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Graybar Electric Co. v. Continental Casualty Co.

Decided: May 27, 1958.

GRAYBAR ELECTRIC COMPANY, INC., A CORPORATION OF NEW YORK, PLAINTIFF-RESPONDENT,
v.
CONTINENTAL CASUALTY COMPANY, A CORPORATION OF ILLINOIS, DEFENDANT-APPELLANT



Price, Haneman and Schettino. The opinion of the court was delivered by Haneman, J.A.D.

Haneman

Defendant appeals from a summary judgment entered against it in the Law Division. The facts are:

On or about May 9, 1956 Sovereign Construction Co., Ltd. (hereinafter Sovereign) entered into a contract with the Institute for Advanced Study (hereinafter Institute) for the construction of a housing project in Princeton, New Jersey. The contract provided, in part:

"32. Contract Security.

The Contractor shall furnish a surety bond in an amount at least equal to 100 per cent of the contract price as security for the faithful performance of this contract and for the payment of all persons performing labor on the project under this contract and

furnishing materials in connection with this contract. The surety on such bond shall be a duly authorized surety company satisfactory to the Owner." (Emphasis supplied)

Consistent with the foregoing provision, Sovereign obtained a bond from Continental Casualty Company, which reads, in part:

"The condition of the above obligation is such that Whereas, the above named Principal did on the 9th day of May, 1956, enter into a contract with Institute for Advanced Study, which said contract is made a part of this bond the same as though set forth herein;

Now, if the said Sovereign Construction Company, Ltd., shall well and faithfully do and perform the things agreed by Sovereign Construction Company, Ltd., to be done and performed according to the terms of said contract, and shall pay all lawful claims of subcontractors, materialmen, laborers, persons, firms or corporations for labor performed or materials, provisions, provendor or other supplies or teams, fuels, oils, implements or machinery furnished, used or consumed in the carrying forward, performing or completing of said contract, we agreeing and assenting that this undertaking shall be for the benefit of any subcontractors, materialmen, laborer, person, firm or corporation having a just claim, as well as for the obligee herein, then this obligation shall be void, otherwise the same shall remain in full force and effect; it being expressly understood and agreed that the liability of the surety for any and all claims hereunder shall in no event exceed the penal amount of this obligation as herein stated.

The said surety hereby stipulates and agrees that no modifications, omissions or additions in or to the terms of the said contract or in or to the plans or specifications therefore shall in anywise affect the obligation of said surety on its bond." (Emphasis supplied)

During the course of construction Sovereign entered into a subcontract for certain electrical work with Ben B. Greene, Inc. (hereinafter Greene) which in turn purchased certain electrical supplies from Graybar Electric Company, Inc. for completion of its subcontract. The total price of the electrical supplies was $6,109.18. Upon the failure of Greene to make payment of said amount, plaintiff demanded payment from Sovereign and defendant. Defendant refused to make payment. Plaintiff thereupon commenced suit against defendant. Issue having been ...


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