United States Fidelity & Guaranty Co. v. Maryland Casualty Co.

Decision Date10 February 1941
Docket Number34228
PartiesUNITED STATES FIDELITY & GUARANTY CO. v. MARYLAND CASUALTY CO. et al
CourtMississippi Supreme Court

December 23, 1940

Suggestion Of Error Overruled February 10, 1941.

APPEAL from the chancery court of Washington county, HON. J. L WILLIAMS, Chancellor.

Suit by the United States Fidelity & Guaranty Company against Council and Lewy Company and the Maryland Casualty Company, surety on bond of the Council & Lewy Company, to recover amount of a judgment which had been recovered against plaintiff in the federal court by materialmen, and court costs and attorney's fees. From a decree dismissing the bill, the plaintiff appeals. Affirmed.

On Suggestion of Error. Suggestion of Error overruled.

Affirmed. Suggestion of error overruled.

Butler & Snow, of Jackson, for appellant.

Elkas and surety were liable to remote materialmen.

U S. for use of Hill v. Am. Surety Co., 200 U.S. 197 50 L.Ed. 437; Mankin v. U.S. use, etc., 215 U.S. 535, 54 L.Ed. 315.

Parties to whose rights subrogation is sought are not necessary parties.

Taylor v. Webb, 54 Miss. 36; Griffith's Chan. Practice, secs. 107-110; Hill v. Ritchie, 90 Vt. 318, L.R.A. 1917A, 731; Fridenburg v. Wilkinson, 20 Fla. 359; U.S. F. & G. Co. v. Singleton, 206 Ala. 437, 90 So. 296; Singleton v. U.S. F. & G. Co., 109 Ala. 506, 70 So. 169; Swain v. Stockton Savings, etc., Soc., 78 Calif. 600, 12 Am. S. R. 114; 60 C. J. 831; Prestridge v. Lazar, 132 Miss. 168, 95 So. 837; Robinson v. Sullivan, 102 Miss. 581, 159 So. 846; Doty v. Timber Co., 114 Miss. 872, 75 So. 602.

Judgment paid by surety is transferred by operation of law.

Secs. 2959, 2961, Code of 1930; Quinn v. Alexander, 125 Miss. 690, 88 So. 170.

When the Council & Lewy Company accepted the assignment, in law it became bound to perform all the terms and obligations of the contract of January 3, 1933, and became obligated to pay all claims against Elkas on account of the performance of that part of the work covered by the contract of January 3, and to completely indemnify Elkas against any loss on account of that part of the contract assigned to them, and became liable to all laborers and materialmen, to which Elkas was liable under his original contract and bond with the government.

5 C. J. 977; Atlantic, etc., R. Co. v. Atlantic, etc., Co., 147 N.C. 368, 23 L.R.A. (N.S.) 223; Jenkins v. City Ice & Fuel Co., 160 So. 215; Rockwell v. Edgcomb, 72 Wash. 694, 131 P. 191, 45 L.R.A. (N.S.) 661; Page on Contracts, p. 4006, sec. 2263; 4 Am. Jur. 234, 310, 311; A. L. I., Restatement of Contracts, sec. 164.

The bond and contract must be treated as one instrument.

Hall-Miller Decorating Co. v. Nat. Surety Co., 104 Miss. 626, 61 So. 700; Standard Oil Co. v. Nat. Surety Co., 143 Miss. 841, 107 So. 559; U.S. F. & G. Co. v. Marathon Lbr. Co., 119 Miss. 802, 81 So. 492; Note, 77 A.L.R. 46, 47, 62.

Contract to indemnify owner obligates contractor to pay for material.

Pacific States Electric Co. v. U.S. F. & G. Co. (Cal.), 293 P. 812; Callan v. Empire State Surety Co., 20 Calif. App. 483; Smith v. Fid. & Dep. Co. (Tex.), 280 S.W. 767; Stoddard v. Hibler, 156 Mich. 335; Hiewit v. Carter 25 Neb. 460; Friend v. Ralston, 35 Wash. 422; Lichtentage v. Feital, 133 La. 931, 37 So. 880; Sailling v. Morrell, 97 Neb. 454, 150 N.W. 195; Nye-Schneider-Fowler Co. v. Rosser, 103 Neb. 614, 173 N.W. 605; Amer. Bonding Co. v. Pueblo Inv. Co., 150 F. 17; Classon v. Bailey, 161 Ind. 611; Brown & H. Co. v. Ligon, 92 F. 851.

It is true that the bond given by The Council & Lewy Company and the Maryland Casualty Company, on its face, does not purport to bind the appellees to pay laborers and materialmen's claims, but under the contract, The Council & Lewy Company assumed the obligations of Elkas under the original contract; that the bond guaranteed the faithful performance of that contract and, as a consequence, appellees became jointly and severally liable to Elkas and appellant, as subrogee, for all claims paid. And this is so, whether the claims arose prior or subsequent to January 3, 1933, or prior or subsequent to the 14th day of January, 1933.

The contract of January 3, 1933, and the bond of appellees are governed by the private contractor's statute (sec. 2276, Code 1930) under such cases as Davis Company, Inc., v. D'Lo Guaranty Bank, 162 Miss. 829, 138 So. 802; U.S. for use, etc., v. Md. Cas. Co., 10 F.Supp. 982; Landis & Young v. Gossett & Winn, 169 So. 178.

Section 2276, Code of 1930, has the effect to write into the bond given by The Council & Lewy Company, as principal, and the Maryland Casualty Company, as surety, the obligation to pay all persons furnishing labor and material under that contract. Indeed, had such obligation been expressly excluded, the bond, nevertheless, would have inured to the benefit of such materialmen.

