Petition of Leon Keyser, Inc.

• Decision Date: 01 July 1952
• Citation: 89 A.2d 917,97 N.H. 404
• Parties: Petition of LEON KEYSER, Inc.
• Court: New Hampshire Supreme Court

Page 917

89 A.2d 917

97 N.H. 404

Petition of LEON KEYSER, Inc.

Supreme Court of New Hampshire.

July 1, 1952.

Sulloway, Piper, Jones, Hollis & Godfrey and Irving H. Soden, Concord, for Aetna Casualty & Surety Co.

Robert P. Booth, Manchester, receiver, pro se.

Devine & Millimet, Joseph A. Millimet, Manchester, for Joseph F. Carew, Inc.

J. Morton Rosenblum, Manchester, for Architectural Stone Co., Inc.

Charles B. McLaughlin, Manchester, for H. J. Touhy & Son and United Plate and Window Glass Co.

Winthrop Wadleigh, Manchester, for Duracrete Block Co., Inc.

John W. King, Manchester, for P. H. McGranahan Co., Inc.

DUNCAN, Justice.

The surety takes the position that the bonds which it executed with the insolvent corporation are statutory bonds, and that it is obligated to pay only those creditors who gave the notice required by the statute. R.L. c. 264, § 27, Laws 1943, c. 182. It contends that the statute should be read into the bonds, and that any undertakings which are broader than those required by the statute or conflict therewith, should be limited accordingly. With this view we do not agree. In 43 American Jurisprudence 888, 'Public Works and Contracts,' § 146, it is stated that by the weight of authority such a 'bond may be conditioned more broadly than the statute requires, and if * * * voluntarily given in consideration of the contract, its extrastatutory provisions may be enforced as a valid common law obligation.' See also, Western Steel Casting Co. v. Edland, 187 Wash. 666, 669, 61 P.2d 155; Hogan v. Walsh & Wells, Inc., 180 Tenn. 670, 177 S.W.2d 835; Mass. Bonding & Ins. Co. v. State, 82 Ind.App. 377, 149 N.E. 377; Annotation, 18 A.L.R. 1227. There is no indication in our statute that this principle should not be applied in this jurisdiction. The statute does not prohibit the taking of bonds broader than the statute requires, nor is any intention shown to make the prescribed type of bond exclusive.

The statute in its original form, Laws 1927, c. 88, provided for a bond conditioned upon the payment of all who would have liens under sections 15-24 of chapter 217, P.L., now chapter 264, Revised Laws. It was designed 'to furnish an alternative security to lienors, in general more practically adapted to protect them and at the same time to save the state or municipality from annoyance.' Guard Rail Erectors v. Standard Surety & Casualty Company, 86 N.H. 349, 168 A. 903. Accordingly, it was held that enforcement of a lien by notice and attachment as required by statute in other cases, R.L. c. 264, §§ 16, 20, was unnecessary in order to have recourse to the bond. Id. See also, American Bridge Co. v. United States Fidelity & Guaranty Company, 87 N.H. 62, 174 A. 57. Thereafter the statute was amended, Laws 1943, chapter 182, Laws 1949, chapter 71, to define with more particularity persons entitled to the protection of the required bond, § 26, to provide for notice, § 27, and for hearing in a single proceeding of all claims properly filed. § 27-a. The remedy thus provided does not purport to be a remedy for the enforcement of all types of bonds but only for the bonds required by the statute. Common law liability is not abolished. See Toner & Co. v. Long, 79 N.H. 458, 111 A. 311. While the statute defines the conditions which a bond shall contain, it does not prohibit the incorporation of additional conditions. The recent decision in Therrien v. Maryland Casualty Company, 97 N.H. 180, 84 A.2d 179, establishes that the statutory requirement of notice to the principal and surety is one which may be waived by them. In other respects so far as it is applicable, the statute may be thought to be mandatory.

The bond executed by the surety in favor of the Claremont School District recites a purpose 'to comply in full' with the statute. The language of the bond goes beyond the requirements of the statute and guarantees 'faithful performance of the Contract' by the principal and indemnifies the district against loss through his default and any expenditure to make the default good. With respect to persons furnishing labor and materials the express provisions of the bond are narrower than the requirements of the statute, since they are in favor only of 'persons who have contracts directly with the Principal,' while the statute requires that the bond guarantee payment 'by the contractors and subcontractors for all labor performed or furnished, [and] for all equipment hired * * *.' § 26.

The bond is interpreted to afford protection to the classes of persons contemplated by the statute, as well as to afford to the district and others the rights expressly given by the bond. The statute is to be read into the bond for the purpose of affording rights to persons intended by the Legislature to be protected, Baumann v. City of West Allis, 187 Wis. 506, 525, 526, 204 N.W. 907, especially when an intent to comply with the statute is evidenced by the bond (Annotation, 89 A.L.R. 446, 451); but no reason is seen to deprive others of the protection which the parties to the bond intended and provided for, and which the statute does not expressly prohibit.

The question of the necessity for compliance with the statute in enforcement of rights under the bond is presented. The bond provides that persons having contracts directly with the principal 'shall have a direct right of action against the Principal and Surety under this Obligation.' In the absence of such a provision, and of any controlling statute, persons entitled to benefits under the bond would be entitled to enforce their rights by bill in equity. Toner & Co. v. Long, 79 N.H. 458, 111 A. 311, supra. The effect of the provision for a direct right of action is to give to those in whose favor it runs, the right to enforce their claims by an action at law, if no statute requires otherwise. Guard Rail Erectors v. Standard Surety & Casualty Company, supra. The statute in its present form provides a remedy by notice and petition. §§ 27, 27-a. But by giving 'a direct right of action,' to persons having contracts directly with the contractor, and by further provision that no such action shall be brought 'after two years from the day on which the final payment under the Contract falls due,' the principal and surety have waived the statutory requirements that notice shall be given within ninety days after the claimant ceases to perform labor or furnish material, and that a petition shall be filed within one year. §§ 27, 27-a supra. Therrien v. Maryland Casualty Company, supra. Consequently creditors who come within the condition of the bond may maintain their actions without prior statutory notice.

Such a waiver cannot be implied however with respect to persons who do not have contracts directly with the principal. As previously indicated, their rights depend upon the statute. If they accept its benefits, they likewise become subject to its burdens. The statute creates their rights, and they may not be enforced at common law. Mason v. Portland Const. Company, 85 N.H. 487, 160 A. 477, but only by the means specified by the statute. Such creditors are accordingly remitted to the statutory procedure, including notice and petition, within the times limited.

Similar principles govern the rights...