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Samuel Braen''s Sons v. Fondo

Decided: October 9, 1958.

SAMUEL BRAEN'S SONS, ETC., PLAINTIFF-APPELLANT,
v.
DOMINICK FONDO, ET AL., DEFENDANTS-RESPONDENTS



Conford, Freund and Haneman. The opinion of the court was delivered by Conford, J.A.D.

Conford

This action was instituted June 1, 1955 to recover upon a statutory bond (N.J.S. 2 A:44-143 et seq.) given July 23, 1954, covering performance by a contractor on a contract for certain municipal improvements in the Borough of Fair Lawn. The contractor was Magnifico Construction Company, which, after commencing performance of the work, defaulted and was adjudicated bankrupt March 15, 1955. Plaintiff and its assignors were suppliers of labor and materials to the contractor in connection with the project. It was stipulated at the trial that there was a balance of $1,521.97 owing to the plaintiff on the job.

Paragraph 7 of the complaint states that the action "is instituted within one year from the date of acceptance." The defendant Standard Accident Insurance Company (Standard) filed its answer June 22, 1955 denying liability in general terms and not setting up the defense of prematurity

of the action. It is undisputed that the Borough of Fair Lawn did not accept the improvement until July 10, 1956. On October 4, 1956 the case was pretried, and the pretrial order expressly states as a defense that the action was prematurely instituted in that it was filed prior to acceptance of the work, contrary to the statute governing bonds on public contracts. Moreover, included in the specification of issues in the order is the question: "14. Has the action against Standard Accident Insurance Co. been prematurely brought?"

After the submission of proofs at the trial the court granted a motion by Standard to dismiss the action as against it on the ground of prematurity of the action under the statute, N.J.S. 2 A:44-145, which provides as to actions on surety bonds given on public contracts:

"No action shall be brought against any of the sureties on the bond required by this article until the expiration of 80 days after the acceptance of the building, work or improvement by the duly authorized board or officer."

Under N.J.S. 2 A:44-146 an action on such a bond may be brought by any of the persons for whose benefit it is required to be filed within one year from the date of acceptance of the work. The bond is required primarily for the benefit of the public agency or body for which the work is being done and secondarily for the benefit of materialmen and subcontractors and others whose labor or materials go into the performance of the contract. N.J.S. 2 A:44-143; Williamsport Planing Mill Co. v. Board of Education of City of Paterson , 130 N.J.L. 321, 322 (Sup. Ct. 1943); Franklin Lumber Co. v. Globe Indemnity Co. , 102 N.J.L. 9, 12 (Sup. Ct. 1925); affirmed 102 N.J.L. 715 (E. & A. 1926). It is therefore clear that although plaintiff was in the class of parties entitled to sue upon the bond it was bound by the statutory stipulation forbidding institution of an action on the bond until 80 days after acceptance of the work by the borough. Williamsport Planing Mill Co. v. Maryland Casualty Co. , 129 N.J.L. 333 (Sup. Ct. 1943).

Although plaintiff concededly was in contravention of the statutory stipulation in filing its action well prior to the acceptance of the work, it contends its action was nevertheless "timely" since, at the time of the pretrial conference on October 4, 1956, and when the motion for dismissal was made, on December 12, 1957, more than 80 days had elapsed from the date of the borough's acceptance of the work. In other words, so goes the argument, the defect of prematurity existing when the action was first instituted was cured by the occurrence of acceptance and the passage of 80 days thereafter pendente lite. But a proper appreciation of the public policy underlying the statutory proscription brings in its train a rejection of the position thus urged.

The purpose of the statutory prohibition of institution of any action on the bond by materialmen and suppliers of labor until after acceptance of the project is to protect the security of the public body in the bond from depletion or impairment by prior actions against the surety "before it is known whether the contractor has faithfully performed his contract with the public board or body," and, if not, what loss has consequently been sustained by the public body. Franklin Lumber Co. v. Globe Indemnity Co., supra (102 N.J.L. , at page 12); Graybar Electric Co. v. Manufacturers Cas. Co. , 37 N.J. Super. 284, 289 (Law Div. 1955), affirmed (other grounds) 21 N.J. 517 (1956). It is thus seen that the statutory policy involved is offended by the fact that the action has been prematurely instituted and that the policy is necessarily weakened if it is to be held that the illegality of a premature action becomes spent once there is acceptance of the work and a lapse of 80 days thereafter in advance of trial. Moreover, the fact, stressed by plaintiff, that these circumstances antedated the raising of the defense of prematurity by the defendant bonding company in the action is immaterial, not only for the reason just stated, but for the additional reason that the statutory policy is not legislated for the benefit of the surety on the bond but for the protection of the public body. This also serves to answer the contention that Standard was in no way prejudiced by

the prematurity of the action. The fact that in the particular case before us the public body may suffer no injury by allowing the action to go forward against the surety is of no consequence. The statute must be interpreted and enforced in the light of its policy and of the effect of the ...


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