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VAN COR v. AMERICAN CASUALTY COMPANY READING (03/23/65)

decided: March 23, 1965.

VAN COR, INC., APPELLANT,
v.
AMERICAN CASUALTY COMPANY OF READING



Appeal from order of Court of Common Pleas No. 7 of Philadelphia County, June T., 1962, No. 4206, in case of Van Cor, Inc., successor to Daniel B. Van Campen Corporation, Marple-Newtown Joint School Authority, to the use of Van Cor, Inc., successor to Daniel B. Van Campen Corporation, v. American Casualty Company of Reading.

COUNSEL

Melvin Lashner, with him Adelman & Lavine, for appellants.

Edward H. Cushman, with him Kenneth M. Cushman, and Cushman & Obert, for appellee.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ.

Author: Per Curiam

[ 417 Pa. Page 409]

The order of the court below is affirmed on the following excerpts from the able opinion of Judge Charles Waters:

"Van Cor, Inc. [Van Cor], is successor to Daniel B. Van Campen Corporation, which contracted to perform the general construction work in the erection of a junior high school building for Marple-Newtown Joint School Authority. The authority awarded a separate contract to M. Zucker Co. [Zucker] for the electrical construction. . . . American Casualty Company of Reading, Pennsylvania [Casualty Company], was surety for [Zucker] in two bonds issued to the authority, one a 'performance bond' and the other a 'labor and materialmen's bond.' [Zucker] encountered difficulty in the performance of its contract, and eventually went into bankruptcy and was declared in default. The uncompleted portion of the electrical work was performed by another contractor under contract with the authority, and the added expense to which the authority was thereby put over and above the original contract price for the electrical work was paid to the authority by [the Casualty Company] pursuant to the terms of its performance bond.

"The present action is brought by Van Cor, the building contractor, to recover, first, under the performance bond, damages which it claims to have suffered by reason of delays in the completion of its building

[ 417 Pa. Page 410]

    contract caused by [Zucker's] failure to perform in accordance with its contract; and, second, under the labor and materialmen's bond, for labor and material furnished by [Van Cor] to [Zucker] in the performance of its contract.

"There is no dispute of the fact that [Zucker] was in default or of the fact that the delay in completion of [Van Cor's] contract, and the resultant loss to [Van Cor], were, in part at least, caused by [Zucker's] faulty performance. Nor is it seriously disputed that [Van Cor] furnished to [Zucker] the labor and material forming the basis of [Van Cor's] claim under the labor and materialmen's bond. [The Casualty Company's] position is, in respect of the first claim, that [its] undertaking in the performance bond does not render it answerable to other contractors for delays caused by its principal but runs only to the benefit of the school authority, the obligee; and, in respect of the second claim, that the suit is barred by the running of the one-year limitation contained in the bond and in the applicable statute, to which later reference will be made. . . .

"Giving our attention first to [Van Cor's] claim for delay damages, we find that the cause of action on which [Van Cor] relies in its complaint is that [the Casualty Company], knowing that [Zucker] had become bankrupt and was unable to complete its contract, refused, despite demand, to perform the electrical contract promptly. I have never before heard it asserted that the surety in a performance bond is itself obligated to perform the contract of its principal. It may, of course, do so; but unless such a provision is contained in the bond the surety is not required to carry out the contract. . . . The condition of the bond in the instant ...


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