Sorensen v. Robert N. Ewing, General Contractor

• Decision Date: 12 December 1968
• Docket Number: CA-CIV
• Citation: 448 P.2d 110,8 Ariz. App. 540
• Parties: Vinson D. SORENSEN and Jane Doe Sorensen, his wife, dba V. D. Plumbing & Heating; and Glens Falls Insurance Company, a Nw York corporation, Appellants, v. ROBERT N. EWING, GENERAL CONTRACTOR, an Arizona corporation, Appellee. No 1576.
• Court: Arizona Court of Appeals

Page 110

448 P.2d 110

8 Ariz.App. 540

Vinson D. SORENSEN and Jane Doe Sorensen, his wife, dba V. D. Plumbing & Heating; and Glens Falls Insurance Company, a Nw York corporation, Appellants, v.ROBERT N. EWING, GENERAL CONTRACTOR, an Arizona corporation, Appellee.

No 1 CA-CIV 576.

Court of Appeals of Arizona.

Dec. 12, 1968.

Lesher, Scruggs, Rucker, Kimble & Lindamood, by Robert O. Lesher, Tucson, for appellants.

Rawlins, Ellis, Burrus & Kiewit, by Chester J. Peterson, Phoenix, for appellee.

KRUCKER, Judge.

This appeal brings up for review a judgment entered in favor of a general contractor against a subcontractor and the latter's surety.Briefly, the facts are as follows.

Sorensen, the subcontractor, had entered into a contract with Ewing, the general contractor, to furnish all labor, material and equipment for installation of plumbing, heating, air conditioning and outside utilities for the Pinetop-Lakeside High School and elementary school project in Navajo County.This subcontract specifically provided:

'* * * Special attention is to be given to the General Conditions of the Specifications, all of the provisions of which are made a part of this subcontract.

* * *

* * *

'A Performance Bond and a Labor Material Payment bond on A.I.A. form A311 are to be furnished the General Contractor as a part of this Subcontract.'

These required bonds were duly furnished.The performance bond in favor of Ewing obligated the surety in the amount of $87,129.93.He instituted this lawsuit to recover damages for alleged breaches of this subcontract--failure to complete performance and defective workmanship.The case was tried to the court, sitting without a jury, and the parties stipulated that the court might view the premises in question.The court found in the contractor's favor as to the following items:

Bruce Floors, work               $   242.82
                White Mountain Plumbing, work        100.25
                Brooks Insulation Co., work          249.73
                Carl Hadra, work                     597.00
                J. H. Welch & Sons, work           7,319.09
                Mayben & Walker, work                114.80
                State of Arizona penalties         1,125.00
                Propane Gas                        1,648.97
                Additional repairs needed
                before the year was up, but not
                yet done                             852.00
                Replacement of gym floor          13,845.00
                                                 ----------
                                                 $26,124.66
                

Reduction of this total sum by offset of the amount allowed on defendants' counterclaim resulted in a judgment of $22,926.42 in plaintiff's favor.

Before addressing ourselves to consideration of the items allowed as damages, we shall pass upon the surety's contention that it was discharged from liability.In the absence of limitations in the contract, the liability of a surety on a performance bond is co-extensive with that of its principal.Maine Bonding and Casualty Co. v. Foundation Constructors, 105 N.H. 470, 202 A.2d 481(1964);Dinon Terrazzo & Tile Co. v. Tom Williams Construction Co., 148 So.2d 329(La.App.1963);Rocky Mountain Tool & Machine Co. v. Tecon Corp., 371 F.2d 589(10th Cir.1966).The surety contends that it was released from liability because Ewing had failed to establish the Fact of injury.There is no merit to this contention when, as here, the surety's obligation was to guarantee performance rather than to indemnify.72 C.J.S.Principal & Surety§ 97.Glens Falls undertook to guarantee that Sorensen would perform the terms of his contract with Ewing.A breach by its principal rendered Glens Falls liable, 72 C.J.S.Principal & Surety§ 95, and Ewing was entitled to be placed in the position he would have been in had the contract been fulfilled.Id, § 112.

