STATE OF FLORIDA, DEPARTMENT OF TRANSPORTATION, FOR THE USE AND BENEFIT OF CONSOLIDATED PIPE & SUPPLY COMPANY, INC., AN ALABAMA CORPORATION, APPELLANT,
v.
HOUDAILLE INDUSTRIES, INC., A DELAWARE CORPORATION, AND FEDERAL INSURANCE COMPANY, A NEW JERSEY CORPORATION, APPELLEE
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The court held that a performance bond is a statutory bond under Florida law even though it does not explicitly reference the notice provisions and time limitations of Section 255.05(2), as long as it cites the statute and does not expand the surety's minimum obligations beyond what the statute requires. The court affirmed the dismissal of a supplier's suit against the surety because the complaint failed to allege compliance with the one-year limitations period.
The court held that the bond is a statutory bond despite the absence of explicit reference to the statutory notice and time limitations, because the bond cited Section 255.05, did not expand the surety's obligations beyond the statutory minimum, and substantially restated the statutory language verbatim. The court affirmed dismissal because the complaint failed to allege compliance with the one-year time limitation of Section 255.05(2).
[1] A performance bond is statutory, rather than a common law bond, if it does not expand the minimum obligation placed upon the principal and surety by statute, even if it o…
[2] A bond that cites the relevant statute and does not expand the principal's statutory obligation to laborers and suppliers is considered a statutory bond.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“The primary test in ascertaining whether a bond is statutory or one at common law is to determine if the minimum obligation placed upon the principal and his surety by statute has been expanded by the bond.”
Establishes the controlling legal standard for distinguishing statutory bonds from common law bonds.
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Join FLexlaw to unlock all legal intelligenceConsolidated Pipe & Supply Company, a supplier to a subcontractor, brought suit in the name of the State of Florida under a performance bond issued by…
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ERVIN, Judge.
Does the failure of a performance bond to include specific reference to the notice provisions and time limitations of Section 255.05(2), Florida Statutes (1975), even though the bond required the contractor to comply with the provisions of Section 255.05, make the bond a common law, rather than a statutory bond?
We conclude it does not. There is language in United Bonding Ins. Co. v. City of Holly Hill, 249 So. 2d 720 (Fla. 1st DCA 1971) and S.
W. Fla. Water Mgt. Dist. v. Miller Const., 355 So. 2d 1258 (Fla. 2d DCA 1978) indicating that statutory bonds must refer to both the statute creating the bond as well as the limitations periods stated in the statute, but we think such language must be restricted to the facts in those cases which are distinguishable from those here. In both Holly Hill and Miller the performance bonds failed to refer to Section 255.05, failed to contain any limitation with respect to the time within which a suit on the bond could be commenced and, most importantly, granted broader coverage than the minimum required by the statute.
The primary test in ascertaining whether a bond is statutory or one at common law is to determine if the minimum obligation placed upon the principal and his surety by statute has been expanded by the bond. See Fulghum v. State, 92 Fla. 662, 109 So. 644 (1926). Here the bond, while containing no reference to the statutory limitation, specifically cited Section 255.05.
Finally, it did not expand the principal’s obligation to laborers and suppliers as set forth in the statute. Indeed, the bond practically restated word-for-word the minimum obligation: “[I]f such Contractor shall promptly make a payment to all persons supplying labor, material, equipment and supplies, used directly or indirectly by the said Contractor or any subcontractor(s) in the prosecution of the work provided for in said Contract, . . ., then this obligation [shall] be void; . . . .”1
If any ambiguity arguably existed in the bond,2 it could hardly be construed against the surety which did not prepare the bond. Appellant Consolidated Pipe and Supply Co., Inc., a supplier to a subcontractor, brought suit in the name of the state for its use and benefit as required by Section 255.05(1). The bond's drafter, the State of Florida and the nominal plaintiff, is the only party that is subject to the rule of strict construction — not the surety.
We conclude that the lower court correctly held the bond was statutory. Since the complaint failed to allege compliance with the one-year time limitation of Section 255.-05(2), the lower court’s order granting the motion to dismiss is affirmed.
McCORD, Acting C. J., and LARRY G. SMITH, J., concur. . Compare the above language with Section 255.05(1), stating that “such contractor shall promptly make payments to all persons supplying him labor, material, and supplies, used directly or indirectly by the said contractor or subcontractors in the prosecution of the work provided for in said contract; . .
. Section 255.05, Florida Statutes (1975), subsequent to the execution of the bond, was amended by Ch. 77-81, § 1, Laws of Florida, by providing a suggested bond form, which, like the present bond, makes specific reference to Section 255.05, but does not incorporate the statute’s notice and time provisions, which remain unchanged.
Cases With Similar Vibessemantic neighbors from the corpus
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Am. Home Assurance Co. v. Plaza Materials Corp., 908 So. 2d 360 (Fla. 2005)…the surety which did not prepare the bond.... The bond’s drafter, the State of Florida and the nominal plaintiff, is the only party that is subject to the rule of strict construction not the surety.” State Dep’t of Transp. v. Houdaille Indus., Inc., 372 So. 2d 1177, 1178 (Fla. 1st DCA 1979) (footnote omitted). In other words, the surety should not be held responsible for the agency’s omission. IV. THE STATUTE OF LIMITATIONS Finally, I address the majority’s abrogation of the one-year statute of limitations i…1 / 2
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Martin Paving Co. v. United Pac. Ins. Co., 646 So. 2d 268 (Fla. 5th DCA 1994)…clusion that common law bonds have ceased to exist in Florida, however. The term “common law bond” still means, as it always has meant, a bond whose protections exceed the minimum obligations imposed by statute. State, Dep’t of Transp. v. Houdaille, 372 So. 2d 1177, 1178 (Fla. 1st DCA 1979); see also Southwest Fla. Water Management Dist. v. Miller Constr. Co., 355 So. 2d 1258,1260 (Fla. 2d DCA 1978). The bond in this case is a “common law bond.” Such a bond still may be subject to the notice and statute of lim…
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Fla. Keys Cmty. Coll. v. Ins. Co. OF N. Am. & Fid. Fire Ins. Co., 456 So. 2d 1250 (Fla. 3d DCA 1984)…ns imposed upon the principal and its surety. The test requires a comparison of the minimum requirements enunciated in the statute and the language contained within the bond. State ex rel Consolidated Pipe & Supply Co. v. Houdaille Industries, Inc., 372 So. 2d 1177 (Fla. 1st DCA 1979). Section 255.05, Florida Statutes (1977) requires: (1) Any person entering into a formal contract with the state or any county, city, or political subdivision thereof, or other public authority, for the construction of any publ…
Previewing 3 of 4 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Fulghum v. State, 92 Fla. 662 (Fla. 1926)
- Sw. Fla. Water Mgmt. Dist. v. Miller Constr. Co., 355 So. 2d 1258 (Fla. 2d DCA 1978)
- State v. Reese, 249 So. 2d 720 (Fla. 2d DCA 1971)
- United Bonding Ins. Co. v. City OF Holly Hill, 249 So. 2d 720 (Fla. 1st DCA 1971)