Sproul Const. Co. v. St. Paul Fire & Marine Ins. Co.
Decision Date | 18 May 1964 |
Docket Number | No. 7323,7323 |
Citation | 392 P.2d 339,1964 NMSC 102,74 N.M. 189 |
Parties | SPROUL CONSTRUCTION COMPANY, Sproul Brothers, Inc., Sproul-Brozo Construction Corp., Plaintiffs-Appellees, v. ST. PAUL FIRE & MARINE INSURANCE COMPANY, Defendant-Appellant. |
Court | New Mexico Supreme Court |
Keleher & McLeod, Russell Moore, Albuquerque, for appellant.
Rodey, Dickason, Sloan, Akin & Robb, Robert D. Taichert, John P. Eastham, Albuquerque, for appellees.
ON SECOND MOTION FOR REHEARING
Leave of the court has been granted for the filing of a second motion for rehearing by defendant-appellant. Sec. 21-2-1(18)(7), N.M.S.A.1953. Upon consideration of the same, the former opinion, reported at 73 N.M. 421, 389 P.2d 194, is withdrawn and the following substituted therefor:
This action was commenced as a suit to foreclose materialmen's liens. The plaintiffs, Air Service, Inc., and Air Conditioning Equipment Company, furnished labor and materials to the defendant, Associated Roofing and Supply Company, Inc., hereinafter referred to as 'Associated,' in connection with the performance by Associated of a sub-contract between it and defendants, Sproul Construction Company, Sproul Brothers, Inc., and Sproul-Brozo Construction Corp., hereinafter referred to as 'Sproul.' Upon failure of Associated to pay plaintiffs as agreed, liens were duly filed and this suit commenced to foreclose the same. Additional suppliers, who had also filed liens, intervened. Sproul, the contractor, filed a third-party action against St. Paul Fire & Marine Insurance Company, hereinafter referred to as 'St. Paul' or 'insurer,' alleging the execution by St. Paul of a 'performance and payment bond' guaranteeing the performance by Associated of its sub-contract with Sproul. St Paul, by answer, pleaded a number of defenses, only two of which are material to this appeal.
St. Paul, in its brief, states its 'principal defense' to be 'that after notice to Sproul that Associated was insolvent and that liens had been filed' in connection with the construction, Sproul continued to make progress payments to Associated, prejudicing the rights of St. Paul and thus voiding the bond.
All issues of fact having been settled by agreement between the parties, judgments were duly entered. It was understood that the issues raised by the defenses of St. Paul to the third-party complaint of Sproul were not to be prejudiced thereby. The issues of law raised by the answer of St. Paul were in turn decided by the trial court in favor of Sproul, and this appeal followed.
The contract between the parties contained the following language:
and the following additional sections:
The condition of the bond executed by Associated Roofing and Supply Company, Inc., as principal, and St. Paul Fire and Marine Insurance Company, as surety, to Sproul Construction Company, as obligee, reads as follows:
'NOW, THEREFORE, the condition of the foregoing obligation is such that if the Principal shall indemnify the Obligee for all loss that the Obligee may sustain by reason of the Principal's failure to comply with any of the terms of said contract, then this obligation shall be void; otherwise it shall remain in force.'
Although St. Paul pleaded numerous defenses, we need notice only those that are argued here on appeal, all others being considered abandoned. Hendrix v. Dominguez, 58 N.M. 216, 269 P.2d 1099.
Did the trial court err in sustaining Sproul's motion for summary judgment? By so ruling, the legal defenses presented were held ineffective. These defenses asserted that the bond was voided by virtue of Sproul's acts in continuing to make payments to Associated after mechanics' liens had been filed, knowing Associated was insolvent, and also because of Sproul's failure to retain 10% of the contract price.
St. Paul places principal reliance on the early cases of Lyons v. Kitchell, 18 N.M. 82, 134 P. 213, Ann.Cas.1915C, 671, and Morgan v. Salmon, 18 N.M. 72, 135 P. 553, L.R.A.1915B, 407.
Lyons v. Kitchell, supra, is distinguishable. Payment without retaining 20% was held to be a deviation from the contract and to operate to discharge the surety. The surety there was an accommodation or non-compensated surety, whereas here, St. Paul was paid for the obligation it undertook. That this makes a difference is recognized by the court in its decision. See also, Southwestern Portland Cement Co. v. Williams, 32 N.M. 68, 251 P. 380, 49 A.L.R. 525; note in 94 A.L.R. 876.
Morgan v. Salmon, supra, was a case of a paid surety and, even so, a failure to retain a percentage of the value of labor and materials furnished as provided in the contract was held to be a substantial deviation and operate to discharge the surety. However, the bond there being sued upon was conditioned as follows:
'[A]ll moneys, which but for such default would be due, or would thereafter become due, to the principal, shall be held by the obligee and by him applied for the indemnification of the surety. * * *'
and also:
The surety bound itself only on condition...
To continue reading
Request your trial-
Sangre de Cristo Development Corp., Inc. v. City of Santa Fe
...N.M. 30, 474 P.2d 712 (Ct.App.1970)), and then to present argument and authority in support thereof (Sproule Const. Co. v. St. Paul Fire & Marine Ins. Co., 74 N.M. 189, 392 P.2d 339 (1964); Gibbs v. Whelan, 56 N.M. 38, 239 P.2d 727 (1952); Spain Management Co. v. Packs' Auto Sales, 54 N.M. ......
-
Honolulu Roofing Co. v. Felix
...then the burden again rested on the owners of showing that such sums were so borrowed.32 See Sproul Construction Co. v. St. Paul Fire & Marine Insurance Co., 74 N.M. 189, 392 P.2d 339, 341, and Steck v. Home Indemnity Co., 74 N.M. 419, 394 P.2d 267, 268, which distinguish Morgan v. Salmon, ......
-
Denton v. Fireman's Fund Indemnity Company, 7939.
...will operate to release his obligations at least to the extent of the prejudice. See Sproul Construction Company et al. v. St. Paul Fire and Marine Insurance Company, 74 N.M. 189, 392 P.2d 339. While New Mexico has not specifically applied this rule to indemnity contracts, it is generally a......
-
Steck v. Home Indemn. Co.
...properly ascertained and fixed by the trial court. A very recent opinion of this Court in the case of Sproul Const. Co. v. St. Paul Fire & Marine Ins. Co., 74 N.M. 189, 392 P.2d 339, considers and rules upon the precise question here involved. That opinion fully and clearly enunciated the r......