Pacific States Electric Co. v. United States Fidelity & Guaranty Co.

This is an appeal from a judgment rendered against each of the plaintiffs in the foregoing cases which were consolidated for trial. Each of the actions was based upon the claims of materialmen against a surety bond which was given to pledge the faithful performance of a subcontractor for the construction of specific parts of a building. The court held that the bond was not liable for the labor performed or the materials furnished. The judgment depends upon a construction of the bond.

The Breakers Hotel Company, a corporation, awarded a contract to construct a hotel of the same name at Long Beach to William G. Reed at a cost of about $850,000. The court found that Reed agreed to furnish and pay for all necessary labor and materials to complete the building according to the contract. Mr. Reed, as principal, and the Metropolitan Casualty Insurance Company, as surety, executed and delivered to the hotel company a bond pursuant to section 1183 of the Code of Civil Procedure for the faithful performance of the contract. This bond was duly recorded. It guaranteed “the payment in full of the claims of all persons performing labor upon or furnishing materials to be used in the work” of…