William H. Toner & Co. v. Long

• Decision Date: 05 June 1920
• Citation: 111 A. 311
• Parties: WILLIAM H. TONER & CO. v. LONG et al.
• Court: New Hampshire Supreme Court

111 A. 311

WILLIAM H. TONER & CO.

v. LONG et al.

Supreme Court of New Hampshire. Hillsborough.

June 5, 1920.

Transferred from Superior Court, Hillsborough County; Allen, Judge.

Bill in equity by William H. Toner & Co. against George Baker Long and another. Case transferred from the superior court. Decree directed for plaintiffs.

Bill in equity, praying that the defendant, the Fidelity & Deposit Company may be ordered to pay their bill against Long in accordance with the provisions of a bond of the deposit company running to the city of Manchester, one of the defendants, and procured by Long in accordance with his contract with the city to build for the city certain buildings. He agreed in writing to provide all the materials and to perform all the work for the erection of the buildings which were known as the Manchester City Hospital, and the city agreed to pay him for the performance of his undertaking the sum of $56,945. It was also agreed in the contract that—

"Should the contractor at any time refuse or neglect to supply a sufficiency of properly skilled workmen, or of materials of the proper quality, or fail in any respect to prosecute the work with promptness and diligence * * * the owner shall be at liberty, after three days' written notice to the contractor, to provide any such labor or materials and to deduct the cost thereof from any money then due or thereafter to become due to the contractor under this contract. * * * The contractor shall furnish owner a surety bond in the sum of $25,000, that the buildings will be completed as called for in plans and specifications."

As a part of this transaction Long procured a bond, signed by himself as principal and the deposit company as surety, for the sum above mentioned, running to the city, and duly delivered the same. It was conditioned for the faithful performance by Long of his agreements with the city, and for the payment by him "for all labor performed or furnished, and for all materials used in the fulfillment of said contract." Subsequently the plaintiffs, under a contract with Long, furnished all labor and materials necessary for the installation of the plumbing, gas, and vacuum system in the hospital buildings. A substantial part of the amount due the plaintiffs under this contract has not been paid, although the plaintiffs have demanded payment from Long, who is financially embarrassed, and from the deposit company. The question was transferred from the May term, 1919, of the superior court, by Allen, J., whether upon the foregoing facts the deposit company is liable to the plaintiffs for the amount due them from Long. Certain exceptions taken to evidence are stated in the opinion.

Taggart, Tuttle, Wyman & Starr, of Manchester (L. C. Wyman, of Manchester, orally), for plaintiff.

Harry T. Lord, of Manchester, Smith, Gage & Dresser, of Worcester, Mass., and Warren, Howe & Wilson, of Manchester (De Witt C. Howe, of Manchester, orally), for Deposit Co.

WALKER, J. Though the original contract between the city and the contractor did not expressly provide that the contractor should pay for the labor employed and the materials used in the construction of the buildings, which he agreed to build for the city, he and the Fidelity & Deposit Company, as surety in the bond which he gave to the city to secure the faithful performance of his contract, agreed to "pay for all labor performed or furnished and for all materials used in the fulfillment of said contract." The contract and the bond together constituted an entire agreement; and the supplemental provision in the bond in regard to the payment of the labor and the materials furnished is not to rejected because it was not also contained in the contract. It was clearly a provision upon which the minds of the parties meet, and was designed to express their intention that the payment for the labor and the materials which the contractor should use in the construction of the buildings and for which the city were to pay him should in turn be paid by him to the parties entitled to it, or to the parties employed by him to do the necessary work and to furnish the necessary supplies. The language used is not vague, indefinite, or ambiguous, and its meaning is not open to doubt. If, as is urged by the surety company, the intention was merely to promise that in ease the city should avail itself of the provision in the contract to furnish labor and materials upon the failure of the contractor to perform the work satisfactorily, the contractor should reimburse the city therefor, it is somewhat peculiar that the provision in the bond is not thus confined in its application; and, moreover, it would be an unnecessary provision, since the city was authorized to deduct what it might expend on that account from the money that might be due the contractor. The reasonable construction of the clause in question is that if the contractor failed to pay a subcontractor like the plaintiffs for work and materials furnished by them, the security afforded by the surety company would be available for his benefit.

But it is contended that if such was the intention of the parties, the city had no power to enter into the contract, which was for the sole benefit of strangers, who were not only not parties to it in a technical sense, but furnished no consideration for the promise. As a further reason for this contention, it is suggested that the city as a municipal corporation had no legal interest in the question whether the contractor paid the plaintiffs what he might be owing them on account of work and materials, or whether the latter should receive compensation from any other source. Whatever force there might be in these suggestions in an action at law, the facts do not warrant their application and adoption in this suit, which is a bill in equity governed by equitable principles. One evident purpose of the execution of the bond was to furnish security for the subcontractors, whoever they might be. That they did not directly participate in the agreement is no reason why, having provided labor and materials for the construction of the buildings, and having no lien thereon (Laws 1913, c. 93), they should have no remedy on the bond for their compensation in default of payment by the contractor. The security was furnished in part for their benefit. "If for technical reasons the law is powerless to enforce the duty, equity is subject to no such weakness." Hunt v. Association, 68 N. H. 305, 308, 38 Atl. 145, 147 (38 L. R. A. 514, 73 Am. St. Rep. 602); Keene Five Cents Savings Bank v. Herrick, 62 N. H. 174; Baker v. Bryan, 64 Iowa, 561, 566, 21 N. W. 83. "The proceeding is in equity and not at law. The facts that the plaintiff is in no way a party to the...