Fidelity Dep. Co. of Md. v. Crane Co.

12 S.W.2d 872, 178 Ark. 676, 1928 Ark. LEXIS 631
CourtSupreme Court of Arkansas
DecidedDecember 17, 1928
StatusPublished
Cited by6 cases

This text of 12 S.W.2d 872 (Fidelity Dep. Co. of Md. v. Crane Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fidelity Dep. Co. of Md. v. Crane Co., 12 S.W.2d 872, 178 Ark. 676, 1928 Ark. LEXIS 631 (Ark. 1928).

Opinion

Hart, C. J.,

(after stating the facts). Appellant seeks to reverse- the judgment on the ground that it had inserted a provision in the bond expressly providing that it should not, as surety, be liable, directly or indirectly, to any one except the owner, which was the board of trustees of the University of Arkansas. The language used in the bond is plain and unambiguous. By incorporating this provision into the bond, nothing is left to interpretation. All doubt as to the intention of the parties is removed.

It is conceded that bonds of this character are contracts, and it is sought to uphold the judgment of the circuit court on the ground that our statute relating to the subject must be read into the bond as a part of the obligation of the surety. Section 6913 provides, in effect, that whenever any public officer shall, under the laws of this State, enter into a contract in any sum exceeding one hundred dollars with any person for the purpose of constructing any public building, such officer shall take from the party contracted with a bond with sureties as provided in the statute, and that the bond shall be conditioned that such contractor shall pay all indebtedness for labor and materials furnished in the construction of said, public building.

Counsel for appellant seek to reverse the judgment upon the authority of Union Indemnity Co. v. Covington, ante, p. 533. In that ease the court had under consideration the construction to be placed upon §§ 6915 and 6916, providing for similar conditions in the contracts for the construction of churches or charitable institutions, and for the giving of a bond containing a similar condition, and for the filing of the 'bond in the office of the circuit clerk. It was there contended,' as here, that any bond given by the contractor must necessarily contain the provisions of the statute and be construed as a statutory bond. In that case the bond sued on contained a condition that in no event shall the surety be liable to any other person than the obligee or for a greater sum than the penalty of the bond. The court held that the obligations contained in the bond expressly negative the claim that the bond sued on was a statutory bond. The effect of that decision was to hold that, notwithstanding the language of the statute, a surety company might limit its obligation under the bond to the oblig’ee, and that the terms of the statute should not be construed as a part of the contractual obligation of the bond. The court held that the language of the statute was not definite enough to prohibit the parties from agreeing to the execution of a bond which should not embody the provisions of the statute.

Counsel for the plaintiff recognized the force of this decision by contending that a different rule obtains in the case'of a public contractor’s bond executed pursuant to the statute. They insist that the Legislature, in passing the statute requiring a public contractor’s bond to contain certain conditions, has declared such to be the public policy of the State, and that all bonds executed shall be conclusively presumed to be statutory bonds, and any provision therein contrary to the statutory law is null and void. In support of their contention they cite Philip Carey Co. v. Maryland Casualty Co., 201 Ia. 1063, 206 N. W. 808, 47 A. L. R. 495. In filiat case the court held (quoting syllabus):

“Where the situation is such as to require a statutory-contractor’s bond, and the bond given conforms in material and essential respects to the requirements of the statute, the parties will be held to have intended to make a statutory bond, notwithstanding the omission from the bond of conditions required by statute, or the inclusion of stipulations contrary to the statute, if the statute provides that the requirements of the statute shall not be annulled by contrary provisions in the bond.” 1 : : ,

■ In that case, however, the statute provided that no contract coming within the provisions of thé act shall be of any validity until the bond required has been executed. The court held that the situation of the parties and the circumstances showed that the parties intended to execute a bond under the statute, and, for that reason, the conditions of the bond contrary to the provisions of the statute should not modify or annul the requirements of the statute, because in this way the purpose of the act would be defeated and it would fail to accomplish the end intended. . ■. (

Again, in Southern Surety Co. v. Klein (Texas), 278 S. W. 527, a similar contention was made. The court held (quoting syllabus):

“Though city refused to accept a bond containing provisions required by Vernon Sayles’ Ann. Civ. St. 1914, arts. 6394f, 6394g, and furnished bond without such provisions, the statutory provisions' making 'bond payable to, or for use and benefit of, laborers and material-men are nevertheless read into the'bond, regardless of the intention of the parties, and parol evidence is not admissible to establish intention of the parties to exclude provisions of statute.”

In that case the statute provided that in contracts for the construction of public works the contractor should be required to execute a bond with sureties before commencing the work. Hence it was held that, where the contractor commenced the work and executed a bond, he did so in obedience to the statute and with the intention of complying with its terms. It was held to be a statutory bond, and, in addition, that terms contrary to the provisions of the statute were null and void, because, if enforced, they would tend to nullify the statute.

The Supreme Court of North Carolina has adopted a construction similar to our own in the Covington case above cited. In the case of Ingold v. City of Hickory, 178 N. C. 614, 101 S. E. 521, the statute expressly provided that every county or municipal corporation which should let a contract for a public building should require the contractor, before beginning work under the contract, to execute a bond containing certain conditions. The court said the surety company had substantially incorporated the statute in the bond by reference to it, and to permit it to insert stipulations which would destroy its legal effect would put it in the power of cities and surety companies to defeat the purpose of the statute by contract. The provision was held to be contrary to the public policy of the State as declared by the Legislature.

In the later case of Ideal Brick Co. v. Gentry, 191 N. C. 636, 132 S. E. 800, the contract contained a stipulation that the contractor should pay for all materials, labor, etc., necessary for the execution of the work, but the obligation of the bond was not for the faithful performance of the contract as it related to the materialmen, but the surety agreed to indemnify the obligee, and no one else, against all loss that the obligee might sustain by reason of the principal’s failure to comply with the provisions of the contract, and all other persons were expressly excepted from the protective provisions of the bond.

Reliance was had by the plaintiffs on the Ingold case just cited. The court pointed out that the bond in that case contained a direct stipulation for the payment of laborers and materialmen and expressly referred to the requirements of the statute in explanation of its true meaning and intent. -Continuing, the court said:

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Bluebook (online)
12 S.W.2d 872, 178 Ark. 676, 1928 Ark. LEXIS 631, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fidelity-dep-co-of-md-v-crane-co-ark-1928.