J. H. McNamara, Inc. v. McGuire

Wait, J. The city of Boston appeals from a final decree which determined that the plaintiff and certain intervening creditors, hereafter called the claimants, had established claims against security in the hands of the city, being a bond executed by the Maryland Casualty Company, hereafter called the surety, binding the surety to pay a penal sum of $10,000, if McGuire and Doonan, hereafter called the contractors, failed to “faithfully furnish and do everything therein required . . . on . . . [their] part to be kept and performed and shall also pay for all labor performed or furnished, and for all materials used in the carrying out” of a contract for work on Dudley Street in Boston. The decree also determined that the bond was taken by the city pursuant to the requirements of G. L. c. 149, § 29; that the contractors were in default, and, furthermore, were — 593 — irresponsible financially; that the surety was liable and must pay the amounts found due to the several claimants, who had performed or furnished labor and furnished materials used in the work, with interest; that upon such payment the liability of the surety terminated and that the city could not recover on the bond an amount which it had expended in excess of the contract price in completing the work after the contractors had abandoned it. The city contends that the bond was security not only for the benefit of the claimants but also for its own benefit; and that the decree is erroneous in denying it priority to the claimants and any recovery against the surety for its own benefit. A report of a master was confirmed by interlocutory decree from which no appeal was taken. The master found that the bond was obtained as security for payment for labor and materials pursuant to the statute; that it was sufficient to pay the claimants in full if the city was not permitted to share in the recovery, but was insufficient in a large amount if the city shared and had priority, and insufficient in a less degree if city and claimants shared pro rata in the amount recovered. When the contractors abandoned the work, the city held the sum of $1,192.66, which it had retained from payments earned by the contractors as the work progressed. This was five per cent of the payments earned. The master’s report makes no finding to show by what right this was retained. The city applied this money in payment of the excess cost of the completed work. The claimants make no contention with regard to this payment; but it is contended that the surety is entitled to have the money applied for the benefit of the claimants and thus in reduction of its payments on the bond. The city relies upon the decision in Hunter v. Boston, 218 Mass. 535. There are circumstances which distinguish the cases. Hunter v. Boston decided that the bond there under consideration was not taken in pursuance of the statute and did not furnish security for the lienors, because other security had been taken for their benefit and there had been — 594 — no breach of the bond resulting in liability upon it. Here, however, the bond was taken under the statute. There has been a breach of the bond. The question is, to whose benefit the recovery enures. The Legislature cannot have intended that the person upon whom it placed the duty to secure "sufficient security” for the payment "for labor performed or furnished and materials used” should be permitted so to use that security for his own benefit as to render it insufficient for the payments for labor and material. The law will not permit it. Where the law requires one person to obtain security for the benefit of others, that person cannot himself share in it until those for whom he is bound to obtain it have had the full benefit intended to be secured to them. The city contends that it cannot be responsible if its officials take security which proves to be insufficient. This is aside from the point. The point is that the city cannot render what has been obtained as security under the statute insufficient by taking so much for itself that the remainder falls short of satisfying the statutory beneficiaries. The decision in Friedman v. County of Hampden, 204 Mass. 494, that lienors took precedence of any assignment by the contractors, supports this position. The decree, therefore, is right in so far as it determines that the surety is liable to the claimants, and that the latter take priority to the city in their claims against the surety. The city contends, further, that the decree is erroneous in releasing the surety from all liability on the bond beyond the payment of the amounts found to be due to the claimants with their costs. The surety maintains that "the question of any liability of the bonding company to the city is not properly before the court.” The latter contention is sound. The city and the surety are defendants in this suit. One co-defendant can enforce a liability against another codefendant only by cross bill. Forbes v. Thorpe, 209 Mass. 570, 583. Martin v. Murphy, 216 Mass. 466. Holbrook v. Schofield, 211 Mass. 234. No cross bill has been filed. — 595 — No contest has been made with regard to the interest imposed by the decree. See Hurley v. Boston, 244 Mass. 466, 472. The decree must be amended by striking out all language exonerating the Maryland Casualty Company from liability to the city of Boston; by providing that it is made without prejudice to such rights, if any, as the city may have against the company; and by awarding to the claimants their costs of this appeal against the city. As so amended it is affirmed. So ordered.