Walsh Const. Co. v. City of Cleveland

• Citation: 250 F. 137
• Decision Date: 04 April 1918
• Docket Number: 9406.
• Parties: WALSH CONST. CO. v. CITY OF CLEVELAND et al.
• Court: U.S. District Court — Northern District of Ohio

250 F. 137

WALSH CONST. CO. v. CITY OF CLEVELAND et al.

No. 9406.

United States District Court, N.D. Ohio, Eastern Division.

April 4, 1918

Klein &amp Harris, of Cleveland, Ohio, for plaintiff.

Alfred Clum, of Cleveland, Ohio, for defendant city of Cleveland.

Tolles Hogsett, Ginn & Morley, of Cleveland, Ohio, for defendant National Surety Co.

WESTENHAVER District Judge.

The plaintiff, Walsh Construction Company, filed its petition in this court against the original defendant, the city of Cleveland, an Ohio municipal corporation, seeking to recover a balance alleged to be due on a certain construction contract for the erection of a filtration plant. A copy of this contract is annexed to and made a part of the petition. Thereafter the city of Cleveland applied for and obtained an order making the National Surety Company also a defendant and thereupon filed its answer to the original petition, and also its cross-petition herein against the plaintiff and the National Surety Company. To this cross-petition the National Surety Company has filed its demurrer, assigning in support thereof three grounds: (1) Misjoinder of parties defendant (2) misjoinder of causes of action; (3) several causes of action against several defendants are improperly joined.

The construction contract, annexed to plaintiff's petition and also to this cross-petition, consists of several documents, namely, a notice to bidders, a proposal submitted pursuant thereto by the Walsh Construction Company, a formal agreement in writing, signed by the Walsh Construction Company and the city of Cleveland, plans and specifications for the proposed work, and a performance bond executed by the Walsh Construction Company and the National Surety Company. The notice to bidders provides that a bond in a penalty equal to 50 per cent. of the amount of the proposed contract, with an approved surety company as surety, will be required from the accepted bidder for the faithful performance of the contract. The written agreement provides that the notice to bidders, the proposal for bids, the bid, the bond, and contract drawings shall all be taken as parts of that agreement.

The bond thus made a part of this contract binds the Walsh Construction Company and the National Surety Company to the obligee, the city of Cleveland, in the sum of $136,500, both jointly and severally. It recites the making of the construction contract, a copy of which, including notice to bidders, proposals, bid, and specifications, is attached thereto and made a part thereof as fully as if the same were set forth therein. The condition of the bond is that, if the Walsh Construction Company shall well and truly execute all and singular the stipulations by it to be executed, contained in said written agreement, and shall fully and faithfully perform the work therein specified, and all and singular the terms, conditions, and requirements of the plans, specifications, and contract, the obligation is to be void; otherwise to be and remain in full force and virtue in law.

Plaintiff's petition is framed on the theory that all the terms, conditions, and requirements of said construction contract have been executed and performed by it, that all the work therein specified has been fully and faithfully performed, and that all the conditions, stipulations, and obligations of the plans, specifications, and contract have been also fully and faithfully kept and performed. Judgment is prayed for the balance alleged to be due as if said contract were fully performed in all its terms, conditions, and requirements.

Defendant's cross-petition proceeds on the theory that the Walsh Construction Company has not kept and performed the terms, conditions, and requirements of said written agreement, but that, on the contrary, it has failed so to do. The cross-petition sets up the city's demand in three causes of action: (1) For the recovery of liquidated damages for delay in completing the work; (2) for the recovery of damages due to an alleged failure to complete and construct the filtration plant as provided by said agreement; and (3) a cause of action which incorporates therein the allegations of the first and second causes of action and prays judgment against the Walsh Construction Company and the National Surety Company for the full penalty of said bond on account of the alleged defaults set up in said first and second causes of action. Judgment is prayed against the Walsh Construction Company alone for $328,000, and against the Walsh Construction Company and the National Surety Company for the full penalty of the bond.

The argument in support of the demurrer is, in brief, that the first and second causes of action are against the Walsh Construction Company alone, and are based upon the construction contract in writing; that the third cause of action is against the Walsh Construction Company and the National Surety Company on the performance bond; and that these first two causes of action are on a contract separate and independent from the contract set up in the third. The misjoinder of parties and causes of action, it is argued, results from the fact that the first and second causes of action are on a contract separate from that set up in the third, and that, inasmuch as the parties to these two contracts are different and the causes of action thus joined do not affect all of the defendants equally, the joinder is improper.

The fundamental assumption of this argument is that the construction contract and the performance bonds are separate and independent contracts. This assumption cannot be admitted. On the contrary, these several documents are expressly made a part of the same contract. They were all executed at the same time, upon the same consideration, and for the same purpose, and took effect by a single delivery. As a result there is in law but one contract. A simple test of the question presented is whether or not an original action against the Walsh Construction Company and its surety could be maintained on the third cause of action set up in the cross-petition. Such an action, on well-settled legal principles, could undoubtedly be maintained without first compelling the obligee to sue the principal on the contract and exhaust his remedies against him. Both defendants have agreed jointly and severally to perform all the terms of the construction contract. They are in law joint and several contractors and obligors. The surety's obligation is not that of an indemnitor, or of a collateral guarantor, against whom no action can be brought without demand or notice, or until after failure to...