Young v. American Bonding Co.

Citations

• 228 Pa. 373
• 77 A. 623
• 1910 Pa. LEXIS 491

Syllabus

<p>Principal and surely — Bond to secure contract — Variance from contract — Release of surety.</p> <p>1. Where a bond issued by a surety company refers to an agreement between the principal in the bond and the obligee, and recites so much of the agreement as relates to what the principal had engaged to do, and for the performance of which the surety had become liable, a variance in the performance of the contract from that portion recited in the bond will discharge the surety, if it appears that the ability of the principal to perform his part of the contract had been thereby materially lessened, and the risk of the surety correspondingly increased.</p> <p>2. The interest of a surety in an earlier contract between the principal and the obligee to which the surety is not a party can arise only at the point where the liability of the surety is touched, and where such liability is touched, it must be in connection with something material before the variance from the contract can be made available as a defense to the bond.</p> <p>3. The doctrine that a surety is a favorite of the law, and that a claim against him is strictissimi juris does not apply where the bond or undertaking is executed upon a consideration by a corporation organized to make such bonds or undertakings for profit. While such corporations may call themselves “surety companies” their business is in all essential particulars that of insurance. Their contracts are usually in the terms prescribed by themselves, and should be construed most strictly in favor of the obligee.</p> <p>4. In an action on a bond given to secure the performance of a contract where the principal claims that the obligee, the other party to the contract, had released him from all obligation to complete the work contemplated by the contract, and this claim is disputed and denied, the contention raised by the conflict of evidence must be passed upon as a question of fact by the jury.</p>