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Amelco Window Corp. v. Federal Insurance Co.

Decided: March 26, 1974.

THE AMELCO WINDOW CORP., A CORPORATION, PLAINTIFF-APPELLANT,
v.
FEDERAL INSURANCE COMPANY, DEFENDANT-RESPONDENT



Carton, Seidman and Demos. The opinion of the court was delivered by Demos, J.s.c., Temporarily Assigned.

Demos

Plaintiff The Amelco Window Corp. (Amelco) instituted an action against Federal Insurance Company (Federal) to recover, as a third-party beneficiary, on a surety bond provided by Federal for a construction project. In its answer Federal denied plaintiff was within the class of persons who were entitled to protection under the bond, asserting that it had only agreed to indemnify the owner for any loss resulting from a default by the general contractor and not to secure payment to subcontractors for labor and materials.

The parties filed cross-motions for summary judgment. The court below granted Federal's motion and entered judgment in its behalf. Amelco appeals from that decision.

The facts are not materially disputed. Amelco entered into a written subcontract with Frank W. Bogert, Inc (Bogert), the general contractor, for the installation of windows and doors on a project known as "No. 1 University Plaza." Bogert had furnished a performance bond, with Federal as surety, in accord with Bogert's contract with the owner, Fairleigh Dickinson University (University). The construction contract between the University and Bogert contained the following:

7.5 PERFORMANCE BOND AND LABOR AND MATERIAL PAYMENT BOND

The Owner shall have the right prior to signing the Contract, to require the Contractor to furnish bonds covering the faithful performance of the Contract and the payment of all ogligations [sic] arising thereunder in such form and amount as the Owner may prescribe and with such sureties as may be agreeable to the parties. If

such bonds are stipulated in the bidding requirements, the premiums shall be paid by the Contractor; if required subsequent to the submission of quotations or bids, the cost shall be reimbursed by the Owner. The Contractor shall deliver the required bonds to the Owner not later than the date of execution of the Contract, or if the work is commenced prior thereto in response to a notice to proceed, the Contractor shall, prior to commencement of the work, submit evidence satisfactory to the Owner that such bonds will be issued.

Section 4:4.1. Unless otherwise specifically noted, the Contractor shall provide and pay for all labor, materials, equipment, tools, construction equipment and machinery, water, heat, utilities, transportation, and other facilities and services necessary for the proper execution and completion of the work.

The surety agreement stated that it was "in accordance with the terms and conditions of said contract [Bogert-University] which is hereby referred to and made a part hereof as if fully set forth herein". It also stated;

NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the above bounden Principal [Bogert] shall well and truly keep, do and perform each and every, all and singular, the matters and things in said contract set forth and specified to be by said Principal kept, done and performed at the times and in the manner in said contract specified, or shall pay over, made good and reimburse to the above named Obligee [University], all loss and damage which said Obligee must sustain by reason of failure or default on the part of said Principal so to do, then this obligation shall be null and void; otherwise shall remain in full force and effect.

A subsequent rider substituted University Plaza Realty Corporation in place of University as obligee. The substitution has no effect upon this controversy.

Bogert went into bankruptcy before the building was completed, thereby creating a default under its ...


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