AETNA INSURANCE COMPANY, APPELLANT,
v.
ESTERO MANUFACTURING AND BUILDERS SUPPLY, INC., FULLER INDUSTRIES, INC., AND SARASOTA ELECTRIC CORPORATION, APPELLEES
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Aetna Insurance Company appealed orders denying its motion to dismiss cross-claims against it by suppliers and subcontractors on a construction performance bond. The court held that an explicit contractual provision in the bond limiting rights of action to the named obligee (the property owner) precluded third-party suppliers and subcontractors from suing the surety, despite prior Florida law permitting such suits where bonds contained no such limiting language.
The court reversed the orders denying dismissal and held that the express limiting language in the bond validly precluded third-party suppliers and subcontractors from suing the surety. Only the named obligees (the property owners) had a right of action against the bonding company, and suppliers could pursue liens against the owner only.
“That no right of action shall accrue upon or by reason hereof to or for the use or benefit of anyone other than the obligee(s) herein named.”
The express limiting language in the surety bond that the court found to be a valid contractual agreement precluding third-party beneficiary claims
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Join FLexlaw to unlock all legal intelligenceH.B. and Virginia Nevans, owners of the Caribbean Motel, contracted for construction of an addition and required the contractor to provide a surety bo…
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This is an interlocutory appeal by Aetna Insurance Company, one of the defendants in the trial court, from Orders denying Motion to Dismiss Cross Claims of Sarasota Electric Corporation and Estero Manufacturing & Builders Supply, Inc., and Fuller Industries, Inc. entered after final judgment for the plaintiff H. B. Nevans, et ux, on the question of liability. On appeal to this court said final judgment was Per Curiam affirmed in the case of Kornblum v. Nevans, 174 So.2d 632, on April 30, 1965.
H. B. Nevans and Virginia Nevans, his wife, as owners of the Caribbean Motel, entered into a contract for the construction of an addition to the motel, and in accordance with the provisions of Section 84.05 (11) (a), Fla.Stat.1961, F.S.A., required the contractor to provide a surety bond payable to the owner in the amount of the original contract conditioned upon faithful performance of the contract and to cause all claims for material furnished in the prosecution of the work to be discharged. The bond also provided that no right of action should accrue under the bond for the use or benefit of anyone other than the obligees therein.
The record discloses extensive defalcation by the contractor in the quality of the work, failure to complete the contract, and the failure to pay persons who had supplied labor, material and supplies. The court declined to dismiss the cross-claims of Estero Manufacturing and Builders Supply, Inc. and Sarasota Electric Corporation, and the responsive pleading in the nature of a complaint to foreclose lien of Fuller Industries, Inc.
The Florida Supreme Court held in the case of Johnson Electric Co. v. Columbia Casualty Company, 1931, 101 Fla. 186, 133 So. 850, 77 A.L.R. 1, and in the companion case Barry v. Columbia Casualty Company, 1931, 101 Fla. 168, 133 So. 852, that a subcontractor as third party beneficiary could bring suit against the surety under the per*749formance bond conditioned upon payment of all claims and demands incurred as a result of the default by the contractor.
The rationale of those decisions was that the court found in construing the contracts and bonds, although not expressly stated, the parties intended to make subcontractors parties beneficiaries of the bond. While agreeing that this is the law as to a contract and bond containing no express provision, we have in the case at bar a bond which contains the following proviso:
“That no right of action shall accrue upon or by reason hereof to or for the use or benefit of anyone other than the obligee(s) herein named.”
By this provision the parties specifically contracted and agreed on the subject, thus taking this bond out from under the effect of the foregoing decisions. The statutes in effect at the time this bond was given neither gave a subcontractor a direct right of action on the bond nor prohibit provision in the bond limiting the right of action to the owner. The quoted proviso was therefore a valid contractual agreement between the parties which cannot be expanded by judicial interpretation to include a right of action to a subcontractor. Under this provision of the bond the owners who were the obligees above have a right of action against the surety. Morganton Mfg. & Trading Co. v. Andrews, 1914, 165 N.C. 285, 81 S.E. 418.
The holders of valid liens have a right of action against the owner, and the owner would then in turn have a claim against the bonding company in accordance with the expressed teirn of the bond.
Accordingly, the orders appealed from are
Reversed, with directions to grant the Motion to Dismiss the claims of Estero Manufacturing and Builders Supply, Inc., Fuller Industries, Inc., and Sarasota Electric Corporation.
SMITH, C. J., and ALLEN, J., concur.
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Argonaut Ins. Co. v. Commercial Standard Ins. Co., 380 So. 2d 1066 (Fla. 2d DCA 1980)…ond. See National Union Fire Ins. Co. v. Westinghouse Elec. Supply Co., 206 So. 2d 60 (Fla. 3d DCA 1968); American Fire and Cas. Co. v. Charles Sales Corp., 203 So. 2d 670 (Fla. 4th DCA 1967); Aetna Ins. Co. v. Estero Mfg. and Builders Supply, Inc., 174 So. 2d 747 (Fla. 2d DCA 1965). . In view of our disposition of the case, we need not determine the validity or effect of purported assignments of the construction contract made by Peninsular to Pinehurst and Pi-nehurst to Argonaut.…
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Nat'l Union Fire Ins. Co. v. Westinghouse Elec. Supply Co., 206 So. 2d 60 (Fla. 3d DCA 1968)…in the bond was Diplomat, the obligee was the general contractor, Fred Howland, Inc., and appellant was the surety. The language used in this bond was quite similar to that used in Aetna Ins. Co. v. Estero Mfg. & Bldrs. Supply, Inc., Fla.App. 1965, 174 So. 2d 747. There, the court construed a bond provided by the general contractor to the land owners, for certain construction work on their motel. The court acknowledged the rationale of Johnson Electric and Barry, supra, but went on to say, at page 749: “T…
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Westinghouse Elec. Supply Co. v. Diplomat Elec., Inc., 221 So. 2d 436 (Fla. 3d DCA 1969)…So. 2d 518; 2 Fla.Jur. Appeals § 374. In essence, our prior opinion held that “under the circumstances and record on appeal of this case,” the rule expressed in Aetna Insurance Company v. Estero Manufacturing & Building Supply, Inc., Fla.App.1965, 174 So. 2d 747 applied and required a reversal of the “final judgment” entered on the “order granting motion for partial summary judgment.” Our reversal of that “partial final summary judgment” did not authorize or direct a dismissal of the cause with prejudice a…
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
- Turner v. Bacon, 101 Fla. 186 (Fla. 1931)
- Right Reverend Patrick Barry v. Columbia Cas. Co., 101 Fla. 168 (Fla. 1931)
- Kornblum v. Nevans, 174 So. 2d 632 (Fla. 2d DCA 1965)
- Scolaro v. Scolaro, 174 So. 2d 632 (Fla. 2d DCA 1965)