State Ex Rel. Southern Maryland National Bank v. National Surety Co.

Stockbridge, J., delivered the opinion of the Court. The General Assembly of 1908, p. 252, by Ch. Ill, repealed and re-enacted with amendments sec. 32-D of the laws relating to public roads in this State. Among the provisions as thus adopted was the following: “In all cases where the contract for work and materials shall be given out after competitive bidding, the successful bidder shall promptly execute a formal contract to be approved as to its form, terms and conditions by said Commission, and shall also execute and deliver to said Commission a good and sufficient bond to be approved by said Commission to the State of Maryland in not less than the amount of the contract price.

In no case shall any bond be approved or accepted unless the obligators bind themselves therein to the payment of all just debts for labor and materials incurred by the bidder in the construction and improvement of the road contracted for.” The Rickey-Swann Company was the successful bidder for a section of the public highway to be constructed or reconstructed in Charles County, and entered into a contract with the State Roads Commission for doing the work. In compliance with the statute already quoted, a bond was entered ²⁹² into by the contractor, with the appellee, the National Surety Company as surety, to the State of Maryland, in which the condition was in these words: “Now, therefore, the condition of this obligation is such that if the above bounden The Rickey-Swann Company shall in all respects comply with the terms and conditions of this contract, and its obligations thereunder including the specifications therein referred to and made part thereof and such alterations as may be made in said specifications as therein provided for, and shall indemnify and save harmless the said State of Maryland against or from all costs, expense, damages, injury or loss to which the said State of Maryland may be subjected by reason of any wrongdoing, misconduct, want of care or skill, negligence or default, upon the part of said, The Rickey-Swann Company, its agents or employees in or about the execution or performance of said contract, including said specifications, and such alterations as may be made in said specifications as therein provided for, and shall save and keep harmless the said State of Maryland against and from all losses to it, from any cause whatever, including patent infringements, in the matter of constructing said section of State highway, and shall promptly pay in full all just debts for labor and materials incurred by such contractor in the construction and improvement of the road contracted for, then this obligation to be void, and otherwise to1 be and remain in full force and virtue in law.” Sometime thereafter the Rickey-Swann Company borrowed from the Southern Maryland National Bank moneys to the extent of $2,800, for which it gave its promissory notes, and the original notes were later renewed, the last renewal being two notes of $1,400 each, dated July 15th, 1912, and August 15th, 1912, and payable at four and three months respectively. The notes not being paid, the present suit was instituted upon the bond of the contractor. A demurrer to the declara- ■ tion was sustained, and judgment entered for the defendant ²⁹³ thereon.

The sole question presented for determination is the liability of the Surety Company upon the bond for this money borrowed from the bank. It is alleged in the declaration, and must be taken to be admitted by the demurrer, that the money borrowed was used to pay the wages of laborers hired and materials obtained and used in