Murchison Nat. Bank of Wilmington v. Clark

• Decision Date: 27 October 1926
• Docket Number: 340.
• Citation: 135 S.E. 123,192 N.C. 403
• Parties: MURCHISON NAT. BANK OF WILMINGTON v. CLARK et al.
• Court: North Carolina Supreme Court

135 S.E. 123

192 N.C. 403

MURCHISON NAT. BANK OF WILMINGTON v. CLARK et al.

No. 340.

Supreme Court of North Carolina

October 27, 1926

Appeal from Superior Court, Durham County; Clifford, Special Judge.

Action by the Murchison National Bank of Wilmington against Walter Clark and another. From judgments sustaining demurrer of defendant Commercial Casualty Insurance Company and dismissing action, plaintiff appeals. Modified and affirmed.

Civil action to recover on a bond given by Walter Clark contractor, with the Commercial Casualty Insurance Company as surety thereon, to insure the faithful performance of a contract to build a county home in Durham county, "and satisfy all claims and demands incurred for the same," and "fully indemnify and save harmless the owner from all costs and damages which it may suffer by reason of failure so to do"; the plaintiff, Murchison National Bank, having loaned to the contractor sums aggregating more than $17,000, as represented by several promissory notes with which to pay laborers doing work on, and materialmen furnishing material for, the construction of said county home, and taking from the contractor assignments of all moneys then due under said contract and in the hands of the owner.

From a judgment sustaining a demurrer interposed by the Commercial Casualty Insurance Company and dismissing the action, the plaintiff appeals, assigning error.

In action on bond against surety and contractor, though no cause of action was stated against surety, on sustaining demurrer dismissal of action against contractor held error; plaintiff being entitled to proceed against him.

Bryan & Campbell, of Wilmington, for appellant.

Fuller Reade & Fuller, of Durham, and S. Brown Shepherd, of Raleigh, for Casualty Co.

STACY C.J.

Let it be observed in limine that this is not a contest between the Murchison National Bank, a creditor of the contractor, and the surety company over the retained percentages in the hands of the owner or the balance due the contractor and withheld under the contract. It is alleged that more than said balance was required to complete the contract after the failure and adjudication in bankruptcy of the contractor. Nor is it a case where moneys have been advanced for the payment of laborers and materialmen and assignments taken of their claims against the contractor. Independence Trust Co. v. Porter, 191 N.C. 672, 132 S.E. 806. Plaintiff, a lender of money to the contractor for use in carrying on the work of construction, is seeking to recover directly on the bond given by the contractor to the owner, with the Commercial Casualty Insurance Company as surety thereon, to insure the faithful performance of said contract, and conditioned as follows:

"Now, therefore, the condition of this obligation is such that, if the principal shall faithfully perform the contract on his part, and satisfy all claims and demands incurred for the same, and shall fully indemnify and save harmless the owner from all costs and damages which it may suffer by reason of failure so to do, and shall fully reimburse and repay the owner all outlay and expense which the owner may incur in making good any such default, and shall pay all persons who have contracts directly with the principal for labor and material, then this obligation shall be null and void; otherwise it shall remain in full force and effect."

It it conceded that the provisions of C. S. § 2445, requiring said bond to be conditioned "for the payment of all labor done on and materials and supplies...