Continental Casualty Co. v. Hartford Accident & Indemnity Co.

The question of law presented is whether the surety of a subcontractor is liable on its bond to the general contractor’s surety (plaintiffs herein) for unpaid bills for construction materials used in a project built pursuant to the federal Capehart Act where the subcontractor failed to pay for such materials.

A judgment of dismissal was entered following the sustaining of defendant’s general demurrer without leave to amend. (1) plaintiffs Continental Casualty Company and Fidelity & Casualty Company of New York (herein “Continental”)

A summary of the allegations disclosed by the single cause of action in plaintiffs’ second amended complaint shows that were surety to a contract between the prime contractor, Hal B. Hayes & Associates, Ine. (herein “Hal Hayes”), and the United States, under a Capehart Act construction project at Beale Air Force Base; and (2) Continental’s bonds were issued pursuant to the provisions of the Capehart Act and are statutory bonds. Hal Hayes assigned the entire contract to Hayes-Cal Builders, Inc. (herein “Hayes-Cal”) and Hayes-Cal subcontracted certain plumbing work to Country Boys Builders Supply (herein “Country Boys”). Hartford Accident & Indemnity…