Lalonde

September 21, 1924, Lalonde, Peek & Powers, a copartnership, entered into a contract with the state of Montana, through its highway commission, for the construction of about ten miles of *674 road; the contractors agreeing to furnish and supply all labor and material. The Federal Surety Company executed a bond to the state for the faithful performance of the contract. On October 27, 1924, the contractors sublet the work to one Windsor; the subcontractor obligating himself to fully perform the contract with the state for 87% per cent, of the original contract price. The Federal Surety' Company also executed a bond to the original contractors on behalf of the subcontractor for the faithful performance of the subcontract. The subcontractor began work on the road under his subcontract soon thereafter, but in the latter part of October, 1925, the work was abandoned. The surety company thereupon completed the contract with the state according to its terms. The present action was brought by the original contractors against the surety company to recover the unpaid balance of the 12% per cent, of the contract price, reserved by them, the amount of certain liability insurance paid by them…