Hartford Acc. & Ind. Co. v. Natchez Inv. Co., 161 Miss. 198, 132 So. 535; Hartford Acc. & Ind. Co. v. Nelson, 291 U.S. 352, 78 L.Ed. 840; Union Ind. Co. v. Acme Blow Pipe & Sheet Metal Works et al., 150 Miss. 332, 117 So. 251; Commercial Bank of Magee v. Evans, 145 Miss. 643, 112 So. 482; U.S. F. & G. Co. v. Parsons, 147 Miss. 335, 112 So. 469, 53 A.L.R. 88.

The instrument executed by Martin & Carrithers Bros. to The Council & Lewy Company under date of January 14, 1933, was an assignment of the contract of January 3, 1933. But even if it be said that this contract was a mere sub-letting, it does not affect the case because The Council & Lewy Company agreed to indemnify and save harmless Elkas from all liability. And it follows that when appellant discharged the original primary obligation of Elkas, which appellees had assumed, it stood in Elkas' shoes and became entitled to enforce the contract of indemnity just as Elkas might have done.

Wynn, Hafter & Lake, of Greenville, and Watkins & Eager, of Jackson, for appellee.

The bond executed by the Maryland Casualty Company, as surety for Council & Lewy Company, was prospective and not retroactive, and, therefore, the appellant was only liable for the completion of the unfinished portion of the project and for the payment of claims for labor and material thereafter furnished to Council & Lewy.

Council & Lewy, as assignees of Elkas and Martin & Carrithers Bros., did not become personally liable to the assignors by reason of such assignment.

Atlantic & North Carolina R. R. Co. v. Atlantic & North Carolina Co., 147 N.C. 368, 61 S.E. 184, 23 L.R.A. (N.S.) 223; 4 Am. Jur. 234, 310; Rockwell v. Edgcomb (Wash.), 72 Wash. 694, 131 P. 191, 45 L.R.A. (N.S.) 661; Grant v. Harner (Ariz.), 239 P. 296; Jenkins v. Ice & Fuel Co. (Fla.), 160 So. 215; Lunt v. Lorscheider (Ill.), 121 N.E. 237; Page on Contracts; Restatement of the Law, Contracts, par. 164.

Regardless of the liability of Council & Lewy under the contract of assignment of January 14, 1939, the bond executed by the Maryland Casualty Company is prospective and covered liability for the completion of the work and for the payment of claims for labor and material furnished thereunder to Council & Lewy, principal in the bond.

The bond sued upon will be construed just as any other contract; the appellee had the right to limit its coverage.

Am. Life & Acc. Ins. Co. v. Nidlinger, 73 So. 875, 113 Miss. 84, 4 A.L.R. 871; Berry v. Lamar Life Ins. Co., 165 Miss. 405, 142 So. 445, 145 So. 887; Brotherhood of Railroad Trainmen v. Bridges, 144 So. 554, 164 Miss. 356; Continental Cas. Co. v. Hall, 80 So. 605, 118 Miss. 871; Ferguson v. Provident Life & Acc. Ins. Co., 155 So. 168, 170 Miss. 504; Ga. Cas. Co. v. Cotton Mills Product Co., 132 So. 73, 159 Miss. 396; Lavender v. Volunteer State Life Ins. Co., 157 So. 101, 171 Miss. 169, 182; Locomotive Engineers' Mut. Life & Acc. Ins. Co. v. Meeks, 127 So. 699, 157 Miss. 97; New Amsterdam Cas. Co. v. Perryman, 140 So. 342, 162 Miss. 864; Southern Home Ins. Co. v. Wall, 127 So. 398, 156 Miss. 865; U.S. F. & G. Co. v. Citizens' State Bank of Moorhead, 116 So. 605, 150 Miss. 386.

Surety bonds are ordinarily construed as operating prospectively unless a retroactive construction is required.

Chicora Bank v. U.S. F. & G. Co. (S. C.), 77 A.L.R. 857; Fid. & Dep. Co. v. Bank of Pascagoula, 151 So. 373, 169 Miss. 755; Johnson v. Bobbitt, 81 Miss. 339; Nunnery v. Baker, 195 So. 314, 188 Miss. 596; Royal Ind. Co. v. Am. Vitrified Products Co. (Ohio), 62 A.L.R. 407, 410; Salley v. Globe Ind. Co., 43 A.L.R. 92.

The bond sued upon was conditioned only upon the completion of the unfinished work and the payment for labor and material furnished Council & Lewy therein.

13 C. J. 537.

The expression in a contract of one or more things of a class implies the exclusion of all not expressed, although all would have been implied had none been expressed.

13 C. J. 537.

The rule is applicable here. The express mention of such claims for labor and material as were to be covered by the bond necessarily excludes any other claims for labor and material.

Where a contractor enters into a contract to construct an improvement and agrees therein to pay all claims for labor and material arising out of the contract and gives a bond with a surety providing merely for the faithful performance of the contract, the surety is liable directly to persons furnishing labor and material in the prosecution of the work. The cases announce such a proposition and go no further. In each and every case, however, the bonds are held to be prospective in liability and in no case is liability imposed on a surety for labor or material previously furnished.

Alpena Use of Zess, v. Title Guaranty & S. Co., 138 Mich. 678, 123 N.W. 536; Am. Bonding Co. v. Pueblo Inv. Co., 150 F. 17; Am. Surety Co. v. James A. Dick Co., 23 F.2d 464, certiorari denied 278 U.S. 624, 73...

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