Board of Education v. Lange

Sloan, C. J., delivered the opinion of the Court. This appeal is from an order sustaining a demurrer to the second amended declaration of the defendants (appellees), from which the plaintiffs appeal. According to the facts in the declaration, all that we can consider, the Board of Education of Cecil County had awarded a contract to Lange Brothers for the construction of a school house at Cecilton, in Cecil County, for $136,190. The contractor gave a bond to the Board of Education for the amount of the contract to indemnify ¹³⁴ the Board of Education against the claims of “All persons who have performed labor or rendered services” in the execution of the contract.

On the same date, February 3, 1939, the contractors gave another bond, called a “Performance Bond,” with the same surety, .whereby the principal agreed to “make prompt and faithful payment to any person furnishing labor or material for said work,” and the matter of this “Performance Bond” is the. only one now before this court, the labor and service bond having been ruled out on the demurrer to the first amended declaration and not incorporated in the second. .. There are only two contentions on the liability and effect of the “Performance Bond,” the appellees’ that this is a suit on a statutory specialty controlled by Section 11, Article 90 of the Code (1939) ; the appellants’, that by the terms of the bond the liability is not affected by the statute. Section 11, Article 90 of the Code, which the appellees insist bars the appellants’ right to sue these appellees, is as follows: ♦ “In all cases where any bond or undertaking, conditioned for the faithful performance of any contract for construction, installation or repair work, is given to the State of Maryland, or any of its agencies, such bond or undertaking shall not be approved or accepted unless the obligors bind themselves therein to the payment of all just debts for labor and materials incurred, through subcontract or in any other manner, by or in behalf of the person, firm or corporation, to whom such contract has been given, and who is named as principal in such recognizance, stipulation, bond or undertaking. Provided, that in the event that there is a liability to the State, or any agency thereof, under any such bond or undertaking, and also a liability thereunder for labor and materials, then the liability of the State shall be preferred, and shall be paid and discharged in full before any payment is made for or on account of the liability for labor or materials; and provided, further, that any suit or proceed ¹³⁵ ings to enforce the liability under any such bond or undertaking for the payment of debts for labor or materials shall be brought in the name of the obligee named in such bond, or undertaking, for the use and benefit pro rata of all creditors for labor or materials who may be entitled to claim thereunder, and shall be instituted not later than one year from the completion of the whole work covered by the contract and the acceptance thereof by the State, or its agency as aforesaid.” There is one ground upon which the appellees could contend that they are not liable to the appellant, and that is that the one-year limitation fixed by the statute had expired, the suit not having been brought within one year from the completion of the work, and this contention is predicated upon the further contention that the Board of Education of Cecil County is a State agency, the statute being applicable only to “the State of Maryland or any of its agencies.” Opposed to this, the appellants contend that it makes no difference whether the Board of Education is a State agency or not, the terms of the bond are such that it inures to the benefit of anyone performing labor or furnishing materials for the building.

As we are of the opinion that the Board of Education in the construction of school buildings is not acting as a State agency, we find it unnecessary to decide whether, under no circumstances can this bond be a conventional or general and not a statutory bond. The question of the limitation or condition of non-liability after one year may be raised by demurrer. Taggart v. Mills, 180 Md. 302 , 23 A. 2d 832 . The suit as originally entered was on two bonds.

One bond guaranteed payment for all “labor performed and services rendered”; the other, a “Performance Bond,” “payment to any person furnishing labor or materials for said work.” The original declaration was amended; the defendants demurred, and the demurrer was sustained. The grounds of demurrer assigned were (1) that the bonds declared on were statutory