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November 25, 1952


Appeal, No. 167, March T., 1952, from judgment of Court of Common Pleas of Allegheny County, April T., 1951, No. 897, in case of Dravo-Doyle Company v. Royal Indemnity Company. Judgment affirmed.


W. S. Moorhead, Jr., with him J. Wray Connolly, David W. Craig and Moorhead & Knox, for appellant.

James J. Burns, Jr., for appellee.

Before Drew, C.j., Stern, Stearne, Jones, Bell, Chidsey and Musmanno, JJ.

Author: Chidsey

[ 372 Pa. Page 65]


The lower court sustained preliminary objections to the plaintiff's complaint in assumpsit and gave the plaintiff fifteen days in which to amend in order to allege that it had the right to a lien. Upon failure to amend, judgment was entered for the defendant. This appeal is from the entry of that judgment.

[ 372 Pa. Page 66]

The question here involved is one of law and there is no dispute regarding the facts. Plaintiff, Dravo-Doyle Company, is an unpaid materialman. Defendant is a surety for a subcontractor which is now bankrupt.

Bechtel International Corporation, the general contractor, entered into a subcontract with Industrial Contracting Company. Defendant's bond generally insures the performance of such contract. Plaintiff furnished material and equipment to the subcontractor for which it has not been paid. The determination of the question involved turns on an interpretation of the contract between Bechtel and Industrial.

The pertinent portions of such contract are as follows: "2. ITEMS TO BE FURNISHED BY SUBCONTRACTOR: Subcontractor shall supply and furnish at the location where the work is to be performed all items, including labor, materials, and equipment, necessary for the complete and satisfactory performance of this subcontract, except such items as the Contractor in the Subcontract of which these terms and conditions are a part specifically agrees to supply or furnish to or for the use of Subcontractor... 12. LIENS AND CLAIMS: Subcontractor shall indemnify and save harmless Contractor and Owner from all claims, demands, causes of action or suits of whatsoever nature arising out of the services, labor and material furnished by Subcontractor, or its subcontractors, under this Subcontract. Subcontractor shall immediately pay and discharge, or shall provide security sufficient and satisfactory in itself to its laborers, materialmen or other creditors, or those of its subcontractors, for the payment of any obligation, or alleged obligation, it, or any of its subcontractors may have, in aid of the enforcement of which a lien or right of any kind is established, or is attempted to be established, upon or against the work or the real property upon which the

[ 372 Pa. Page 67]

    work is situated. Contractor may, as a condition precedent to any payment hereunder, require Subcontractor to submit complete waivers and releases of any and all claims of any person, firm or corporation. Such release must be submitted covering all such claims as a condition precedent to final payment... 17. INSURANCE AND BONDS: Subcontractor, at its own expense, shall procure, carry and maintain on all its operations hereunder the bonds and policies of insurance in the amounts specified in the Subcontract. The bonds and policies of insurance shall be in such form and shall be issued by such company or companies as may be satisfactory to Contractor. Subcontractor shall cause to be furnished to Contractor certificates of insurance from the assuring companies which shall include the following clause: 'Ten (10) days' advance notice shall be given in writing to Bechtel International Corporation, 141 Battery Street, San Francisco, California, on cancellation, termination, or any alteration of the policy or policies evidenced by this certificate.'... 18. (d) Payments otherwise due may be withheld by Contractor on account of defective work not remedied, claims filed, or reasonable evidence indicating probability of filing of claims, failure of Subcontractor to make payments properly to subcontractors or for material or labor, or a reasonable doubt that the subcontract can be completed for the balance then unpaid. If the foregoing causes are removed, the withheld payments ...

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