Springfield Cooperative Freeze Locker Plant, Inc. v. E. R. Wiggins Et Als
| Decision Date | 05 January 1949 |
| Citation | 63 A.2d 182,115 Vt. 445 |
| Parties | SPRINGFIELD COOPERATIVE FREEZE LOCKER PLANT, INC. v. E. R. WIGGINS ET ALS |
| Court | Vermont Supreme Court |
October Term, 1948.
Sureties.
1. A condition in a policy of insurance providing that no recovery shall be had thereon unless brought within a given time is valid unless the time prescribed can be said to be unreasonable, or the limitation is rendered in-operative by statute; such provisions are void when they conflict with statutory inhibitions.
2. In construing a statute every part of the statute must be considered and, if possible, effect must be given to every word, clause and sentence.
3. All reasonable inferences from facts found will be assumed in support of the decree.
4. In the case of a surety company, acting for compensation, a contract of insurance will be construed most strongly against the surety and in favor of the indemnity which the obligee has reasonable ground to expect.
5. Where by the terms of an insurance contract a specified notice, given by or on behalf of the insured to the insurer is made a condition precedent to liability on the part of the latter, failure to give such notice will release the insurer from the obligations imposed by the contract.
6. On appeal it is required in construing a statute that different sections of the act be harmonized if it can be done reasonably.
7. Compliance with the provisions of Par. III of P. L. 2685 does not require a finding that notice was given the owner prior to filing notice in the office of the town clerk.
8. The lien provided by P. L. 2685, as amended, is a direct lien and is not affected by an assignment.
BILL IN CHANCERY for failure to perform contract and for injunction. Upon hearing in Chancery, Windsor County, June Term, 1946, Adams, Chancellor, decree was entered for plaintiff.
Decree reversed. Claim of Springfield Cooperative Freeze Locker Plant, Inc. reduced in the amount of $ 4000. Cause remanded. Let a new decree be entered in accordance with the views expressed in the foregoing opinion.
Parker & Ainsworth for defendants Wiggins and Hemenway Electric Shop.
Christopher A. Webber for defendant Peerless Casualty Co.
Lawrence & O'Brien for the plaintiff.
Present MOULTON, C. J., BUTTLES, JEFFORDS and CLEARY, JJ. and CHASE, Supr. J.
This is a Bill in Equity brought by the Springfield Cooperative Freeze Locker Plant, Inc., for the claimed failure of Karl F. Jackson to perform his contract to build the Freeze Locker Plant. Defendant Peerless Casualty Co. was the surety on Jackson's bond and agreed to indemnify the Locker Co. "against any and all loss or damage directly arising by reason of the failure of the principal to faithfully perform said contract". Defendants Hemenway and Wiggins filed mechanics' liens against the property for materials and labor furnished Jackson in the construction and later each brought suit against the Locker Co. to enforce their liens. These suits were enjoined, Hemenway and Wiggins being made defendants in the Locker Co.'s suit in equity. After hearing and Findings of Fact, Decree was for the Locker Co. and Hemenway and against the Surety Co. and Wiggins.
The Surety Co. excepted to the Decree and argues that the Decree is not supported by the Findings because suit was not brought within the time limited in the Bond and because the Locker Co. did not give notice of breach of the building contract by Jackson within a reasonable time as required by the Bond.
The Bond provided as follows: "This bond is executed and accepted upon the following express conditions precedent: All suits at law or proceedings in equity to recover on this bond must be instituted within twelve months after completion of said contract, and in any event within twelve months from the date fixed in said contract for its completion."
The contract for which the Bond was given provided for completion of the work on November 15, 1943. The first loss sustained by the Locker Co. by reason of the failure of Jackson to perform his contract occurred after November 21, 1944. The Surety Co. claims that the contract was completed more than twelve months prior to September 28, 1945 when this suit was instituted.
P. L. § 7070 (now V. S. 1947 § 9187) provides
It is a well recognized rule that a condition in a policy of insurance providing that no recovery shall be had thereon unless suit is brought within a given time is valid unless the time prescribed can be said to be unreasonable, or the limitation is rendered inoperative by statute. The rule is equally well settled, that such provisions are void when they conflict with statutory inhibitions. Schlitz v. Lowell Mutual Fire Insurance Company, 96 Vt. 334, 119 A. 516, and cases cited.
