People ex rel. T. B. Townsend Brick & Contracting Co. v. Bowen

Beooke, C. J. On April 8, 1911, defendant Bowen entered into a contract with the city of Adrian to furnish the labor and material to carry out and complete the paving on East Maumee street, in said city, for a stipulated sum. He furnished a bond, with the defendant the American Bonding Company as surety, in the sum of $5,000, conditioned as follows: “Now the condition of this obligation is such that if the said William F. Bowen shall pay to any subcontractor, or by any such contractor or sub-contractor, as the same may become due and payable, of all indebtedness which may arise from said contract to a sub-contractor, or party performing labor or furnishing materials, or any sub-contractor, or any person, firm, or corporation, on account of any labor performed or material furnished in the erection, repairing or ornamentation of such building, improvement, or works, then this obligation shall be void; otherwise the same shall be in full force and effect.” In accordance with the contract, the plaintiff furnished to said Bowen a considerable quantity of brick to be used upon said paving job. Some payments bn account thereof were made by said Bowen, but on [259] August 24, 1911, there was an unpaid due balance of $1,729.86. On that date Bowen executed a promissory note at 90 days, for $1,700. This note was executed by Bowen at the request of the plaintiff without the knowledge or consent of the surety, the defendant American Bonding Company. Bowen has since been adjudicated a .voluntary bankrupt, and the note has not been paid. Suit was brought by the plaintiff against the defendant bonding company upon the bond, resulting in a judgment in favor of plaintiff, which is now reviewed in this court. It is the contention of counsel for appellants that the case is governed by the holding of this court in Little v. Grant, 188 Mich. 60 (100 N. W. 1006). That case was one in which the bond was executed by individual gratuitous sureties, and, applying the strietissmi juris rule, the bondsmen were held to be released. It is"the appellants’ claim that the extension of time granted by the use plaintiff to Bowen without notice to or consent from it worked a release of its liability upon the bond. The record contains no evidence that the extension of time granted by the plaintiff to Bowen actually operated to the injury of the defendant bonding company. It seems clear that the old rule applicable to private gratuitous bondsmen is not applicable, where the bond is furnished by a surety company for hire. This view of the rule is indicated by our holding in Cox v. Fidelity & Deposit Co. of Maryland, 157 Mich. 59 (121 N. W. 494), where this court used the following language: “We think the rule of law that bondsmen are treated as a favored class should receive extremely cautious application to contracts like the one at bar, which is but one of a very large and rapidly growing class where the surety undertakes its liability for hire, and purely as a matter of business, and not of accommodation.” And further by our holding in the case of Crystal [260] Ice Co. v. Surety Co., 159 Mich. 102, 106 (123 N. W. 619). An examination of the following collection of Federal and State authorities will be found to demonstrate the unanimity of the decisions upon this question: Chaffee v. Fidelity & Guaranty Co., 128 Fed. 918 (63 C. C. A. 644); Atlantic Trust, etc., Co. v. Town of Laurinburg, 163 Fed. 690 (90 C. C. A. 274); Baglin v. Guaranty & Surety Co. (C. C.), 166 Fed. 356; United States, etc., Guaranty Co. v. United States, 178 Fed. 692 (102 C. C. A. 192); United States v. Fidelity & Guaranty Co., 178 Fed. 721; Guaranty Co. v. Pressed Brick Co., 191 U. S. 416 (24 Sup. Ct. 142); Lesley v. Kite, 192 Pa. 268 (43 Atl. 959); Young v. Bonding Co., 228 Pa. 373 (77 Atl. 623); Philadelphia v. Fidelity & Deposit Co., 231 Pa. 208 (80 Atl. 62, Am. & Eng. Ann. Cas. 1912B, 1085); Rule v. Anderson, 160 Mo. App. 347 (142 S. W. 358); Boppart v. Surety Co., 140 Mo. App. 675, 683 (126 S. W. 768); Hull v. Bonding & Insurance Co., 86 Kan. 342 (120 Pac. 544); Brandrup v. Surety Co., 111 Minn. 376 (127 N. W. 424). See, also, cases cited in note to George A. Hormel & Co. v. Bonding Co., 112 Minn. 288 (128 N. W. 12, 33 L. R. A. [N. S.] 513), and in note to Am. & Eng. Ann. Cas. 1912B, 1087. The judgment is affirmed. Kuhn and Moore, JJ., concurred with Brooke, C. J.