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Newman v. Maryland Casualty Co.

Decided: January 12, 1934.

TIMBROOK NEWMAN, PLAINTIFF-RESPONDENT,
v.
MARYLAND CASUALTY COMPANY, DEFENDANT-APPELLANT



On appeal from the Supreme Court (Monmouth Circuit).

For the appellant, McDermott, Enright & Carpenter (James D. Carpenter, Jr., of counsel).

For the respondent, J. Everett Newman (Theodore D. Parsons, of counsel).

Trenchard

The opinion of the court was delivered by

TRENCHARD, J. This is the appeal of the defendant below from a judgment entered upon a verdict for the plaintiff at the Monmouth Circuit.

Briefly stated the situation was this: The plaintiff-respondent, Timbrook Newman (hereinafter called the plaintiff), was a subcontractor of Burke Brothers Construction Company, who held the general contract made July 10th, 1924, for the construction of the Asbury Park High School under a contract with the board of education of that city, and who filed a bond for the faithful performance of the contract. The plaintiff, by his subcontract with Burke Brothers Construction Company, dated July 14th, 1924, agreed to excavate for the foundations of the building. He proceeded with this work, completed it, and under his contract, was entitled to receive $2,700 from Burke Brothers Construction Company. But that company then was adjudged insolvent and receivers were appointed. The board of education thereupon, on August 20th, 1924, canceled the contract and notified the receivers, and the defendant, Maryland Casualty Company (hereinafter called the defendant), who had given the surety bond under chapter 75 of the laws of 1918, that the contract was rescinded, and took possession of the site together with all materials thereon. Thereafter the defendant, Maryland Casualty Company, when the board of education again advertised for bidders to complete the work, formed a subsidiary company known as the McClary Corporation, which bid upon and obtained the contract for completion and gave a bond, with the defendant as surety, for the faithful performance of the contract. Later the McClary Corporation proceeded with the work, but did not complete it to the satisfaction of the board, and on September 7th, 1926, the board entered into occupancy of the building under a resolution which expressly provided "that such action must not be construed as acceptance of the building either in whole or in part." The defendant,

Maryland Casualty Company (who had succeeded to the rights of its subsidiary the McClary Corporation), brought suit against the board to recover as for completion. Finally, on November 17th, 1931, the board of education passed a resolution providing for a full settlement of all differences between the Maryland Casualty Company, the McClary Corporation, and itself, by the payment by the board to the present defendant of $100,000. This settlement was that day consummated by such payment and by the exchange of general releases between the parties. The release given by the board by its terms released the Maryland Casualty Company from any liability upon the Burke Brothers Construction Company's bond and contract as well as the McClary Corporation's bond and contract, and on December 6th, 1931, a formal resolution was passed accepting the building. On the day of the settlement, that is on November 17th, 1931, plaintiff served notice on the defendant, Maryland Casualty Company, of his claim for work, labor and materials, and upon denial of liability by such surety, instituted the present suit on February 25th, 1932. The trial judge submitted to the jury the determination of the time of acceptance by the board of education of the building. The jury expressly found that this acceptance had taken place on November 17th, 1931, and so rendered a verdict for the plaintiff. From the judgment entered thereon the defendant, Maryland Casualty Company, appeals.

We believe that the questions to be examined arose out of, and may be disposed of in effect, by a consideration of the legal propriety of the refusal of the trial judge to direct a verdict for the defendant.

The defendant contended and now contends that when Burke Brothers Construction Company defaulted in its contract with the board of education, and the board terminated the contract and took possession of the premises and relet the contract for completion, the action of the board in so doing was an acceptance of the work then done, and that the liability of the defendant Maryland Casualty Company upon the Burke Brothers Construction Company's bond was terminated

by this action, and that, therefore, the plaintiff's suit, brought in 1932, was barred both by the terms of the act and by the statute of limitations.

We think not. As we shall point out the action of the board of education in taking possession of the premises and reletting the contract for completion, was not an acceptance of the building or improvement under the Burke Brothers ...


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