Rivier College v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 31 January 1963
• Citation: 187 A.2d 799,104 N.H. 398
• Parties: RIVIER COLLEGE v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY et al.
• Court: New Hampshire Supreme Court

Page 799

187 A.2d 799

104 N.H. 398

RIVIER COLLEGE v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY et al.

Supreme Court of New Hampshire.

Argued Dec. 4, 1962.

Decided Jan. 31, 1963.

Guertin & Widener, Antoine A. Guertin, Nashua, for plaintiff Rivier College.

Boynton, Waldron & Dill, Wyman P. Boynton, Portsmouth, for defendant St. Paul Fire & Marine Ins. Co.

Booth, Wadleigh, Langdell, Starr & Peters and Richard C. Kohls, Manchester, for Peabody Co. Wiggin, Nourie, Sundeen, Nassikas & Pingree and T. William Bigelow, Manchester, for United Glass & Aluminum Co., Inc.

The other creditor defendants filed no briefs.

BLANDIN, Justice.

The main issue transferred to this Court is whether the contract between the plaintiff Rivier College and the defendant St. Paul Fire and Marine Insurance Company is an indemnity or a performance bond.

It appears there are two types of agreement commonly drawn in such situations as the present. The first is called an indemnity bond, the purpose of which is for the sole benefit of the owner, to secure for him the completion of the building within the terms of the contract and without extra cost to him, because of liens for unpaid sub-contractors, labor and material for which he might otherwise be liable. Mason v. Portland Const. Company, 85 N.H. 487, 160 A. 477. The second is a performance bond, where the surety guarantees not only that the building will be completed within the contract price without extra cost to the owner, but also that payment will be made by the contractor to sub-contractors and to those who furnish labor and materials. Toner & Co. v. Long, 79 N.H. 458, 111 A. 311.

The bond agreement here was executed in two parts. The first, dated July 3, 1958, standing alone, indisputably is an indemnity bond, and all counsel so agree. However, the Court has construed this agreement, together with a subsequent addendum dated July 21 following, as constituting a performance bond. No question is raised as to the proper execution of either of these instruments, and the question of their meaning becomes one of interpretation for this Court. Pettee v. Omega Chapter of Alpha Gamma Rho, 86 N.H. 419, 170 A. 1, 171 A. 441. In such cases, it is elementary that where the second agreement expressly refers to the first and deals with he same subject matter, the two should be construed together. Bogasian v. Fine, 99 N.H. 340, 344, 111 A.2d 190; Hill v. Huntress, 43 N.H. 480; 17 C.J.S. Contracts, § 299. Also, the law is well established that when a bond refers, as here, to a specific contract and is conditioned upon the principal's performance of that contract, both bond and contract must also be read together. Paisner v. Renaud, 102 N.H. 27, 29, 149 A.2d 867; Kenney v. Barry, 86 N.H. 35, 162 A. 774; 9 Appleman, Insurance Law and Practice, s. 5276, p. 70. It is thus our duty to consider together the original bond and addendum agreement between the plaintiff and the defendant insurance company with the contract between the plaintiff and J. M. Construction Co., to which the bond agreements expressly refer. The interpretation of these instruments resolves itself into one of the intent of the parties, and in determining this intent we consider not only the language of the instruments, but all relevant circumstances, including the facts found by the Trial Court. Pettee v. Omega Chapter of Alpha Gamma Rho, 86 N.H. 419, 170 A. 1, 171 A. 441.

At the threshold of this inquiry we are met by the defendant insurance company's objection that the Trial Court erred in admitting the testimony of the attorney for the plaintiff as to his intent on insisting on the addendum to the original contract between the plaintiff and the defendant insurance company. There was evidence, however, that he had communicated his intent to the representative of the defendant prior to the execution of the addendum agreement. 'In accordance with the modern tendency (IX Wig.Ev., 3d Ed., § 2465) it has long been the rule here that the facts surrounding an undertaking, including conversations in preliminary negotiations, are admissible to aid in interpreting an agreement.' Lefebvre v. Waldstein, 101 N.H. 451, 456, 146 A.2d 270, 275; see also Perry v. Champlain Oil Company, 99 N.H. 451, 454, 114 A.2d 885; see Berke Moore Co. v. Phoenix Bridge Co., 98 N.H. 261, 266, 98 A.2d 150. The parol evidence was properly admitted, and therefore we overrule the defendant's exception to its admission. Perry v. Company, supra.

The Trial Court found that the first bond, signed on July 3, 1958, 'was not acceptable to Rivier College * * * in that it was not a performance bond but rather an indemnity bond.' The existence of this fact, explaining why the plaintiff's attorney requested the addendum, is supported by the record and is binding upon us. Pettee v. Omega Chapter of Alpha Gamma Rho, 86 N.H. 419, 423, 170 A. 1, 171 A. 441. The Trial Court also found that it was the intention of the parties that a performance bond be furnished and construed the obligation of the defendant to be such. It is true that the question of intention is ultimately for this Court, although in a true sense it is a question of fact. Sylvester v. Newhall, 97 N.H. 267, 272, 85 A.2d 378. Nevertheless, the determination of this fact is initially for the Trial Court (Newcomb v. Ray, 99 N.H. 463, 465, 114 A.2d 882), and such is entitled to weight.

In reaching its conclusion, it was the duty of that Court to consider, among other circumstances, the familiar principle that all parts of an agreement are to be given a meaning whenever reasonably possible. McGinley v....