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MILLER v. COMMERCIAL ELECTRIC CONSTRUCTION (11/16/72)

decided: November 16, 1972.

MILLER
v.
COMMERCIAL ELECTRIC CONSTRUCTION, INC. (ET AL., APPELLANT)



Appeal from order and judgment of Court of Common Pleas of Lehigh County, Sept. T., 1968, No. 46, in case of Franklin O. Miller v. Commercial Electric Construction, Inc. and United States Fidelity & Guaranty Company.

COUNSEL

Fredric C. Jacobs, with him E. Jerome Brose, and Brose, Poswistilo, LaBarr & Jacobs, for appellant.

Edward C. McCardle, with him King, McCardle, for appellee.

Wright, P. J., Watkins, Jacobs, Hoffman, Spaulding, Cercone, and Packel, JJ. Opinion by Hoffman, J. Dissenting Opinion by Packel, J. Spaulding and Cercone, JJ., join in this dissenting opinion.

Author: Hoffman

[ 223 Pa. Super. Page 218]

This appeal involves the question of whether an individual employee may recover sums claimed for labor supplied or performed from a surety when the compensation for such labor is calculated, in part, upon a percentage of the profits of the employer rather than paid on a weekly, monthly, or other basis.

This case is before us upon the appeal of appellant, United States Fidelity & Guaranty Company (hereinafter "U.S.F. & G."), from an order of the court below denying its motion for judgment n.o.v. and for a new trial. The pleadings and testimony in the case establish that on or about May 13, 1966, Franklin O. Miller (hereinafter "Miller") and Commercial Electric Construction, Inc. (hereinafter "Commercial"), entered into a contract of employment through an exchange of letters whereby Miller was hired to "develop, operate and control all electrical work in the Allentown area." His compensation was based on a salary of $250 per week plus "one-half of the profits of all work secured in the Allentown area." U.S.F. & G. and Commercial admitted that "plaintiff performed labor in the supervision of the said electrical construction contract." U.S.F. & G.'s bond contained the customary language that if Commercial paid "all sums of money which may be due for all materials furnished, labor supplied or performed, . . . in or in connection with the prosecution of the work. . ." (emphasis added), then the obligation would be null and void, otherwise to remain in full force and effect.

[ 223 Pa. Super. Page 219]

The jury accepted plaintiff's evidence that the profit on the Bethlehem Housing Authority project, which contract for the construction of electrical work had been secured by Miller for Commercial, was $36,545.45. The jury returned a verdict against both Commercial and U.S.F. & G. in the amount of $18,014, or slightly less than one-half of the profits from the project.

It is basic that the obligations of a surety under a bond cannot be extended beyond the plain import of the words used. Obligations not imposed by the terms of the bond cannot be created by judicial construction or interpretation which extends the terms beyond their normal meaning. Peter J. Mascaro Co. v. Milonas, 401 Pa. 632, 635, 166 A.2d 15 (1960).

The surety agreement between Commercial and U.S.F. & G. was entered into in accordance with the dictates of the Act of May 28, 1937, P. L. 955, § 11, as amended, 35 P.S. 1551. In addition to containing language substantially similar to that included in the surety agreement the Act further provides: "Such provision shall be deemed to be included for the benefit of every person, . . . who as subcontractor or otherwise, has furnished material, supplied or performed labor, rented equipment or services in or in connection with the prosecution of the work. . . ."

This Commonwealth has long recognized that compensation in the form of profits is within the contemplation of labor and materialmen's bonds. In Philadelphia v. Pierson, 217 Pa. 193, 196-97 (1907), our Supreme Court permitted recovery of the contract price, which included a profit for the subcontractor, and the claim of the surety that recovery be limited to the value of the materials and labor was rejected. The Court stated: "The obligation of the Trust Company was not to pay for labor and materials furnished according to their market value any more than it was Pierson's. The

[ 223 Pa. Super. Page 220]

    latter's obligation was to pay 'any and all persons, any and all sum or sums of money which may be due for labor and materials furnished,' etc. Pierson could not have been heard to say in defense of the action that the contract price exceeded the market value of the labor and materials employed, for what was due to the plaintiff, and therefore recoverable, was such sum as he had agreed to pay for the ceiling. No more could the Trust Company, for the obligation was the same with respect to each." See ...


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