Title: WATER W., G. & S. BD., ONEONTA v. PA Buchanan Cont. Co.

State: alabama

Issuer: Alabama Supreme Court

Document:

318 So. 2d 267 (1975)
The WATER WORKS, GAS & SEWER BOARD OF the CITY OF ONEONTA, INC., a corporation
v.
P. A. BUCHANAN CONTRACTING CO., a partnership, etc., et al.
SC 1168, 1169.

Supreme Court of Alabama.
July 31, 1975.
Simmons, Torbert & Cardwell, Gadsden, for appellant.
Spain, Gillon, Riley, Tate & Etheredge and H. H. Grooms, Jr., Birmingham, for appellees.
MERRILL, Justice.
These appeals are from judgments granting the motion of United States Fidelity & Guaranty Company (USF&G), a third party defendant, for a summary judgment in cross-claim against it by The Water Works, Gas & Sewer Board of the City of Oneonta, hereinafter referred to as the Board. We affirm.
*268 In this case, we do not perceive any genuine issue as to any material fact, ARCP 56(c), and the only question presented is a question of lawwhether, under the facts, USF&G is liable to the Board under the public works Completion and Performance Bond which it made for P. A. Buchanan Contracting Company, hereinafter referred to as Buchanan.
In August, 1952, Buchanan entered into a contract with the Board for the construction of a natural gas system for the City of Oneonta. USF&G executed the statutory public works Completion and Performance Bond and the Labor and Materials Bond. Goodwin Engineers of the South, Inc. and J. W. Goodwin Engineering Co. (also third party defendants) were the project engineers.
Buchanan completed the work; it was approved and accepted and Buchanan was paid in full under the terms of the contract in 1953.
On March 7, 1969, some 16 years later, a pipe exploded and damaged a building owned by Dorothy Gartrell. Her suit is S.C. 1168. Her husband, Dr. L. S. Gartrell, was a tenant in the building and his suit is S.C. 1169. The basis of each suit against the Board, Buchanan and the engineers was that the pipe was negligently laid and as a proximate consequence the building was damaged, and in S.C. 1169, Dr. Gartrell's practice was disrupted and records destroyed.
The Board filed a third-party summons and complaint against Buchanan, USF&G and the engineers. The engineers also filed cross-complaint against USF&G. USF&G filed a motion for summary judgment accompanied by affidavits. The Board filed its opposition to the motion.
The trial court found in favor of USF&G as to the cross-claims of the Board and the engineers, and rendered a summary judgment in favor of USF&G as to the Board and the engineers. Only the Board appealed.
The Board's position is expressed in brief as follows:
The undisputed evidence is that the bond in question was required and given under the provisions of Tit. 50, § 16, Code 1940, which provides in pertinent part:
It is undisputed that these requirements were met.
This statute, Alabama's public works bond statute, enacted in 1927 and *269 amended in 1935, is patterned after the Miller Act, Tit. 40, §§ 270a & 270b, U.S.C.A. In State v. Southern Surety Co., 221 Ala. 113, 127 So. 805 (1930), this court, after comparing our statute with the federal statute in parallel columns, stated in part:
******
That decision was followed in National Surety Corporation v. Wunderlich (8th Cir.), 111 F.2d 622 (1940), where our public works statute was being construed and applied.
It is clear that a public works performance bond required by Tit. 50, § 16, carries with it the federal interpretation of the Miller Act.
This court has held that even when a bond under § 16 is not literally in statutory form, if it was given "for the purposes named in the statute and accepted and acted upon as such," the statute will be read into the bond. Royal Indemnity Co. v. Young & Vann Supply Co., 225 Ala. 591, 144 So. 532. And in American Casualty Co. of Reading, Pa. v. Define, 275 Ala. 628, 157 So. 2d 661, this court said:
A public works bond surety is not liable to third parties for injuries caused by negligence of the contractor-principal. The general rule is stated in 63 C.J.S. Municipal Corporations § 1172, p. 859:
Many federal court cases support this principle, some of which are: United States v. Fidelity & Deposit Co. of Maryland (D.C., La.), 144 F. Supp. 322; United States v. Mass. Bonding & Insuring Co. (6th C.A.), 18 F.2d 203; United States for use of Moran Towing Corp. v. Hartford Accident & Indemnity Co. (D.C.R.I.), 204 F. Supp. 353, and Tri-State Insurance Co. v. United States (8th C.A.), 340 F.2d 542.
In Stearns Law of Suretyship, 5th Ed., § 8.13, p. 269, the following appears: "Attempts have been made under statutory bonds to hold the surety for torts of the contractor or his employees. These attempts have been uniformly unsuccessful."
*270 All the authorities cited supra deal with either the performance bond or the labor and materials bond required by Tit. 50, § 16. These bonds are not public liability and property insurance.
The undisputed evidence is that Buchanan "took out a policy of public liability and property damage insurance with Liberty Mutual Insurance Company" and that this "policy remained in force and effect throughout the construction of the gas system in question." It is also undisputed that USF&G did not furnish any liability insurance but furnished only the completion and performance bonds and the labor and materials bonds and that no claim had been made on either of the bonds either against the contractor Buchanan or USF&G in connection with completion and performance or payment for labor and materials.
The contract between the Board and Buchanan provided in part:
"1.15 SAFETY PRECAUTION AND INSURANCE COVERAGE:
The completion and performance bond (Board's Exhibit "C") executed by the contractor and USF&G read:
This is an ordinary performance bond required under Tit. 50, § 16.
The common practice of referencing in the surety bond the construction contract between the Board and the contractor does not change a Tit. 50, § 16 statutory performance and completion bond into either a common-law bond or a liability insurance policy for the payment of tort claims. United States v. Mass. Bonding & Ins. Co., supra; United States for use of Moran Towing Corp. v. Hartford Accident & Indemnity Co., supra; Kniess v. American Surety Co. of New York, 239 Wis. 261, 300 N.W. 913.
The trial court correctly held that, as a matter of law, the motion for summary judgment was proper in this case.
HEFLIN, C.J., and MADDOX, JONES and SHORES, JJ., concur.