Sullivan v. Fidelity & Casualty Co.

175 N.W. 397, 208 Mich. 68, 1919 Mich. LEXIS 546
Michigan Supreme Court·Decided December 22, 1919·No. Docket No. 59·Published·Cited by 4 cases

Opinion

Sharpe, J.

On February 8, 1917, plaintiff entered into a contract with the Shiawassee county board of road commissioners to construct 3% miles of gravel road in that county. Under it the contractor agreed to build a gravel road “in strict conformity with the specifications hereto attached and the plans herein referred to, all of which are made a part of this agreement.” The specifications provided that the contractor “shall furnish all materials, tools, machinery and labor necessary for * * * finishing the roadway complete in every respect.” They also provided that bids for the work must be made on blanks furnished by the board and must be accompanied by a certified check for $100, payable to the board,—

“conditioned that if the contract shall be awarded to the bidder he will when required by said board execute an agreement in writing to perform the work according to the specifications therefor, accompanied by good and sufficient bonds, one guaranteeing the faithful performance of the work in accordance with the terms of the contract, and the other guaranteeing the payment of all indebtedness incurred for labor, materials, or any cause whatsoever on account of this contract. It being expressly understood that the bond given to guarantee the payment of indebtedness is also to include any liability of the said party of the second part arising from the provisions of Act No. 10 of the Public Acts of Michigan, 1912 (Extra Session), as passed, or thereafter amended and occurring through the execution of the work under this contract.”

On February 19,1917, Warren W. Doan entered into [70] a similar contract with, the board for the construction of 31/2 miles of road, one mile north of that to be constructed by plaintiff. Both Sullivan and Doan furnished the bonds required by the provision above quoted, one known as the “construction bond,” conditioned for the due performance of the contract, and the other known as the “lien bond,” conditioned for the payment of all indebtedness which might arise to any subcontractor or laborer or material man in the performance of the work.

Sullivan and Doan, by separate instruments in writing, assigned to the defendant Waldorf their said contracts so far as they related to the graveling of the roads, and Waldorf in such assignments agreed “to give a bond in the sum of $5,000.00 * * * as security to them of the proper performances of the within contract conditions.”

The consent of the county board to such assignments was given on May 21, 1917. In pursuance of the assignments, Waldorf furnished to Sullivan and Doan respectively the bonds required thereby, with the defendant surety company as surety. These bonds were similar in form, both being conditioned:

“Whereas, the principal and the obligee have entered into a written contract, hereinafter called the contract, for furnishing and hauling gravel and level-ling same on a certain road in the township of New Haven, county of Shiawassee, and State of Michigan, dated the 19th day of February, 1917, a copy of which is attached hereto;
“Now, therefore, the condition of the foregoing obligation is such that if the principal shall indemnify the obligee for all loss that the obligee may sustain by reason of the principal’s failure to comply with any of the terms of the contract, then this obligation shall be void; otherwise it shall remain in force.”

It appears that Waldorf hired one William C. Saeman to haul gravel for him and that the work he thus [71] did was not kept separate so far as the two jobs were concerned. On Waldorf’s failure to pay for this work, Saeman sued him and made both Sullivan and Doan and the sureties in their lien bonds parties. Waldorf was not served, and the others did not defend. The defendant surety company was notified of the pend-ency of this suit by both Sullivan and Doan and requested to defend the same and thereby save them harmless on their bonds. Mr. Ruttle, a representative of the defendant company, came to Corunna and looked the matter up. He talked with both Sullivan and Doan about it, but declined to defend the suit. A judgment on default was rendered against all of the defendants for $737.14 and costs.

Sullivan and Doan estimated their several liability on such judgment, Sullivan assuming $271 and Doan $466.14, and paid the same. Doan then assigned to Sullivan all right of action he might have, by reason of such payment, on the bond given by Waldorf to him and in which the defendant company was his surety, and Sullivan brought this suit against Waldorf and the surety company to recover the amount of the Saeman claim. Waldorf was not served. The declaration counts on the contract and bonds separately and as to the Doan claim alleges an assignment of his right of action to Sullivan. The plaintiff had verdict and judgment, and the defendant surety company appeals.

1. Do the bonds given by the defendant company as surety for Waldorf cover labor claims? The rights and liabilities of Waldorf accrued under the assignments made to him by Sullivan and Doan. These were annexed to the contracts made with the county board which, including the specifications annexed thereto and forming a part thereof, thus became a part of Waldorf’s contract, and he became chargeable with the performance of every obligation assumed by Sullivan [72] and Doan thereunder, relative to the graveling of the roads. Waldorf thus had notice that the lien bonds had been given and that Sullivan and Doan were liable thereunder to pay for all labor performed whether hired by them or by himself. The bonds sued on were given to indemnify the obligees for all losses sustained by reason of Waldorf’s failure to comply with any of the terms of his contract. As before stated, his obligation under his assignment must be held to include every obligation of Sullivan and Doan under their respective contracts. There seems no escape from the conclusion that as the obligees in the respective bonds suffered loss by reason of their liability to Saeman for the work done by him, the principal and surety must, under the conditions of the bonds, indemnify them for such loss.

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Sullivan v. Fidelity & Casualty Co., 175 N.W. 397, 208 Mich. 68, 1919 Mich. LEXIS 546 (Mich. 1919).

175 N.W. 397 (Sullivan v. Fidelity & Casualty Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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