Rechtsteiner v. National Surety Co. of New York

WOOD, J.,

pro

tem.—This is an action brought by the owner of a building against the surety on the contractor’s bond. The bond was conditioned that the builder would indemnify the owner against loss or damage directly caused by reason of the failure of the builder to perform his contract. The owner completed the work after it was abandoned by the contractor, and filed the proper notice of cessation of labor. Thereafter sixteen claims of lien were filed, two of which were subsequent to the expiration of thirty days after the notice. Suits for foreclosure were brought upon all these claims, and consolidated into one action. Although the bond in question explicitly provides that no right of action shall accrue upon it for the use or benefit of any person other than the owner of the building, the Surety Company was made a party to such consolidated action. All parties therein at some time, the date of which does not appear, agreed upon and stipulated in writing to all the facts, and that all the liens were filed for record within the time prescribed by law. Judgment in the consolidated action was entered for $3,155.33 more than eighteen months after the time fixed in the building contract for its completion. It was paid upon the filing of the cost bill. The owner had left in her hands after she had completed the contract $775.96 only of the original contract price with which to satisfy the judgment, and her damages were the amount she paid in excess of such sum to effect such satisfaction.

There is an express stipulation in the Surety Company’s bond that no suit or action shall be instituted in any event later than six months after the date or time fixed in the contract for the completion of the work therein. In accordance with this provision the trial court held that this action was brought too late, and rendered judgment against the plaintiff.

The questions involved upon this appeal, as.stated by appellant, are:

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First. Is the six months’ limitation provided in the bond an unreasonable one in an indemnity bond of this character.

Second. Was the plaintiff’s delay in commencing the action unavoidable, and should not the limitation commence to run only from the time of her loss or damage, that is, at the time when the claims were established by judgment of the court or paid?