Sanders v. Am. Cas. Co. of Reading

California Court of Appeal Jan 30, 1969 No. Civ. 32218Published

Before: Kingsley

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Holding. A third-party beneficiary of a bond is bound by the contractual limitations period contained within that bond, even if the beneficiary was unaware of the bond's existence when the period expired.

Issues

Whether a one-year contractual limitation period in a subcontractor's bond bars a claim by a materialman who was unaware of the bond's existence until after the period expired.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The bond contains a provision limiting the time within which a suit or action may be filed by any claimant to one year following the date upon which the principal ceased work on the subcontract.”

“When plaintiff seeks to secure benefits under a contract as to which he is a third-party beneficiary, he must take that contract as he finds it.”

[307]

KINGSLEY, J.

This is an action by a supplier of materials to a subcontractor in which he seeks to recover the amount due for his materials from the bonding company on the bond furnished by the subcontractor to the prime contractor.

On or about April 30, 1962, Quiller Construction Company, Inc., as prime contractor, entered into a written contract with the United States whereby Quiller agreed to perform certain construction work at Vandenberg Air Force Base. Quiller entered into a subcontract with Stereovision, Inc., whereby Stereovision agreed to perform part of the work called for by the prime contract. Quiller, as the prime contractor, procured and filed the bond required by the Miller Act, for the protection of its subcontractors and their materialmen. In order to protect itself against any possible liability thereunder, Quiller required Stereovision to procure the bond in suit, which ran in favor of Quiller and, also, by its express terms, ran in favor of Stereovision’s sub-subcontractors and materialmen.

Plaintiff herein sold materials to Stereovision which the latter used on the Quiller job.

The following facts were stipulated :

All of the merchandise, material and equipment for which plaintiff claims compensation were furnished to the subcontractor and were used upon the construction to which the bond applied, and the prices charged represented the reasonable value of each of the items.

The subcontractor who was the principal under the labor and material payment bond in question ceased work on its subcontract in February of 1963, which was more than one year before the complaint in this action was filed.

The bond contains a provision limiting the time within which a suit or action may be filed by any claimant to one year following the date upon which the principal ceased work on the subcontract.

It was also in evidence and undisputed that the first information which plaintiff had as to the existence of the bond was in August 1965. The complaint herein was filed on September 24,

Sanders v. Am. Cas. Co. of Reading

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KINGSLEY, J.

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