Paul Schoonover, Inc. v. Ram Const., Inc., 15071

• Decision Date: 02 June 1981
• Docket Number: No. 15071,15071
• Citation: 129 Ariz. 204,630 P.2d 27
• Parties: PAUL SCHOONOVER, INC., an Arizona Corporation, Appellee, v. RAM CONSTRUCTION, INC., an Arizona Corporation, and Aetna Casualty and Surety Company, a Connecticut Corporation, Appellants.
• Court: Arizona Supreme Court

Page 27

630 P.2d 27

129 Ariz. 204

PAUL SCHOONOVER, INC., an Arizona Corporation, Appellee, v. RAM CONSTRUCTION, INC., an Arizona Corporation, and Aetna Casualty and Surety Company, a Connecticut Corporation, Appellants.

No. 15071.

Supreme Court of Arizona, In Banc.

June 2, 1981.

Logan, Marton, Halladay & Hall by Kraig J. Marton, Phoenix, for appellants.

Cahill, Hanson, Phillips & Mahowald by Bruce M. Phillips, Phoenix, for appellee.

HAYS, Justice.

An action was brought by Paul Schoonover, Inc., a subcontractor (hereinafter referred to as appellee), to recover payment for monies due under a contract entered into between it and Ram Construction, Inc., the general contractor (hereinafter referred to as Ram). The contract concerned the construction of an addition to H. M McKemy Intermediate School Library, a public building in Tempe. Aetna Casualty and Surety Company was joined as a defendant in the action below as the surety who bonded the performance of the school construction project and was jointly represented throughout by counsel for Ram. Aetna appeals the entry of judgment for plaintiff by the Superior Court. Plaintiff was successful in a hearing before the registrar of contractors and received an award in arbitration. Ram did not appeal the adverse judgment and therefore it is admitted that Ram failed to perform its contractual obligation with appellee. Aetna asserted no defenses nor objections independent of those asserted by Ram at trial. Subsequent to trial, Aetna filed an "Objection to the Form of Judgment and Motion for New Trial," claiming that there was no evidence to sustain the entry of judgment against Aetna. This motion was denied and formal written judgment entered. We take jurisdiction pursuant to 17A A.R.S. Rules of Civil Appellate Procedure, rule 19(e).

It has long been established in Arizona that an appellate court must view the evidence and reasonable inferences therefrom in the light most favorable to the party in whose favor the judgment was rendered and if there is any evidence to support the judgment of the trial court, it must be affirmed. Kubby v. Crescent Steel, 105 Ariz. 459, 466 P.2d 753 (1970); Hueg v. Sunburst Farms (Glendale) Mutual Water & Agricultural Co., 122 Ariz. 284, 594 P.2d 538 (App.1979). Viewed in this light, we affirm.

The burden upon appellee to establish a cause of action on the bond consists of proving the execution of the contract of suretyship, breach by the principal, loss or damages sustained as a result of the breach, and liability of the surety therefor. 72 C.J.S. Principal and Surety § 270 (1951). The first three requirements were evidenced by the final judgment determining the liability of Ram, and by the admissions in appellee's answer.

Plaintiff-appellee's complaint alleged:

"(T)he construction of Tempe Elementary School, District Number 3 has been bonded and that the bonding company holding said bond for the performance of said contract is AETNA CASUALTY AND SURETY COMPANY; that plaintiff is due payment from defendant, pursuant to the contract attached hereto and by reference included herein, and defendant AETNA CASUALTY AND SURETY COMPANY as bonding company for the performance of said contract is liable thereon,"

Aetna and Ram jointly answered the complaint:

"Admit that RAM CONSTRUCTION, INC. (RAM) is an Arizona corporation which was engaged in contracting on or about June 10, 1976 and that AETNA CASUALTY AND SURETY COMPANY (AETNA) is the bonding company which bonded RAM in connection with construction done in Tempe Elementary School District Number 3. Deny all the rest of Paragraph I of Plaintiff's Complaint and demand strict proof thereof.

"Admit that plaintiff and RAM entered into a contract ..."

The admission binds Aetna and is conclusive as to the admitted fact. Schwartz v. Schwerin, 85 Ariz. 242, 249, 336 P.2d 144, 148 (1959). The final requirement, the sufficiency of the evidence of appellant's liability is now questioned.

Appellant contends that the failure to introduce the bond itself at trial was fatal and that the extent and nature of the bond was not otherwise proven. This contention was disposed of in Mine & Smelter Supply Co. v. General Insurance Co. of America, 24 Utah 2d 330, 471 P.2d 154 (1970), where a bond was posted in conformance with a statute requiring it for construction of a public building. The supplier of the subcontractor was awarded the cost of material he supplied to the general contractor, and the insurance bonding company for the general contractor appealed. The court stated "(a)s to the second claim of error General Insurance contends that it was error for the trial court to enter judgment against it inasmuch as the bond it supplied was not offered or received in evidence. An examination of the pleadings reveals that General Insurance admitted by its answer that it supplied the surety bond we are here concerned with. No issue was raised by the pleading in which General Insurance contended that it was not liable on its undertaking. It would appear that this matter was first raised in this court and was not called to the attention of the trial court. We are of the opinion that appellant's contention respecting the bond is without merit." Id. at 332, 471 P.2d at 156.

As here, the appellants have admitted supplying the bond, and the record contains the general contract between Ram and the owner which required a performance bond on this project. This bond was to cover the "faithful performance (100%) of the contract and the payment of all obligations (100%) arising therein, in such form as the owner may prescribe with all sureties as he may approve." We find appellee's statement persuasive that "(w)hile the (general) contract may not be total evidence of performance, it does evidence the requirement, the performance of which is admitted by the Answer." Since Ram was adjudicated liable and Aetna supplied the bond covering 100% performance and raised no defense nor objection independent of Ram at trial, it can be inferred that Aetna is liable.

The record shows no indication that the existence and coverage of the bond were at issue. Defendant-appellant's attorney questioned appellee's president as follows at trial:

Q. You knew this was a municipal job, did you not, Mr. Schoonover?

A. Yes.

Q. You knew there was a performance bond for the benefit of the contractors on this job by Aetna Casualty and Surety?

A. I knew there was a bond.

Q. You knew that it was for your benefit?

A. Eventually, if necessary.

The testimony at trial and the admissions in the pleadings and documentary evidence all tend to establish the applicability of the bond and liability thereon.

Appellants argue that following the decision in Tyner v. DiPaolo, 76 N.M. 483, 416 P.2d 150 (1966), this court should not "assess any liability," because we are not able to "ascertain what obligations, if any, were undertaken" by Aetna. We disagree and hold that under Arizona authority the law is read into the bond. "The law is well settled that if a surety makes a contract with the law before him the law enters into and becomes a part of the agreement." Porter v. Eyer, 80 Ariz. 169, 172, 294 P.2d 661, 663 (1956); see United States Fidelity & Guaranty Co. v. Bross, 118 Ariz. 599, 601, 578 P.2d...