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Schlanger v. Federal Insurance Co.

Decided: January 22, 1965.

NATHAN SCHLANGER, PHILIP SCHLANGER AND MOE SCHLANGER, PARTNERS TRADING AS CONCRETE BLOCK COMPANY OF IRVINGTON, PLAINTIFFS-APPELLANTS,
v.
FEDERAL INSURANCE COMPANY, A CORPORATION, DEFENDANT-RESPONDENT



For reversal -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For affirmance -- None. The opinion of the court was delivered by Haneman, J.

Haneman

Plaintiff filed suit as a third-party beneficiary under a surety bond, and appealed to the Appellate Division after defendant's motion for summary judgment was granted. Before argument there, this Court granted certification on plaintiff's motion. R.R. 1:10-1A(a).

On June 15, 1960 Muhlenberg Hospital (Muhlenberg) entered into a written contract with Walter Kidde Constructors, Inc. (Kidde), under which Kidde was to erect an addition and make alterations to its hospital in Plainfleld. Said contract was not filed in any county clerk's office under N.J.S. 2A:44-75.

Article 9 of the general conditions attached to the contract provides:

"Materials, Appliances, Employees

Unless otherwise stipulated, the Contractor shall provide and pay for all materials, labor, water, tools, equipment, light, power, transportation and other facilities necessary for the execution and completion of the work."

Article 30 of the general conditions provides:

"The Owner shall have the right, prior to the signing of the Contract, to require the Contractor to furnish bond covering the faithful performance of the Contract and the payment of all obligations arising thereunder, in such form as the Owner may prescribe and with such sureties as he may approve. If such bond is required by instructions given previous to the submission of bids, the premium shall be paid by the Contractor; if subsequent thereto, it shall be paid by the Owner."

Muhlenberg was furnished with a bond executed by Kidde as principal and defendant as surety on June 27, 1960. The condition of said bond reads:

"The condition of this obligation is such, that whereas the Principal entered into a certain contract, hereto attached, with the Owner, dated June 15th, 1960, for alterations and additions to Muhlenberg Hospital.

Now, therefore, if the principal shall promptly make payment to all persons supplying labor and material in the prosecution of the work provided for in said contract * * * then this obligation to be void otherwise to remain in full force and virtue."

Kidde thereafter subcontracted a portion of the work required to be performed to James Kane & Company, Inc. (Kane). Kane purchased materials from plaintiff which were delivered and used in connection with its subcontract. Plaintiff did not file a notice of intention to furnish said materials under N.J.S. 2A:44-71. Kane has filed a petition in bankruptcy and plaintiff has not received payment of $1779.54 allegedly due for said ...


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