Van Cor, Inc. v. American Cas. Co. of Reading, Pa.

• Decision Date: 23 March 1965
• Citation: 417 Pa. 408,208 A.2d 267
• Parties: VAN COR, INC., Successor to Daniel B. Van Campen Corporation, and Marple-Newtown Joint School Authority to the use of Van Cor, Inc., Successor to Daniel B. Van Campen Corporation, Appellants, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA.
• Court: Pennsylvania Supreme Court

208 A.2d 267

417 Pa. 408

VAN COR, INC., Successor to Daniel B. Van Campen Corporation, and Marple-Newtown Joint School Authority to the use of Van Cor, Inc., Successor to Daniel B. Van Campen Corporation, Appellants, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA.

Supreme Court of Pennsylvania.

March 23, 1965.

Melvin Lashner, Adelman & Lavine, Philadelphia, for appellants.

Edward H. Cushman, Cushman & Obert, Philadelphia, Kenneth M Cushman, Philadelphia, of counsel, for appellee.

Before BELL, C. J., and MUSMANNO, JONES, COHEN, EAGEN O'BRIEN and ROBERTS, JJ.

PER CURIAM.

The order of the court below is affirmed on the following excerpts from the able opinion of Judge Charles Waters:

'Van Cor Inc. [Van Cor], is successor to Daniel B. Van Campen Corporation, which contracted to perform the general construction work in the erection of a junior high school building for Marple-Newtown Joint School Authority. The authority awarded a separate contract to M. Zucker Co. [Zucker] for the electrical construction. * * * American Casualty Company of Reading, Pennsylvania [Casualty Company], was surety for [Zucker] in two bonds issued to the authority, one a 'performance bond' and the other a 'labor and materialmen's bond.' [Zucker] encountered difficulty in the performance of its contract, and eventually went into bankruptcy and was declared in default. The uncompleted portion of the electrical work was performed by another contractor under contract with the authority, and the added expense to which the authority was thereby put over and above the original contract price for the electrical work was paid to the authority by [the Casualty Company] pursuant to the terms of its performance bond.

'The present action is brought by Van Cor, the building contractor to recover, first, under the performance bond, damages which it claims to have suffered by reason of delays in the completion of its building contract caused by [Zucker's] failure to perform in accordance with its contract; and, second, under the labor and materialmen's bond, for labor and material furnished by [Van Cor] to [Zucker] in the performance of its contract.

'There is no dispute of the fact that [Zucker] was in default or of the fact that the delay in completion of [Van Cor's] contract, and the resultant loss to [Van Cor], were, in part at least, caused by [Zucker's] faulty performance. Nor is it seriously disputed that [Van Cor] furnished to [Zucker] the labor and material forming the basis of [Van Cor's] claim under the labor and materialmen's bond. [The Casualty Company's] position is, in respect of the first claim, that [its] undertaking in the performance bond does not render it answerable to other contractors for delays caused by its principal but runs only to the benefit of the school authority, the obligee; and, in respect of the second claim, that the suit is barred by the running of the one-year limitation contained in the bond and in the applicable statute, to which later reference will be made. * * *

'Giving our attention first to [Van Cor's] claim for delay damages, we find that the cause of action on which [Van Cor] relies in its complaint is that [the Casualty Company], knowing that [Zucker] had become bankrupt and was unable to complete its contract, refused, despite demand, to perform the electrical contract promptly. I have never before heard it asserted that the surety in a performance bond is itself obligated to perform the contract of its principal. It may, of course, do so; but unless such a provision is contained in the bond the surety is not required to carry out the contract. * * * The condition of the bond in the instant case, which is the natural place to look for the nature and extent of the liability assumed by the obligor, Com. v. Great American Indemnity Co., 312 Pa. 183, 187 [167 A. 344, 89 A.L.R. 333] (1933), is such 'that if the said principal shall and does well and truly, in all respects, comply with all the terms, conditions and covenants contained and set forth in the aforesaid contract * * * and shall and does save harmless, protect, and indemnify the obligee, of, from and against all loss, damage and expense by reason of the principal's failure for any cause whatsoever to comply with the aforesaid contact, * * * then this obligation shall be null and void; otherwise to be and remain in full force and effect.' The language here is unambiguous; we cannot read into it any expansion of the obligation assumed.

'However, as the case developed at trial it became apparent that [Van Cor] was proceeding on a different theory. [Van Cor] contends, and quite rightly, that the terms of the contract and specifications between the authority and [Zucker] became part of the bond issued by the surety. [Van Cor] contends further that paragraph 20 of the general conditions spells out the cooperation which [Zucker] was required to give to other contractors on the project; that by that paragraph other contractors, including [Van Cor], became donee beneficiaries of the contract between the authority and [Zucker]; that [the Casualty Company], having assumed the obligation to answer to the authority for its principal's default, became liable to [Van Cor] for [Zucker's] failure to carry on its work with the required measure of cooperation.

* * *

* * *

'The paragraph of the electrical contract relied on by [Van Cor], number 20, is headed 'Cooperation,' and from it [Van Cor] in its complaint quotes the following sections:

"(a) If this contract is proceeding with another, the contractor shall be responsible for any acts or omissions that interfere with the progress of the work of the other contractor or contractors.

"(c) Each contractor shall carefully examine all drawings and specifications and carry on his work in such manner as not to interfere with or delay the work of other contractors. If any part of a contractor's work depends upon the proper execution or results of some other contract, the former shall inspect and report in writing to the architect any defects in such work.'

'Other provisions in the contract papers are to somewhat the same effect, but need not be here stated in full.

'We are considering now the possible liability of one contractor to another arising out of such contract provisions, because I think...