Court Opinion

ID: 9850479
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:58:00.868446+00
Date Added: 2024-06-11T09:20:37.870491
License: Public Domain

Maher, J.
(dissenting). I cannot agree with the majority’s conclusion that defendant’s failure to include within its payment bond a provision reciting the statutory thirty-day notice requirement excused compliance with this requirement.
The payment bond that was issued in this case was a statutory bond that was required under the Michigan public works bond act, MCL 129.201 et seq.; MSA 5.2321(1) et seq. Exactly who is entitled to look to the bond for protection and the manner in which a claim under the bond must be perfected is expressly governed by the statute. MCL 129.206, 129.207; MSA 5.2321(6), 5.2321(7). The act expressly requires that, when a claimant does not have a direct contractual relationship with the primary contractor, a claimant must comply with both thirty- and ninety-day notice requirements as a prerequisite to a "right of action” on the bond. MCL 129.207; MSA 5.2321(7). This Court has repeatedly held that these notice requirements must be strictly complied with. Tempco Heating & Cool*76ing, Inc v A Rea Construction, Inc, 178 Mich App 181, 190; 443 NW2d 486 (1989); Pi-Con, Inc v A J Anderson Construction Co, 169 Mich App 389, 394; 425 NW2d 563 (1988), lv gtd 432 Mich 891 (1989); Square D Environmental Corp v Aero Mechanical, Inc, 119 Mich App 740, 744; 326 NW2d 629 (1982).
Although it is undisputed that the plaintiff failed to comply with the thirty-day notice requirement, the majority nevertheless holds that such compliance may be excused because defendant did not expressly reference this statutory requirement in the bond that was issued. I believe such a conclusion is contrary to both the intent of the Legislature and existing Michigan law.
Under Michigan law, when a bond is given under the authority of a statute, the provisions of the statute are required to be read into the bond, whether so written in or not. Williamson v Williams, 262 Mich 401, 404-406; 247 NW 704 (1933). Thus, because the payment bond in this case was a statutory one, given under the authority of the Michigan public works bond act, it was governed by the statute, and the various statutory requirements governing one’s rights under the bond, including the manner for perfecting a claim, were required to be read into the bond, whether so written in or not.
In reaching a contrary result, the majority relies on Hub Electric Co, Inc v Gust Construction Co, Inc, 585 F2d 183, 188 (CA 6, 1978), cert den 440 US 936; 99 S Ct 1282; 59 L Ed 2d 495 (1979), which held:
[T]he surety by its bonding contract may agree to accept a greater liability than that required under the Michigan bonding statute, although for reasons of public policy, it may not contract for less. . . . Because the bond here provided only for *77the 90-day notice and the trial court correctly held that the plaintiff had complied in all respects with the conditions of the bond as written, plaintiff is entitled to recover upon it. [Emphasis added.]
This Court is not bound by a federal court decision construing a Michigan statute. Hardy v Maxheimer, 429 Mich 422, 432; 416 NW2d 299 (1987); Continental Motors Corp v Muskegon Twp, 365 Mich 191; 112 NW2d 429 (1961). I believe Hub Electric represents an erroneous interpretation of Michigan law. The court’s holding reflects that it was based upon its conclusion that the plaintiff had complied with the conditions of the bond as written. However, it failed to read into the bond those requirements of the statute under which the bond was issued. Williamson, supra.
In analyzing this case, plaintiff’s status as a claimant cannot be ignored. Plaintiff does not have a direct contractual relationship with either defendant or defendant’s principal, nor has plaintiff furnished any consideration for its right to seek the protection provided by the payment bond. Instead, the protection enjoyed by plaintiff existed only because the statute required it. Further, because the bond was a statutory one, defendant, as surety, was not free to either limit or otherwise alter its liability in a manner contrary to that required by the statute. Since the furnishing of the bond, plaintiff’s right to bring suit on the bond, and the extent of defendant’s liability thereunder are all governed by statute, defendant had a right to rely on the requirements of the statute. In Charles W Anderson Co v Argonaut Ins Co, 62 Mich App 650, 653-654; 233 NW2d 691 (1975), lv den 395 Mich 815 (1975), this Court recognized that the statutory notice requirements serve an important function in protecting the surety "so *78that it might have timely notification that a claimant who has not had any direct dealing with the surety’s principal but, rather, with a subcontractor, intends to hold the surety responsible on its bond in the event of default by one of the contractors.”
It is important to recognize that nowhere in the act does the Legislature require that the provisions of the statute be included in any bond issued under the act. I believe that by excusing compliance with an express statutory requirement, merely because that requirement is not expressly mentioned in the bond itself, the majority is establishing dangerous precedent that will pave the way for future decisions clearly unintended under the act. Take, for instance, a situation where the payment bond fails to reference the ninety-day notice provision, as well as the thirty-day provision. Although the statute does not require either of these provisions to be included in the bond, would a claimant who failed to provide any notice whatsoever thereby be entitled to recover under the bond merely because it had otherwise complied with the conditions of the bond as written? Further, suppose the payment bond did contain both the statutory notice requirements but neglected to include a provision reciting the statutory requirement that an action on the bond be commenced within one year from the date on which final payment was made to the principal contractor. MCL 129.209; MSA 5.2321(9). Would this mean the surety has therefore, in the words of the Hub Electric court at 187, "assum[ed] by contract... a broader liability than contemplated by the Act,” thereby entitling a claimant to bring an action after one year merely because the claimant had otherwise complied with the conditions of the bond as written? Although the majority’s holding would *79arguably permit recovery in each of these situations, I do not believe such results were ever intended under the act.
While it may be true that a surety, for whatever reason, may, in some instances, decide to assume liability greater than that required by the statute, I do not believe that, where a bond is issued under the authority of the Michigan public works bond act and the provisions of the act are therefore required to be read into the bond itself, assumption of greater liability should be inferred merely from the surety’s failure to include all statutory requirements in the actual bond issued. Rather, if for some reason a surety elects to assume liability greater than that required by the statute, such intent should be manifested by express language in the bond itself.
Accordingly, because it is undisputed that the plaintiff in this case failed to comply with the thirty-day statutory notice requirement, and because there is no language in the bond expressly waiving compliance with this requirement, I believe summary disposition should have been granted in favor of defendant. I would therefore reverse the decision of the trial court.