Murchison National Bank of Wilmington v. Clark

Stacy, C. J. Let it be observed in limine that this is not a contest between the Murchison National Bank, a creditor of the contractor, and the surety company over the retained percentages in the hands of the owner, or the balance due the contractor and withheld under the contract. It is alleged that more than said balance was required to complete the contract after the failure and adjudication in bankruptcy of the contractor. Nor is it a case where moneys have been advanced for the payment of laborers and materialmen and assignments taken of *404 tbeir claims against tbe contractor. Trust Co. v. Porter, 191 N. C., 672. Plaintiff, a lender of money to the contractor for use in carrying on tbe work of construction, is seeking to recover directly on tbe bond given by tbe contractor to tbe owner, witb tbe Commercial Casualty Insurance Company as surety tbereon, to insure tbe faithful performance of said contract, and conditioned as follows: “Now, therefore, tbe condition of this obligation is such that if tbe principal shall faithfully perform tbe contract on bis part, and satisfy all claims and demands incurred for tbe same, and shall fully indemnify and save harmless tbe owner from all costs and damages which it may suffer by reason of failure so to do, and shall fully reimburse and repay tbe owner all outlay and expense which tbe owner may incur in making good any such default, and shall pay all persons who have contracts directly witb tbe principal for labor and material, then this obligation shall be null and void; otherwise it shall remain in full force and effect.” It is conceded that the provisions of, C. S., 2445, requiring said bond to be conditioned “for tbe payment of all labor done on and materials and supplies furnished for tbe said work” are to be read into tbe bond and considered as if they bad been written therein. Electric Co. v. Deposit Co., 191 N. C., 653. Such is tbe requirement of tbe statute, tbe work being for a county home. Tbe plaintiff does not come within tbe class of persons protected by tbe statute, but it says tbe language of tbe bond is broad enough to include its claim, being, as it is, a lender of money to tbe contractor for use in carrying on tbe work of construction. Aderholt v. Condon, 189; N. C., 748; Town of Cornelius v. Lampton, ibid., 714; Title Guaranty and Surety Co. v. Coffman, Dobson & Co., 97 Wash., 211, 166 Pac., 620; State Bank v. Gallucci, 82 Wash., 445, 144 Pac., 698; Shannon v. Abrams, 98 Kan., 26, Ann. Cas. 1918 E, 502. It is not stipulated in tbe notes given by tbe contractor to tbe plaintiff that tbe moneys obtained tbereon should be used in prosecuting this particular work, nor is it alleged by tbe plaintiff that all of said moneys were so used. Tbe contractor was at liberty to use and did employ some of tbe funds borrowed from plaintiff for other purposes. Plaintiff alleges, however, that to tbe extent said moneys borrowed from it were used by tbe contractor in tbe prosecution of this particular work, it should be allowed to recover on tbe bond in suit. Sumter Trust Co. v. Sumter County, 134 S. E. (S. C.), 209. Tbe action is bottomed solely upon tbe terms of tbe bond. We do not think tbe language of tbe bond, by fair intendment, should be construed to include persons other than those intended to be pro- *405 teeted by tbe statute. Smiley v. State, 60 Ind. App., 507, 110 N. E., 222. Tbe words, “and satisfy all claims and demands incurred for tbe same,” evidently refer to tbe claims and demands of those wbo, by law, are entitled to assert sucb claims and demands against tbe owner, or tbe surety under tbe statutory bond. Amer. Sav. B. & T. Co. v. National S. Co., 104 Wash., 663. Indeed, in one clause of tbe bond it is sought to limit tbe claims of laborers and materialmen to sucb as “have contracts directly with tbe principal.” This, of course, would be enlarged by tbe terms of tbe statute. Electric Co. v. Deposit Co., supra. It is tbe generál bolding that a bank furnishing money to a con-' tractor doing public work, for use in paying tbe claims of laborers and materialmen, without more, does not come within tbe protection of a statutory bond conditioned to pay all persons supplying tbe principal with labor or materials in tbe prosecution of bis work. Hardaway v. Nat. Surety Co., 211 U. S., 552; United States for use of Fidelity Nat. Bank v. Bundle, 107 Fed., 227, 52 L. R. A., 505. Tbe demurrer was properly sustained, but it was error to dismiss tbe action as against tbe contractor. He has been properly served, and tbe plaintiff is entitled to proceed in its action against him. Tbe costs of tbe appeal will be taxed against tbe plaintiff. Modified and affirmed.