Case ID: nc_198/html/0610-01.html
Source: Caselaw Access Project
Author: {"author": "CoNnob, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

J. R. OWEN v. SALVATION ARMY, Inc., and ROYAL INDEMNITY COMPANY OF NEW YORK.
    (Filed 23 April, 1930.)
    Principal and Surety B a — In tills case held: cause of action was stated against surety on bond for private construction.
    Where a surety bond for the erection of a building indemnifies the owner against loss for the failure of the contractor to perform his contract, the owner’s allegation in his pleading against the surety that the contractor had failed to perform his contract and that he was damaged in a certain sum thereby is sufficient to state a cause of action against the surety, and its demurrer thereto was properly overruled, there being no stipulation in the bond that the owner should complete the contract as a condition precedent to recovery.
    Appeal by defendant, the Royal Indemnity Company of New York, from order of McElroy, at February Term, 1930, of the Superior Court of GruiLPORD County.
    Affirmed.
    
      On 3 July, 1928, plaintiff, J. R. Owen, and defendant, Salvation ' Army, Inc., entered into a contract in writing, by which plaintiff agreed to make certain additions to a building owned by defendant in the city of Greensboro, and defendant agreed to pay to plaintiff, upon his completion of said additions in accordance with said contract, a stipulated sum of money. Plaintiff agreed to furnish the labor and material required for the construction of said additions.
    Plaintiff alleges in his complaint that he has fully performed his part of said contract; that defendant has made certain payments to him on account of said contract, and that there is now due him by defendant on account thereof the sum of $11,716.29.
    This action is for the recovery by plaintiff of a judgment against the defendant, Salvation Army, Inc., for the sum of $11,716.29, and interest, and for other relief.
    Defendant in its answer to the complaint denies that plaintiff has fully performed his contract with the defendant, and therefore denies that it is indebted to plaintiff as alleged in the complaint.
    As ground for affirmative relief, defendant alleges in its further answer, that plaintiff has failed to perform his contract with defendant, as specified therein, and that defendant has suffered damages by reason of such failure, in the sum of $2,342.86.
    Defendant demands judgment that plaintiff recover nothing in this action, and that defendant recover of the plaintiff, and of the Royal Indemnity Company, the surety on the bond, filed by him as required by his contract, the sum of $2,342.86.
    On motion of the defendant, Salvation Army, Inc., the Royal Indemnity Company of New York, was made a party to the action, and thereafter the said defendant filed its complaint against the said Royal Indemnity Company of New York.
    On 30 July, 1928, the plaintiff, J. R. Owen, as principal, and the Royal Indemnity Company of New York, as surety, executed a bond in the sum of $15,000, payable to the defendant, Salvation Army, Inc., conditioned among other things for the faithful performance by the principal of his contract with the obligee, Salvation Army, Inc., dated 3 July, 1928.
    In its complaint against the Royal Indemnity Company of New York, filed in this action, the defendant, Salvation Army, Inc., alleges:
    “4. That plaintiff failed and refused to perform said contract as he agreed to do. He failed to furnish the materials of the type and quality which he agreed' to furnish, and failed and refused to perform said work according to the plans and specifications in many respects, and by reason thereof this defendant was damaged by the plaintiff in the sum of $2,403.25, as this defendant is advised and believes.
    
      “5. Tbat after giving tbe plaintiff all credits to wbicb be was entitled, tbe plaintiff is still indebted to tbis defendant in tbe sum of $2,342.86, as tbis defendant is advised and believes, and tbis defendant is informed and believes tbat tbe defendant, tbe Royal Indemnity Company of New York, is by reason of said bond, liable to tbis defendant for said sum.”
    From tbe order overruling its demurrer in writing, duly filed to tbe complaint of tbe defendant, Salvation Army, Inc., tbe Royal Indemnity Company of New York appealed to tbe Supreme Court.
    
      King, Sapp & King, and Tkos. J. Kill for Salvation Army, Inc.
    
    
      Hobgood ■& Vinson and James MacOlcumroch, Jr., for Royal Im-demnity Company of New York.
    
   CoNnob, J.

Tbe bond executed by tbe plaintiff, T. R. Owen, as principal, and by tbe Royal Indemnity Company of New York, as surety, and payable to tbe defendant, Salvation Army, Inc., as obligee, contains clauses as follows:

“Whereas tbe principal bas by means of a written agreement dated 3 July, 1928, entered into a contract witb tbe owner for additions and alterations to Salvation. Army Building at 520 South Elm Street, Greensboro, N. C., in accordance witb plans prepared by M. L. Alber-ton, designer, a copy of wbicb agreement is by reference made a part hereof:

Now, therefore, tbe condition of tbis obligation is such tbat if tbe principal shall faithfully perform tbe contract on bis part, and satisfy all claims and demands incurred for same, and shall fully indemnify and save harmless tbe owner from all cost and damage wbicb be may suffer by reason of failure so to do, and shall fully reimburse and repay tbe owner all outlay and expense wbicb 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 materials, then tbis obligation shall be null and void; otherwise, it shall remain in full force and effect.”

Tbe allegation in tbe answer or cross-complaint, wbicb is admitted by the demurrer, tbat tbe principal in said bond bas failed to perform bis contract witb tbe obligee, witb tbe result tbat tbe obligee bas suffered damages in tbe sum of $2,342.89, is sufficient to constitute a cause of action on wbicb tbe obligee is entitled to recover of tbe principal and tbe surety in said bond. There is no allegation in tbe complaint of a breach of tbe bond for wbicb tbe surety would be liable only as an indemnitor; tbe absence of such allegation, however, does not render tbe cross-complaint demurrable. Where there is an allegation in tbe complaint of a breach of tbe bond, resulting in damages to' tbe obligee, for wbicb tbe surety is liable not as an indemnitor, but as a surety, sucb allegation is sufficient to constitute a cause of action against botb tbe principal and tbe surety. In tbe instant case, there is no provision in tbe bond or in tbe contract wbicb requires tbat tbe owner shall complete tbe contract, upon tbe default of tbe contractor, as a condition precedent to recovery in an action on tbe bond. There was therefore no error in tbe order overruling tbe demurrer. Tbe order is

Affirmed.