage held by the defendant, John D. McArthur, one of the appellees here.
Appellant Gunite Associates, Inc., is one of the defendant lienholders in the suit below, and joins with the appellant Maule Industries, Inc., in contending that the lower court was in error in determining that the United States Fidelity & Guaranty Company was not liable to the appellant lienors under the payment bond, and in determining priority of the mortgage of John D. McArthur to the lien claimants.
The court determined the validity of appellants' liens as against the land owner, and this is not questioned on this appeal.
It is admitted that appellant lien claimants had no knowledge of the existence of the payment bond at the time the materials were furnished, at the time their claim for lien was filed, or at the time the notice of claim of lien was given to the land owner.
It is also admitted that the land owner and contractor are each corporations and that Julius Gaines is the president and sole or chief stockholder in each corporation.
The payment bond introduced in evidence contains the following provision:
'(3) No suit or action shall be commenced hereunder by any claimant,
'(a) Unless claimant shall have given written notice to any two of the following:
The Principal, the Owner, or the Surety above named, within ninety (90) days after such claimant did or performed the last of the work or labor or furnished the last of the materials for which said claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the materials were furnished, or for whom the work or labor was done or performed. Such notice shall be served by mailing the same by registered mail, postage prepaid, in an envelope addressed to the Principal, Owner or Surety, at any place where an office is regularly maintained for the transaction of business, or served in any manner in which legal process may be served in the state * * *.'
It is admitted that the appellant lienors were covered by this payment bond in the beginning, even though they had no knowledge of its existence.
It is the contention of the appellee, United States Fidelity & Guaranty Company, that it is relieved from liability on this bond as to appellants by reason of their failure to comply with the above provision, in that they have failed to prove the giving of written notice to two of the three following: Principal, Owner or Surety, by registered mail, postage prepaid, in an envelope addressed to the Principal, Owner or Surety, at any place where an office is regularly maintained for the transaction of business.
In so far as appellant, Maule Industries, Inc., is concerned, Julius Gaines, president of each the owner and the contractor corporations, admits that he received a letter, with claim of lien attached, by registered mail addressed to the owner corporation, and which indicated at the bottom thereof that a copy had also been sent to Gaines Construction Co., Inc.; and in so far as appellant, Gunite Associates, Inc., is concerned, the said Julius Gaines admits that he received a copy of a letter enclosing a copy of the claim of lien of this company, which was addressed to him and his wife individually, and that he had knowledge of this claim.
There is considerable argument before the court and in the briefs between the appellants and the bonding company as to whether or not the provision for notice should be strictly construed. Such contracts have been strictly construed in so far as they apply to accommodation sureties. However, in the case of a compensated surety, and particularly where the surety is in the business of writing bonds for profit, the better rule seems to be that actual damage resulting from failure to give notice must be pleaded and proved as a defense, Board of County Commissioners v. United States Fidelity & Guaranty Co., 96 Kan. 255, 150 P. 590 (1915), and that failure to give a compensated surety notice of a principal's default required in the bond does not relieve the surety where the failure resulted in no loss to it. Illinois Surety Co. v. Huber, 57 Ind.App. 408, 107 N.E. 298 (1914). See also McNear v. Malow, 282 Mich. 239, 276 N.W. 433 (1937); Lyman v. Title Guaranty & Surety Co., 48 Utah 230, 158 P. 423 (1916).
It would appear that this court has adopted this view of the law as decided in Gruman v. Sam Breedon Construction Co., 148 So.2d 759 (Fla.App.1963). In this case the amount of the contract had been increased by the owner and contractor, contrary to the provisions of the bond and after the bond had been written. The question involved in this case on appeal was as follows:
'On appeal the question is whether a compensated surety should be relieved of its obligation and dismissed from the cause where the contract, the performance of which it insures, may be varied by a separate letter, which to the surety is unknown, without proof of the extent to which it possibly could be harmed.'
Judge Shannon in the summation of this case and speaking for the court said:
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