Whitty v. Fidelity & Deposit Co. of Maryland

MARKS, J.

The Callahan Construction Company was at all times material to this action a corporation engaged in the business of highway construction. About July 1, 1928, it obtained a contract from the state of California whereby it agreed to construct about eleven miles of the state highway in Placer and Nevada Counties. It posted a contractor’s bond pursuant to the provisions of the 1925 Statutes of California (chap. 321, at p. 538), with Fidelity and Deposit Company of Maryland, a corporation, as surety thereon. On September 6, 1929, The Callahan Construction Company entered into a subcontract with the plaintiffs whereby they agreed to construct about one mile of the improvements described in the contract with the state, at a compensation based upon unit prices specified in the subcontract. By the terms of this instrument The Callahan Construction Company agreed to rent to plaintiffs, for use in performing their subcontract, a Northwestern power shovel at a rental of $500 for each calendar month. By the terms of both contracts it was provided that the improvement be completed “before the close down of operations in 1929”. It was agreed by all parties that this phrase meant the prevention of work under the contract by the winter snows and storms. The work was not so completed and The Callahan Construction Company secured from the state of California an extension of the time within which to complete its work under the original contract.

The plaintiffs entered upon the performance of their subcontract using "the power shovel rented to them by The Callahan Construction Company. This was returned to the company at its request before the close down of operations in 1929. The following spring The Callahan Construction Company refused to permit the plaintiffs to continue and

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took over their bunkhouses, camps and other equipment and completed the undertaking.

The plaintiffs instituted this action to recover from the Fidelity and Deposit Company of Maryland under the terms of its bond, the reasonable value of the work they had performed, The Callahan Construction Company having refused to pay the amount demanded by them.

The Callahan Construction Company filed a cross-complaint against plaintiffs seeking to recover damages suffered by it from an alleged breach of the contract by the plaintiffs in not completing the work before the close down of operations in 1929.