Park Paving Co. v. Kraft
Park Paving Co. v. Kraft
Opinion of the Court
Opinion by
This is an action of assumpsit on two bonds given to secure the performance of street paving contracts. It was heard by the-court, jury trial having been waived.On August 12, 1903, plaintiff,-a contracting corporation located at Rochester, Pa., entered into a written contract with the City of Corry, Erie County, for the construction of a brick pavement in Center street. The work was to be commenced on ten days’ notice from the city engineer and completed within ninety days thereafter. Later, on September 11, 1902, plaintiff entered into a
This appeal by plaintiff is from the decision of the court below in favor of the surety. While there is some lack of uniformity in the cases cited from different jurisdictions, we believe the conclusion of the trial court accords with the weight of authority and with our own decisions. The true rule seems to be that where the principal is in default and the surety execute the bond in ignorance thereof he will not be bound where knowledge of such default is withheld from him by the obligee, but where the obligee is also ignorant of the default, or where the surety has knowledge of it, the bond is good. See 32 Cyc., pp. 62 to 66 inclusive; Dinsmore, Trustee, Etc., v. Tidball et al., 34 Ohio 411; Sooy ads. The State of N. J., 39 N. J. L. 135; Franklin Bank v. Cooper, 39 Me. 542. Where the principal was a defaulter and indebted to the plaintiff and that fact was withheld from the sureties when the bond was given, such concealment was a fraud upon the sureties and avoided the bond as to them: Lauer Brewing Co. v. Riley, 195 Pa. 449; see also Wayne v. Commercial National Bank, 52 Pa. 343, 350. “That concealment of a material fact will vitiate a contract of suretyship, is unquestionably the law of this State. When a contract of suretyship is entered into, the surety is entitled to know all the material facts concerning it, and if the person for whose benefit the surety-ship is contracted conceals any material fact of importance in the determination of the surety to undertake the contract, such concealment is a fraud upon the surety and will vitiate the contract”: Bolz et al. v. Stuhl et al., 4 Pa. Superior Ct. 52, 58.
James D. Johnson did not reside at or near where the work was done and the evidence shows had no knowledge of the contracts or that anything had been done under them. The bonds on their face indicated that they were to insure faithful performance of work thereafter to be done and not a guarantee of the payment of an
The other defenses suggested were not passed upon by the trial court nor do we deem it necessary to consider them. We have examined the numerous assignments, but find no reversible error in the record.
The judgment is affirmed.
Reference
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- Principal and surety — Execution of bond by surety after principal’s default — Concealment—Fraud—Discharge of surety. 1. Where a principal is in default, and the surety executes the bond in ignorance thereof, he will not be bound where knowledge of such default was withheld from him by the obligee; but where the obligee is also ignorant of the default, or where the surety has knowledge of it, the bond is good. Such concealment of a material fact from the surety by the obligee is a fraud upon the surety which vitiates the contract. 2. Where a contractor’s bond indicated on its fade that it was given to insure the faithful performance of work thereafter to be done, and not a guaranty of the payment of an existing indebtedness or fixed liability, and, at the time of the execution of the bond by the surety, the contractor was in default, of which the obligee had notice, although the surety was ignorant thereof, good faith required that the real facts should be made known to the surety, and, as this was not done, the bond was void as to the surety.