Appeal from judgment of Court of Common Pleas of Allegheny County, April T., 1965, No. 1550, in case of Commonwealth to use of Fort Pitt Bridge Works v. Continental Casualty Company.
Jack W. Plowman, with him Plowman and Spiegel, for appellant.
William T. Marsh, with him Reed, Smith, Shaw & McClay, for appellee.
Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Musmanno. Mr. Justice Jones and Mr. Justice Cohen concur in the result. Mr. Chief Justice Bell took no part in the consideration or decision of this case.
Fort Pitt Bridge Works, hereinafter referred to as Fort Pitt, sold and delivered to A. J. Marsolino 2,217,087 pounds of structural steel at 17.275 cents per pound, to be used by him in the erection of a bridge on State legislative route 798, section 3.
Marsolino had executed a labor and material bond in favor of the Commonwealth in order to secure the payment of the materials furnished in the prosecution of this state work, such bond being required by the Act of June 1, 1945, P. L. 1242, as amended, 36 P.S. § 670-404. The defendant, Continental Casualty Co., was surety on the bond.
Marsolino in his agreement with Fort Pitt promised to pay for the steel within ten days after receipt by him of payments from the State Highway Department on estimates submitted by him. He did not do so. The steel was delivered between December 13, 1961, and September 18, 1962 and Marsolino had made payments totaling $319,701.60 from January, 1962 through November, 1963, leaving thus a balance then due of $63,300.18.
On June 9, 1964 Fort Pitt notified the surety, Continental Casualty Company, that Marsolino had defaulted in payment and Fort Pitt then made demand on the surety of the amount due from Marsolino, including interest. When the surety refused the demand, Fort Pitt entered suit in the name of the Commonwealth for the use of Fort Pitt.
At the trial a question arose as to the amount of credit due Marsolino for certain equipment and materials furnished by him to Fort Pitt, but this issue was resolved by stipulation agreeing the credit to be $3,021.79. The remaining principal issue was whether Fort Pitt Bridge could collect from the surety, Continental Casualty Co., the amount of interest which
had accrued prior to the notice to the surety of any default by Marsolino. The surety contended that its bond was to cover only the amount due for the materials furnished by Marsolino and that, so far as the surety was concerned, it could only be held liable for interest from the date demand was made against it for payment, which was June 9, 1964. In that case the interest would have amounted to $10,674.66. The court below, however, held that the surety was liable for the entire amount due from Marsolino, including the interest from 1963, thus making the total interest due $21,472.53. Continental Casualty Co. appealed.
Though at first blush it might seem inequitable and harsh to compel the surety to pay for interest which had accrued prior to receiving notice that the principal, Marsolino, had defaulted in his payments, yet such was the obligation the surety had contracted to assume. The bond given by the surety provides: "The principal and surety hereby jointly and severally agree with the obligee herein that every person, copartnership, association or corporation, who, whether as subcontractor or otherwise, has furnished material or supplied or performed labor or rental equipment in the prosecution of the work as above provided and any public utility who has rendered services in, or in connection with, the prosecution of such work, and who has not been paid in full therefor, may sue in assumpsit on this ...