Territory Hawai`i v. Pac. Coast Cas. Co.

• Decision Date: 01 February 1915
• Citation: 22 Haw. 446
• Parties: TERRITORY OF HAWAII, BY J. W. CALDWELL, SUPERINTENDENT OF PUBLIC WORKS, v. PACIFIC COAST CASUALTY COMPANY, A CORPORATION.
• Court: Hawaii Supreme Court

22 Haw. 446

TERRITORY OF HAWAII, BY J. W. CALDWELL, SUPERINTENDENT OF PUBLIC WORKS,

v.PACIFIC COAST CASUALTY COMPANY, A CORPORATION.

Supreme Court of the Territory of Hawai‘i.

Argued January 7, 1915.

Decided February 1, 1915.

ERROR TO CIRCUIT COURT, FIRST CIRCUIT. HON. W. J. ROBINSON, JUDGE.

Syllabus by the Court

A surety on the bond of a contractor for a public work given to the Territory of Hawaii and conditioned that the contractor shall deliver the said work to the Territory, fully completed, free from all liens and claims, is not liable at the suit of the Territory for materials furnished to the contractor and used in the completion of the work, where the work is not subject to lien and the claims of the material-men could not lawfully be asserted against the Territory.

Under Act 31, Laws of 1913, the Territory of Hawaii cannot maintain an action in its own name upon the bond of a contractor for the recovery of the value of materials supplied to the contractor in the prosecution of the work.

Where the bond is for the faithful performance of the contract and the contract provides that the contractor shall “furnish all material necessary to complete the work” but does not in express terms bind him to pay for the same, the surety is not liable for the payment for materials furnished the contractor.R. J. O'Brien ( E. C. Peters with him on the brief) for plaintiff in error.

L. P. Scott, Deputy Attorney General ( I. M. Stainback, Attorney General, with him on the brief), for the Territory.

ROBERTSON, C.J., WATSON, J., AND CIRCUIT JUDGE ASHFORD, IN PLACE OF QUARLES, J., DISQUALIFIED.

OPINION OF THE COURT BY WATSON, J.

On August 23, 1913, the Territory of Hawaii (defendant in error) and one F. M. Friesell entered into a contract by which Friesell agreed to lay a certain amount of six-inch galvanized iron water pipe near Kaimuki, city and county of Honolulu, for the sum of $5655. The contract, so far as material, provided that the contractor should furnish all material (except manhole frames) and all labor necessary for the completion of the work and complete the same in a workmanlike manner to the satisfaction of the superintendent of public works and in accordance with plans and specifications. The Territory agreed to pay eighty per cent. of the value of the materials used and work done during the preceding month as the work progressed. The remaining twenty per cent. was made payable upon the acceptance of the work by the superintendent of public works. To secure the faithful performance of the contract the contractor furnished a bond signed by the plaintiff in error, the Pacific Coast Casualty Company, as surety, which, so far as material, bound it unto the Territory of Hawaii and its successors in the sum of $1415, and provided that the condition of this obligation is such that “Whereas, the above named principal (Friesell) has this day entered into an agreement with the above named Territory of Hawaii through J. W. Caldwell, its superintendent of public works, to furnish all the labor, material, equipment, tools and machinery necessary to complete the laying of 6? galvanized iron water pipe at Kaimuki, Honolulu, Territory of Hawaii.

Now, therefore, if the above named principal shall in all things well and truly keep, observe and perform the said agreement and each and every covenant, condition and promise therein contained on his part to be kept, observed or performed and shall promptly pay all just claims for all labor and materials furnished to him and used in the prosecution of the work, and shall deliver the said work to the said Territory of Hawaii or to its successors fully completed as in said agreement specified, free from all liens and claims and without further cost, expense or charge to the said Territory of Hawaii or to its successors in office than is agreed to or provided for in said agreement * * * then the above obligation shall be void, otherwise it shall be and remain in full force and virtue.”

Before the work was completed Friesell abandoned the contract and the Territory completed the laying of the pipe. This contingency was provided for in the contract as follows:

“Should the contractor at any time fail to carry out the work as specified and as shown on the plans, the superintendent of public works may declare the contract terminated, so notify the contractor and thereupon enter said work, use all the tools, machinery and appliances, the property of the contractor, or such as may have been used by him, and complete the work, charging the cost of same against any moneys held in reserve or belonging to the contractor or that may be due for any work performed; and if such moneys are not sufficient to complete the work, the bondsmen shall be held liable for the excess of any moneys so expended above the contract price.”

Presumably the cost of completing the work was charged against the contract and deducted from the money held in reserve belonging to the contractor, as, although it is alleged that Friesell did not complete the work and abandoned the contract when it was uncompleted and the Territory was compelled to complete the same, it is not made to appear that the Territory sustained any damage thereby, nor is any claim made against the defendant therefor. Upon the completion of the work the Territory was indebted to Friesell in the sum of $1395.50, and Friesell was indebted to various material-men in the sum of $1682.88, claims for which against Friesell were filed in the office of the superintendent of public works. As to these claims and the amount remaining due Friesell under the contract it is stipulated in the agreed statement of facts as follows:

“That there has been paid upon the contract pursuant to its terms the sum of $4259.50 and that there still remains unpaid thereon the sum of $1395.50.

That there have been filed claims against the defendant F. M. Friesell, contractor, in the sum of $1682.88, which said claims are hereby admitted by the Pacific Coast Casualty Company to be valid and copies of which are attached to plaintiff's complaint. The claims are for materials furnished the defendant Friesell and used by him to complete the contract.”

This suit is brought on the bond, by the Territory of Hawaii, the obligor named in the bond, to recover $287.38, the amount due material-men in excess of the amount due from the Territory under the contract. No service was had upon the defendant Friesell and no appearance was entered by him in said action. The case was tried in the lower court, jury waived, upon an agreed statement of facts. The trial court found “that the bond upon which this suit is predicated is conditioned so that the principal ‘shall deliver said work to the said Territory of Hawaii or its successors fully completed, as in said agreement specified, free from all liens and claims and without further cost, expense or charge to the said Territory of Hawaii or to its successors in office than is agreed to or provided for by said agreement.’ The facts show that the contractor did not deliver the work to the Territory of Hawaii or to its successors fully completed, free from all liens and claims, but on the contrary there were claims to the amount of $287.38 in excess of the amount due upon the contract, and the court finds that the surety is liable upon its bond therefor.” Judgment was accordingly entered in favor of the plaintiff (Territory of Hawaii) to recover of the defendant, Pacific Coast Casualty Company (plaintiff in error here), the sum of $287.38 together with interest and costs of court, to reverse which the record has been removed to this court by a writ of error.

We cannot agree with the trial court that the plaintiff in error is liable on the stipulation contained in the bond signed by it as surety that the...