Borsook v. Continental Casualty Co.

MOORE, P. J.

This is an appeal from an interlocutory judgment reforming a completion bond, awarding plaintiffs damages and ordering appellant to discharge all liens of record against the property of plaintiffs. •

Under date of October 12, 1948, respondent Dr. Borsook as owner, and one Hasekian as builder, executed an agreement whereby the latter was to construct a medical office building for the doctor at a cost of $15,000. Under such contract Hasekian was to furnish a satisfactory completion bond. Accordingly, on the same date, he submitted an application for such bond to appellant through one Jones, an insurance broker. The application recited that the bond was to be given to Dr. Borsook as provided by his agreement with Hasekian and contained full and complete provisions for indemnification of the surety by Hasekian. The bond as subsequently issued, however, referred to a contract between the parties dated October 7, • 1948. A bonding company representative, Mr. Jonas, testified that Jones submitted to him a copy of an incomplete and unexecuted draft of a contract bearing date of October 7 and that it was under this contract appellant purported to guarantee Hasekian’s performance.- The document dated October 7, 1948, appears to have been a mere illustrative form. The agreement actually executed on1 October

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12 provided for payment to the contractor of 50 per cent when the contract was executed, 30 per cent when notice of completion was filed and the remainder within 30 days thereafter. Jonas testified that it was represented to him that payments would be in the normal manner of five equal installments.

Hasekian began construction under the building contract but breached it in many particulars and failed to complete the building. During the period of construction certain extras to cost $1,730.90 were agreed upon between owner and builder, raising the total construction cost to $16,730.90. Thereafter, numerous mechanics’ liens were filed against the property whereupon Dr. Borsook instituted this action against Hasekian and the lien claimants to settle all disputes in one action. Pursuant to an arbitration provision in the contract, a Board of Arbiters awarded $3,962.06 to Borsook as damages for the contractor’s breach. Such award was later confirmed by the court.