Wachovia Bank & Trust Co. v. J. F. Mulligan Constraction Co.

Stacy, O. J. On 23 September, 1927, tbe J. F. Mulligan Construction Company, contractor, entered into a written contract witb the State Highway Commission to construct or improve a section of road in Watauga County, known as project No. 7720; and to insure compliance witb tbe terms of said agreement, tbe State Highway Commission took from tbe contractor, as principal, and tbe Southern Surety Company, as surety, a bond in tbe sum of $43,800 conditioned, among other things, on tbe faithful performance of said contract, and that tbe contractor “shall well and truly pay all and every person furnishing material or performing labor in and about tbe construction of said roadway.” On 6 April, 1928, tbe contractor borrowed from tbe plaintiff tbe sum of $2,744.38 for use in paying laborers for work done on, or in and about, said roadway, and executed its note therefor in wbicb it was stipulated that said funds were to be so used, and they were actually so employed. Tbe case, therefore, presents tbe question as to whether tbe bond in suit is broad enough to cover moneys loaned by plaintiff to tbe contractor for use in paying laborers for work done on, or in and about, said roadway, when tbe note executed by tbe contractor to tbe plaintiff shows on its face that said funds were to be so used, and they were actually so employed. We think not. Snelson v. Hill, 196 N. C., 494, 146 S. E., 135; Hardaway v. Nat. Surety Co., 211 U. S., 552; United *306 States for use of Fidelity Nat. Bank v. Rundle, 107 Fed., 227, 52 L. R. A., 505; Nat. Surety Co. v. Jackson County Bank, 20 Fed. (2d), 644. It is conceded that tbe authorities, just cited, are in support of the position that a bank furnishing money to a contractor doing public work, for use in paying the claims of laborers and materialmen, without taking assignments of such claims, does not come within the protection of a statutory bond conditioned to pay all persons supplying the principal with labor or materials in the prosecution of his work. But plaintiff says the opinion in Bank v. Clark, 192 N. C., 403, 135 S. E., 123, gives decided intimation to the contrary, when the note given by the contractor shows on its face that the funds so borrowed are to be used in the prosecution of the work. "We do not so understand the limiting expressions contained in said opinion, which were used solely for the purpose of excluding a dictum on the question now presented. There was error in overruling the motion of the Southern Surety. Company for judgment as of nonsuit. Reversed.