Schepbow v. Pierce

• Decision Date: 18 September 1918
• Docket Number: (No. 58.)
• Citation: 97 S.E. 167
• Court: North Carolina Supreme Court
• Parties: SCHEPBOW. v. PIERCE et al.

97 S.E. 167

SCHEPBOW.

v.PIERCE et al.

(No. 58.)

Supreme Court of North Carolina.

Sept. 18, 1918.

Appeal from Superior Court, Edgecombe County; Daniels, Judge.

Action by E. M. Scheflow against J. W. Pierce and others. Judgment for defendants, and plaintiff appeals. Reversed.

This is an action against the defendant Pierce, the town of Tarboro, and the National Surety Company, as the surety for the faithful performance of the contract by, the defendant Pierce, to do certain sewerage; work and pipe laying in the streets of said town. Soon after the execution of said contract and the bond of the surety, the plaintiff and said Pierce entered into a contract by which the plaintiff was to excavate the sewer trenches, using a trench machine for that purpose, with a competent operator on it, furnishing the fuel, oil, and repairs, and operating the machine to do the work. The plaintiff was to receive for said work a stated sum per foot, according to the depth of the trenches cut. The plaintiff began work under his contract, and cut a great number of trenches of varying depths. That the balance due him for the work done on the contract is $1,350.85 is not disputed. The defendant Pierce failed to pay this balance, alleging that he is financially unable, and the town of Tarboro and the National Surety Company base their refusal upon the ground that they are not liable therefor, and that the bond executed by the surety company does not cover the plaintiff's claim. The defendant Pierce failed to answer, and judgment by default final was entered against him. The town and the surety company demurred. The court, it seems, overruled the demurrer as to the plaintiff's right to maintain the action direct on the bond, but sustained the demurrer that the plaintiff's claim was not covered by the bond, and the plaintiff appealed.

Alsbrook & Philips, fur appellant.

Bryant & Brogden, of Durham, for appellees.

CLARK, C. J. It would seem that the court overruled the demurrer as to the ground that plaintiff could not maintain this action, and the defendants are not appealing. In a case almost exactly like this, it was held that "the beneficiaries of the contract, though not a party or privy thereto, may maintain an action thereon." Gastonia v. Engineering Co., 131 N. C. 363, 42 S. E. 858, citing numerous authorities. In that case, "though no mechanic's lien could be filed against the * * * town" (131 N. C. 365, 42 S. E. 859), on page 366 of 131 N. C. (42 S. E. 859) the court said:

"Those claimants [materialmen and laborers], being the beneficiaries of the contract, could have brought their separate actions on said contract against the engineering company and its surety, " etc., citing Gorrell v. Water Co., 124 N. C. 328, 32 S. E. 720, 46 L. R. A. 513, 70 Am. St. Rep. 598; Shoaf v. Insurance Co., 127 N. C. 308, 37 S. E. 271.

In Supply Co. v. Lumber Co. the rule is thus stated (160 N. C. 428, 76 S. E. 273, 42 L. R. A. [N. S.] 707):

"The beneficiaries of an indemnity contract ordinarily can recover, though not named therein, when it appears by express stipulation or by reasonable intendment that their rights and interests were contemplated and being provided for."

In this case (Supply Co. v. Lumber Co.) it is stated (160 N. C. on page 431, about mid-dle, 76 S. E. on page 274 ):

"In the case before us it appears that the contractor had agreed to pay 'for all labor and material supplied for the erection of the building, and to save the trustees of the church harmless from any and all claims and liens which might arise out of contracts made by him, ' with material furnishers and laborers, etc., and the * * * stipulation 'that said contractor shall faithfully perform and carry out said contract according to the true intent and meaning thereof.' These provisions, in our opinion, clearly contemplate that the contractor shall pay the materialmen and laborers and constitute such claimants the beneficiaries of the contract and bond within the principles of the authorities cited."

Clark v. Bonsai, 157 N. C. 270, 72 S. E. 954, 48 L. R. A. (N. S.) 191, and Peacock v. Williams, 98 N. C. 324, 4 S. E. 550, are distinguished, for in those cases the contract and bond did not provide or intend to benefit third parties. Our decision in Gorrell v. Water Co., 124 N. C. 328, 32 S. E. 720, 46 L. R. A. 513, 70 Am. St. Rep. 598, that the beneficiary in a contract can maintain an action thereon, has been reaffirmed in numerous cases cited in the Anno. Ed., besides Gastonia v. Engineering Co., 131 N. C. 363, 42 S. E. 857, and Supply Co. v. Lumber Co., 160 N. C. 428, 76 S. E. 273, 42 L. R. A. (N. S.) 707. Besides, it has now been made statutory by chapter 150, Laws 1913, amended by chapter 9, Extra Session 1913, and chapter 191, Laws 1915, which provides that the town shall require the contractor for work on its building, roads, and streets to give a bond conditioned for the payment of all labor done on, and material and supplies furnished for, the said work, and further provides:

"Any laborer doing work on said building and materialman furnishing material therefor and used therein shall have the right to sue on said bond, the principal and sureties thereof, in the courts of this state having jurisdiction of the amount of said bond, and any number of laborers or materialmen whose claims are unpaid for work done and material furnished in said building shall have the right to join in one suit upon said bond for the recovery of the amounts due them respectively."

The contract of the defendant Pierce stipulates (section 17) that he will give a surety bond "conditioned to secure the faithful performance of this contract, the payment for all materials purchased, and used under this contract, the payment of wages of laborers employed by said contractor on the works, and the liens which may arise therefrom." Said contractor subsequently made the contract with the plaintiff as a subcontractor, and the bond of the surety stipulates that Pierce, the contractor, "shall In all things stand to and abide by, and well and truly observe, do,...