It is further argued by Glens Falls that Ewing's failure to perform certain conditions imposed on him operated to release it.Although we agree that a failure on the part of an obligee to perform certain conditions may operate to discharge the surety, 72 C.J.S.Principal & Surety§ 152a, we do not agree that such is the case here.The General Conditions section of the construction specifications provides:

'A.AGREEMENT: The Contractor agrees to the use and occupancy of a portion or unit of the project before formal acceptance by the Owner provided, the Owner:

* * *

* * *

2.Secures endorsement from the insurance-carrier and consent of the surety permitting occupancy of the building or use of the project during the remaining period of construction * * *.'

Another section provides, in pertinent part:

'A.GUARANTEES: Neither the final certificate of payment nor any provision in the Contract Documents nor a partial or entire occupancy of the premises by the Owner shall constitute an acceptance of work not done in accordance with the Contract Documents or relieve the Contractor of liability in respect to any express warranties or responsibility for faulty materials or workmanship.The Contractor shall remedy any defects in the work and pay for any damage to other work resulting therefrom, which shall appear within a period of one year from the date of final acceptance of the work unless a longer period is specified * * *.

Where warranties or guarantees of longer term are specifically called for or are freely extended by manufacturer, they shall be provided by Contractor.'(Emphasis supplied)

The parties agree that in applying the foregoing provisions to them, the term 'owner' means Ewing and the term 'contractor' means Sorensen.The surety predicates its 'discharge' argument on (1)'Acceptance' of Sorensen's work on December 20, 1964, and (2)'use and occupancy' by Ewing of the heating equipment without its consent.The first argument is advanced to relieve both the surety and subcontractor from liability on the grounds that the one-year warranty period had expired on December 20, 1966, and therefore, Sorensen had no duty to remedy any defects or pay for any damage to other work resulting therefrom after said date.The trial court apparently found otherwise, and there being evidentiary support for a finding that final acceptance of the work did not take place until February 9, 1965, we cannot say that such finding was erroneous.

As to argument number two, assuming arguendo that the heating equipment installed by Sorensen constituted a 'portion or unit of the project' so as to require the surety's consent for its 'use' prior to formal acceptance by the School Board, Ewing's unequivocal denial of assumption of the operation of the heating equipment is sufficient to support a finding contra to the surety's contention.We thus find no merit to either claim that the judgment in its entirety must be reversed.

The major thrust of this appeal is directed at the evidentiary foundation for the various items of damage, exclusive of the first three listed above.Sorensen had agreed, under the terms of the contract, to remedy any defect in his work and pay for any damage to other work resulting therefrom within a year after acceptance of his work.No useful purpose would be served by detailing the testimony regarding the defectiveness of Sorensen's performance.Suffice it to say there was extensive testimony that the heating equipment installed by him did not comport with the specificaions of the contract.One major defect, to which much testimony was devoted, was the installation of two Fireye units, set up for natural gas, in the boiler.The trial court apparently concluded, not without evidentiary support, that Soresen did not satisfy the requirements of the contract in that the plans and specifications were replete with notations calling for LP gas.Therefore, in view of the evidence that units set up for natural gas would be highly unsuitable and unsafe for an LP gas system, installation of such units rendered the performance defective.Additionally, there was considerable testimony concerning the installation of pipes which, if believed by the trial court, would justify a conclusion that the work had not been performed in a workmanlike manner as required by the contract.In summary, we need only say that the evidence supports a finding that Sorensen's work was defective.

Under these circumstances, there being no claim that unreasonable economic waste would result thereby, Ewing was entitled to recover the reasonable cost of remedying the defects, i.e., the cost of making Sorensen's work conform to the contract.Blecick v. School District No. 18 of Cochise County, 2 Ariz.App. 115, 406 P.2d 750(1965);Haviland v. Dawson, ...