Opinion ID: 269770
Heading Depth: 1
Heading Rank: 2

Heading: d & l cross-appeal.

Text: 9 Consideration will first be given to D & L's cross-appeal as the determination of the issue there presented with respect to the amount of bond coverage has a direct bearing on some of the issues presented by National's appeal. 10 D & L contends that National is legally obligated on the two performance bonds and on the two payment bonds heretofore described, aggregating $1,060,000 coverage, and that the court erred in determining that National's bonds coverage was limited to $530,000, the amount of the subcontract. 11 We have difficulty in determining the precise legal basis upon which the trial court determined this issue. The terms of the bonds are clear and unambiguous and on their face provide a total coverage of $1,060,000. The trial court, at pp. 302 to 309 of 234 F.Supp., sets out facts bearing upon this issue and at finding 35 on p. 314 states: 12 The separate payment bonds sued upon were issued by National Union as a result of a mistake, which should not be held to increase the limits of liability established by the performance bonds written on each subcontract in the full amount of the subcontract price. 13 Apparently upon the basis of our decision in Brezina, supra, the court determined that the performance bonds covered payments due material suppliers and laborers and that the payment bonds here issued were surplusage and issued by mistake. We adhere to our holding in Brezina. We there held that under the circumstances of that case the performance bond covers material claims for which the prime contractor was legally responsible. Conflicting cases are discussed. Our holding is limited to the facts there presented and such case does not go to the extent of holding that a performance bond will under all circumstances cover all of the liabilities contemplated by a payment bond. The case does not deal with the issue of the validity and effect of a validly issued payment bond. 14 The subcontract pursuant to which the bonds here involved were issued provided for a performance and payment bond for not less than 100% of the subcontract price. Clearly the parties had a right to contract for a specific performance and payment coverage. 15 National in its brief does not attempt to uphold the theory upon which the trial court resolved this issue. In its brief, it states: 16 The case evidenced by the record is a clear and simple instance of mutual mistake as to the legal effect of the instruments in question. 17