Third, that the Company shall have the right and is hereby authorized, but not required: * * * (b) To adjust, settle or compromise any claim, demand, suit or judgment upon said bond or bonds, or any of them, unless the undersigned shall request the Company to litigate such claim or demand; * * * Fourth, To assign, transfer and set over, and does or do hereby assign, transfer and set over to the Company, as collateral, to secure the obligations herein and any other indebtedness and liabilities of the undersigned to the Company, whether heretofore or hereafter incurred, such assignment to become effective as the date of said contract bond; (b) All the rights of the undersigned in, and growing in any manner out of said contract, or any extensions, modifications, changes or alterations thereof or additions thereto, or in, or growing in any manner out of said bonds, or any of them; * * * (d) Any and all percentages retained on account of said contract, and any and all sums that may be due under said contract at the time of such abandonment, forfeiture or breach, or that may thereafter become due; Fifth, that liability hereunder shall extend to and include, the full amount of any and all sums paid by the Company in settlement or compromise of any claims, demands, suits and judgments upon said bond or bonds, or any of them, on good faith, under the belief that it was liable therefor, whether liable or not, as well as any and all disbursements on account of costs, expenses and attorney's fees, as aforesaid, which may be made under the belief that such were necessary, whether necessary or not.'
8. Pursuant to said application and relying on the covenants of agreement therein contained, plaintiff did on May 12, 1939, execute as surety the bonds of said Middle West Construction Company, to defendant.
9. The condition of the performance bond is as follows: 'Now Therefore the Condition of This Obligation is Such, That if the Principal shall faithfully perform the contract on his part at the time and in the manner therein provided and satisfy all claims and demands incurred in or for the same, or growing out of the same, or for injury or damage to persons or property in the performance thereof, and shall fully indemnify and save harmless the said Obligee from any and all cost and damage which the said Obligee may suffer by reason of failure so to do, and shall fully reimburse and repay the said Obligee any and all outlay and expense which it may incur by reason of any such default, then this obligation shall be null and void, otherwise it shall remain in full force and virtue.'
10. Middle West Construction Company breached its contract with the defendant and defaulted in discharging its indebtedness and liabilities incurred in the performance of the work and on May 8, 1942, defendant notified said Middle West Construction Company that since it had refused to complete the work it (the defendant) would complete said work and the defendant thereupon did complete the work called for by the contract.
11. Pursuant to their undertaking in the bond aforesaid the plaintiff has paid claims for labor and material, claims for damages, costs and attorney's fees in the aggregate sum of $ 5,966.96.
12. The defendant has in its hands and possession the sum of $ 413.86, the unexpended balance of the contract price due to Middle West Construction Company.
13. Plaintiff has demanded of the defendant the entire balance of the contract price since the amounts paid under its obligation in the bond exceed said balance, but defendant has filed and refused to pay the same or any part thereof.
14. On March 29, 1938, City of Pittsburgh, defendant herein, entered into another contract with Middle West Construction Company for the construction of a Relief Sewer in the Spring Garden Drainage Basin under date of March 29, 1938.
15. Standard Accident Insurance Company executed a labor and material bond and a performance bond to the City of Pittsburgh covering the contract described in the last preceding finding, the terms of said bonds being substantially the same as the bond of the plaintiffs in the case of the Negley Run Drainage Basin contract.
16. Middle West Construction Company began work on the Spring Garden Drainage Basin Sewer on April 12, 1938, and completed the same on October 22, 1938.
17. The City of Pittsburgh, some time in 1941, discovered that the work of the Contractor on the Spring Garden Drainage Basin Sewer was defectively performed. On July 10, 1944, the City estimated on the basis of the then existing costs, that it would require the expenditure of $ 18,240.30 to complete the said contract for the erection of the Spring Garden Drainage Basin Sewer. Said costs were from 10% to 15% higher than the costs at the time when the defective performance of the contract was discovered in 1941.
18. Nothing has been done by the City of Pittsburgh to correct or complete the work of the contractor on the Spring Garden Drainage Basin Sewer.
Conclusions of Law.
I. Upon the default of Middle West Construction Company in the performance of its contract to construct the Negley Run Drainage Basin, assignment contained in the application for the bonds became effective as of the date of the contract, to wit, May 12, 1939, and the surety on the bond of the Contractor became entitled to all of the rights of the Contractor under or in any manner growing out of its contract with the City of Pittsburgh, including all retained percentages on account of said contract and all sums that might become due thereunder.
II. The contract of Middle West Construction Company with the City of Pittsburgh for the construction of the Spring Garden Drainage Basin Sewer was wholly distinct from and independent of the contract for the construction of the Negley Run Drainage Basin Sewer and the performance of the contractor's obligations under the Spring Garden Drainage Basin contract was guaranteed by a different surety, to wit, Standard Accident Insurance Company, which was liable to the City for any default of the contractor under said Spring Garden Drainage Basin contract.
III. Plaintiff in the performance of the contractor's obligations under its contract for the erection of the Negley Run Drainage Basin Sewer having paid out an amount in excess of the balance in the hands and possession of the defendant, is entitled to the full balance now in the hands and possession of the defendant, to wit, $ 413.86.
IV. Defendant is not entitled to set off against the claim of the plaintiffs any amount which it may be compelled to expend for or in the completion of the Spring Garden Avenue Drainage Basin Sewer.
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