The Surety Company argues that the bond was one of surety against the contractor's defaults and as any default had to occur within twelve months of the completion of the contract and in any event within twelve months from the date fixed in the contract for completion, the bond did not limit the bringing of suit to less than twelve months from default and, therefore, it was not in conflict with the statute. But the bond provides that the Surety Company shall indemnify the Locker Co. against any and all loss or damages directly arising by reason of the failure of Jackson to faithfully perform his contract.
In construing a statute every part of the statute must be considered and, if possible, effect must be given to every word, clause and sentence. Matter of George Paquette, 112 Vt. 441, 446, 27 A.2d 129; In re Cornell, 111 Vt. 454, 459, 18 A.2d 151; Jacobs v. Holden Leonard Co., 110 Vt. 245, 250, 4 A.2d 343.
Since the bond limited the bringing of suit to within twelve months from the date fixed in the contract for its completion and since the Locker Company's first loss occurred more than twelve months after that date the bond violated P. L. § 7070 (now V. S. (1947) § 9187) and so that provision of the bond was null and void.
The Bond further provided as follows: "That the obligee shall notify the Surety by registered letter, addressed and mailed to it at its Home Office, of any breach of said contract within a reasonable time after such breach shall have come to the knowledge of the obligee, or the Architect, or Engineer."
In paragraph 65 of the Findings of Fact the Chancellor stated the Locker Company had not established or shown by any evidence that it notified the Surety Company of any breach of the contract by Jackson within a reasonable time. Later the Chancellor reopened the case for further evidence, particularly in regard to paragraph 65 of the findings of fact, made further findings in substitution and in place of paragraph 65 and struck paragraph 65 from the findings. In the substituted findings the Chancellor did not state that the Locker Company notified the Surety Company of any breach of the contract by Jackson within a reasonable time. But he did include in the findings two letters, of June 20, 1944 and June 28, 1944 written by the Locker Company, notifying the Surety Company of breaches of the contract by Jackson. He also found that these letters were sent by registered mail and were received at the office of the Surety Company and return receipts were returned to the Locker Company. The roof was put on the building in December 1943. The first leaks occurred in March or April 1944 and the letters of June 20, 1944 and June 28, 1944 mentioned the leaks in the roof.
From the record before us and from the facts found it is fairly inferable that the notice was given within a reasonable time and we will assume in support of the decree that the inference was drawn by the Chancellor. Sparrow v. Cimonetti, 115 Vt. 292, 58 A.2d 875, 882; Abatiell v. Morse, 115 Vt. 254, 56 A.2d 464, 467; Fair Haven v. Stannard, 111 Vt. 49, 53, 10 A.2d 214; Spencer v. Lyman Falls Power Co., 109 Vt. 294, 302, 196 A. 276.
The Locker Company gave notice only of breaches of Jackson's contract regarding liens and the roof. The Surety Company claims that the notice could cover only the damage suffered as a result of the breaches set forth in the notice. The damages awarded by the decree included those for repairs to the roof, Hemenway's lien, and also damages for repairs to and replacement of refrigerating machinery and repairs to the walls.
The courts agree with practical unanimity that in the case of a surety company, acting for compensation, the contract will be construed most strongly against the surety, and in favor of the indemnity which the obligee has reasonable ground to expect. City of Montpelier v. National Surety Co., 97 Vt. 111, 117, 122 A. 484, 33 ALR 489; Town of Windsor v. Standard Accident Insurance Co., 112 Vt. 426, at 428, 26 A.2d 83. The effect of the rule is to give such contracts of indemnity a reasonable construction, so as to give effect to the intention of the parties and to carry out, rather than defeat, the purpose for which they were executed. City of Montpelier v. National Surety Co., 97 Vt. 111, 118, 122 A. 484, 33 ALR 489; Town of Windsor v. Standard Accident Insurance Co., 112 Vt. 426, 429, 26 A.2d 83.
The chancellor found that the leaks in the roof caused moisture to permeate the cork insulation under the roof boards, that the cork became wet and full of frost so that the cork had to be removed and new insulation installed. He also...
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