Cassan v. Maxwell

Collins, J. The bond executed by Hall, as principal, and Maxwell and Horst, as sureties, contains the unambiguous and unequivocal obligation of those who executed it, that if Hall should “pay all just claims for all work done and to be done, and all materials furnished and to be furnished pursuant to said contract, and in the execution of the work therein provided for, as they shall become due,” then it should be void; otherwise of full force and virtue. It is admitted that he failed to pay for certain material used in the contract men 393 tioned in the bond, and that his creditors compelled these plaintiffs (who were the original contractors, and in part sublet to Hall) to pay the debt, in order that they might escape liability on their bond given under the mechanic’s lien law to the owner of the property. Hall’s creditors could have sued these defendants upon his bond, had they chosen so to do; and it would have been no defence for them to say that, as sureties, they had received, and properly disbursed, the full contract price, — the sum named in the bond, — for such was not their obligation. It was wholly immaterial that the contract price ($2,000) had been paid into their hands, and properly accounted for. In receiving and paying this money, they acted as Hall’s agents as the medium through whom the business was transacted. It was precisely as if Hall himself had collected the money, and either paid it out or appropriated it to his own use. The contract, as set out in the bond, was not that the obligors should properly answer for the $2,000 which Hall was to receive for his labor, but, to that extent, they should be responsible for his failure to pay for material and labor, entering into the contract he had undertaken. Until this was done, they were not relieved from the plain terms of their obligation. But it is urged that plaintiffs have no right to recover upon the bond, because it was given solely for the use of such persons as might perform labor or furnish material to Hall. The plaintiffs had obligated themselves by the statutory bond to Barber, for whom they were erecting the building, to pay for all labor and materials used in its construction; and had thus indirectly become liable to the men who worked for the subcontractor or furnished materials to him. The persons to whom Hall became indebted were his creditors primarily, but to them the plaintiffs were secondarily liable by virtue of the statute, and their bond executed thereunder. Obliged to pay because of their secondary liability, they stood in the position of a surety or guarantor, and, whether strictly or technically so, are entitled to sub-rogation, the same as a surety or guarantor. Marsh v. Pike, 10 Paige, 595. A surety is a person who, being liable to pay a debt, is entitled, if it be enforced against him, to be indemnified by some other person, who ought himself to have.made payment before the surety was obliged to do so; and it is not material in what form the relation of principal 394 and surety be established,'or whether the creditor is or is not contracted with in two capacities, as is" often the case where bonds are-taken. The relation is fixed by the arrangement and equities between the debtors or obligors, and may be known or wholly unknown to the creditor. Smith v. Shelden, 35 Mich. 42. The plaintiffs having been compelled to pay the debt which defendants had obligated themselves to care for and liquidate, a cause of action accrued against the latter, because these plaintiffs stood in the position of sureties for the performance of the conditions found in defendants’ bond, and which they failed to fulfil. Order affirmed.