Gatti v. New Jersey Fidelity & Plate Glass Insurance

MEMORANDUM LETTS, J. The liability of the plaintiff is limited to the price he agreed to pay. When the contractor died, Gatti, the owner, was liable only for such portion of the contract price as represented the work and material already furnished. It seems clear that when the owner has discharged such obligation, by payment under his contract with the contractor, anything fur [154] tlier which he may do by paying it again to the creditors of the contractor, or otherwise, becomes his voluntary act. When he has fully paid the contractor for the work done and the material furnished and has voluntarily made payment to the contractor’s creditors because of the contractor’s default, any effort to hold the contractor’s bondsmen therefor becomes in effect an action for the benefit of the contractor’s creditors; vhereas the bond does not purport to protect anyone except the owner and is in no sense a bond in the interests of the contractor’s creditors. Such creditors may only have recourse against the owner and the property for such part of the contract price (if any) as remains unexpended in the hands of the owner when the building is completed. The surety cannot be charged with any voluntary payment the plaintiff may have made in excess of the legal liability. Hay v. McDonald, 131 Pacific 73. To hold otherwise would permit plaintiff to maintain an action on defendant’s bond for the benefit of the contractor’s creditors. There is no privity between defendant and such creditors and the bond does not stipulate for the protection- of the contractor’s creditors. Rust v. U. S. F. & G. Co., 151 Pacific 249. It appears that this plaintiff did make voluntary payments to the creditors of the contractor, Piland. It follows from what I have said that the defendant cannot be charged therefor. In estimating the amount of such voluntary payments it is proper to exclude the fair and reasonable value of any materials left on the premises by the contractor which were thereafter paid for by plaintiff and used in completing the building. It follows that the exceptions to the report of the Auditor should be sustained as herein indicated.