Snider v. Greer Wilkinson Lumber Co.

• Decision Date: 05 January 1912
• Docket Number: No. 7,360.,7,360.
• Parties: SNIDER et al. v. GREER WILKINSON LUMBER CO.
• Court: Indiana Appellate Court

51 Ind.App. 348

96 N.E. 960

SNIDER et al.

v.GREER WILKINSON LUMBER CO.

No. 7,360.¹

Appellate Court of Indiana, Division No. 2.

Jan. 5, 1912.

Appeal from Circuit Court, Delaware County; J. H. Leffler, Judge.

Action by the Greer Wilkinson Lumber Company against D. M. Snider and another. Judgment for plaintiff; defendants appeal. Affirmed.

Will P. Koons, Geo. H. Koons, and Geo. H. Koons, Jr., for appellants. McClellan & Hensel and Ball & Needham, for appellee.

LAIRY, J.

The appellee brought an action against appellants to recover on a bond executed by one Edmond S. Petro, as principal, and said appellants, as sureties. The school city of Muncie, on the 16th day of May, 1908, let a contract to said Petro for the improvement of a school building in said city, and the bond in question was executed for the purpose of securing the proper performance of said contract. The appellee was at the time a corporation engaged in the retail lumber business, and as such furnished material to said contractor, which material was used in the making of repairs on said school building, and this action was brought to recover for the material so furnished from the sureties on the contractor's bond. The contract entered into between Petro and the school city of Muncie is made an exhibit of the complaint, as is also the contractor's bond. Appellee seeks to hold the sureties on the bond, upon the theory that the bond executed by them bound the contractor and his sureties to pay for all material furnished and used in making the repairs under said contract. The contract is quite lengthy, and it is not necessary to a proper understanding of the points involved in the case to set it out at length.

The bond, executed by said Petro and appellants, as sureties, is as follows:

“Know all men by these presents, that we, Edmond S. Petro and Lawrence H. Klus and David M. Snider, of the city of Muncie, Delaware county, state of Indiana, are held and firmly bound unto the board of trustees of school city of Muncie, of said county and state, as well as to all persons who may become entitled to liens under the contract hereinbefore mentioned, in the sum of four thousand six hundred and fifty ($4,650.00) dollars, lawful money of the United States of America, to be paid to the board of trustees of school city of Muncie and to said parties who may be entitled to liens, their executors, administrators and assigns; for which payment well and truly to be made we bind ourselves one and each of our heirs, executors and administrators, jointly and severally, firmly by these presents. Sealed with our seals; dated this 16th day of May, 1908. The condition of this obligation is such that if the above-bounded Edmond S. Petro, his executors, administrators or assigns shall in all things, stand to and abide by, and well and truly keep and perform the covenants, conditions and agreements of the above-mentioned contract, entered into by and between the said Edmond S. Petro and the said board of trustees of the school city of Muncie, dated on the 16th day of May, 1908, for the construction of the work or works mentioned in the foregoing contract, and shall duly and promptly pay and discharge all indebtedness that may be incurred by the said EdmondS. Petro in carrying out the said contract, and complete the same free of all mechanics' liens, and shall truly keep and perform the covenants, conditions and agreements in the said contract and in the within instrument contained, on his part to be kept and performed, at the time and in the manner and form therein specified, as well as all costs, including attorney's fees, in enforcing the payment and collection of any and all indebtedness incurred by said Edmond S. Petro in carrying out said contract, then the above obligation shall be void, else to remain in full force and virtue. This bond is made for the use and benefit of all persons who may become entitled to liens under the said contract according to the provisions of law in such cases made and provided, and may be sued upon by them as if executed to them in proper person. In testimony whereof, etc. [Signed] Edmond S. Petro, Lawrence H. Klus, and David M. Snider.”

It is the contention of appellant that the complaint is not sufficient to state a cause of action against the sureties on the bond, for the reason that the bond sued on shows upon its face that it was intended only for the protection of the school city of Muncie and all persons who may become entitled to liens; and that, as the appellee was not entitled to a lien, it does not fall within the class for whose benefit the bond was executed, and for that reason it cannot maintain an action on the bond. If the bond was intended to inure to the benefit of persons who might furnish material for such repairs, and who, under the law, were not entitled to acquire a lien therefor against the building, the complaint states a cause of action; but, if it was not so intended, the complaint is insufficient, and the demurrer thereto should have been sustained.

[1] The parties to the bond were the school city of Muncie, on the one hand, and the contractor and his sureties, on the other, but it is claimed on behalf of appellees that certain provisions of the bond were made for the benefit of third persons. A contract may be entered into between two or more parties for the primary benefit of third persons, not parties to the contract, and, in such a case, the persons for whose benefit the contract is made may maintain an action upon it in their own names. This proposition is not controverted by appellant, and is well supported by authority. Williams v. Markland, 15 Ind. App. 669, 44 N. E. 562;Judson v. Romaine, 8 Ind. App. 390, 35 N. E. 912;Waterman v. Morgan, 114 Ind. 237, 16 N. E. 590;Carnahan v. Tousey, 93 Ind. 561;Knight & Jillson Co. v. Castle, 172 Ind. 97, 87 N. E. 976, 27 L. R. A. (N. S.) 573.

[2] It has been frequently held in this state that a bond given to secure the performance of a contract for the construction or repair of public buildings, which are not subject to liens, inures to the benefit of persons furnishing material or labor in the performance of such contracts, where there is an express stipulation, either in the contract or bond, that the contractor shall pay all claims for labor and material. Knight & Jillson Co. v. Castle, supra; Ochs v. Carnahan Co., 42 Ind. App. 157, 76 N. E. 788, 80 N. E. 163;Brown v. Markland Co., 22 Ind. App. 652, 53 N. E. 295. A stipulation to the effect that the contractor shall pay all claims for labor and material, when contained in a contract for building or repairing a public structure, not subject to liens, can be of no direct financial benefit to the public corporation for which the structure is built, or its agents who let the contract, for the reason that neither such corporation nor its agents can be held personally responsible for such claims; and they cannot be enforced as liens against the building. As persons furnishing material or performing labor are the only ones who can be benefited by such a stipulation, this furnishes a reason for holding, in such a case, that an agreement of this character is intended primarily for their benefit. King v. Downey, 24 Ind. App. 262, 56 N. E. 680;United States Fidelity Co. v. American Blower Co., 41 Ind. App. 620, 84 N. E. 555.

The sureties...