Court Opinion

ID: 9665183
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:42:17.633661+00
Date Added: 2024-06-11T18:15:13.638366
License: Public Domain

Robinson, J., dissenting. In the contract between the contractor and the property owner, the contractor agreed to file with the owner a “performance bond” guaranteeing the performance of the contract. Pursuant to this agreement the contractor furnished the Globe Indemnity Company’s “contract bond” in the penal sum of $4,071.30. The bond provides as follows: “Now, therefore, the condition of the above obligation is such, that if the above bounded Principal shall well and truly keep, do and perform, each and every, all and singular, the matters and things in said contract set forth and specified to be by the said Principal kept, done and performed at the time and in the manner in said contract specified, and shall pay over, make good and reimburse to the above named Obligee, all loss and damage which said Obligee may sustain by reason of failure or default on the part of said Principal, then this obligation shall be void; otherwise, to be and remain in full force and effect. ’ ’ The plain, obvious meaning of this bond is that the contractor shall pay over, make good and reimburse the property owner for all loss and damage which the property owner may sustain by reason of failure or default on the part of the contractor, and if the contractor fails to do so the Indemnity Company would pay for such loss to the extent of $4,071.30. Here, the obligee suffered the loss of $450 which it had to pay in attorneys’ fee to protect properly the obligee’s interest by reason of the failure and default of the contractor in doing what he agreed to do. “Reasonable counsel fees which have been incurred in resisting the claim indemnified against may be recovered as a part of the damages and expenses when an action is brought to recover indemnity either upon a right of indemnity implied by law or arising under a contract. ’ ’ 27 Am. Jur. 474. ‘ ‘ Generally, the indemnitee is entitled to recover reasonable attorney’s fee, and reasonable and proper legal costs and expenses which he is compelled to pay as a result of suits in reference to the matter against which lie is indemnified, provided he acts in good faith and with due diligence in prosecuting or defending such suits. ’ ’ 42 C. J. S. 585-6. Also, 31 C. J. 436 states as a general rule indemnitee is entitled to recover, as a part of the damages, reasonable attorney’s fees, and cites the case of Talley v. Ganahl, 151 Cal. 418, 90 Pac. 1049, wherein the court said: “The bond sued on covenanted that the contractors should complete the building within the time specified and should deliver it to the owner ‘free from all liens and claims that may be made or filed against the same, for or in respect of any labor or materials performed or furnished on or for said building.’ After the completion of the building, certain persons who had performed labor for Parsons in the erection of the building, and others who had furnished him materials therefor, filed claims of liens against the premises and began suits to foreclose the same. It became necessary for Mary A. Talley to employ an attorney to advise here in regard to these suits and make proper defense thereto sufficient to protect her interest, and she did so at an expense of $100. * * * The amount paid to the attorney in these suits was claimed in the complaint as special damages and was allowed by the court, after due proof of the facts. We perceive no error in this. It was damages proximately caused by the breach of the agreement to deliver the building free from liens, a convenant for which the bond was security. ’ ’ Appleman on “Insurance Law and Practice,” Vol. 11, p. 116, cites Talley v. Ganahl as authority for the statement that' in a situation the same as the one presented in the case at bar, the property owner is entitled to recover on the bond reasonable attorney’s fee incurred while defending against mechanics’ liens. In the case at bar the Indemnity Company contracted to pay all loss and damage which the property owner might sustain, up to a named amount, by reason of the failure of the contractor to carry out his contract. There is no contention in this case that the property owner did not act with due diligence in employing an attorney or that the attorney’s fee is excessive. In fact, for all the record shows the action of the property owner in employing an attorney in this instance may have saved the Indemnity Company thousands of dollars. In the case of National Surety Company v. Southern Lumber & Supply Company, 181 Ark. 105, 24 S. W. 2d 964, this court quoted with approval from 21 E. C. L. 107-8, as follows: “The law does not have the same solicitude for corporations engaged in giving indemnity bonds for profit as it does for the individual surety who voluntarily undertakes to answer for the obligations of another. Although calling themselves sureties, such corporations are in fact insurers, and in determining their rights and liabilities, the rules peculiar to suretyship do not apply.” Chicago Lbr. Co. v. Douglas, 89 Kan. 308, 131 Pac. 563, 44 L. R. A., N. S. 843; Ludlow Valve Mfg. Co. v. Fidelity & Casualty Co. of New York, 114 Kan. 151, 217 Pac. 282; Salt Lake City v. O’Connor, 68 Utah 233, 249 Pac. 810, 49 A. L. R. 941; Puget Sound State Bank v. Gallucci, 82 Wash. 445, 144 Pac. 698, 39 A. & Eng. Ann. Cas., 767; Wyandotte Coal & Lime Co. v. Wyandotte Paving & Const. Co., 97 Kan. 203, 154 Pac. 1012, Ann. Cases 1917C, 580. According to the plain language of the contractor’s bond made by the Indemnity Company and the weight of authority, the plaintiff is entitled to recover. For the reasons set out herein, I respectfully dissent. Mr. Justice Millwee joins in this dissent.