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SCALES-DOUWES CORPORATION v. PAULAURA REALTY CORP. ET AL. (06/10/68)

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT


June 10, 1968

SCALES-DOUWES CORPORATION, RESPONDENT,
v.
PAULAURA REALTY CORP. ET AL., DEFENDANTS, AND CONTINENTAL CASUALTY COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT. NORMAN RAPPAPORT ET AL., THIRD-PARTY DEFENDANTS

Beldock, P. J., Christ, Rabin, Benjamin and Martuscello, JJ., concur.

We are of the opinion that it may not recover. There was no underlying agreement by which either Gamport or Paulaura promised the town that subcontractors or materialmen were to be paid; nor did the applicable statute require that the bond so provide (cf. E.J. Eddy, Inc. v. Fidelity & Deposit Co., 265 N. Y. 276; Merchants Mut. Cas. Co. v. United States Fid. & Guar. Co., 253 App. Div. 151; Graybar Elec. Co. v. Seaboard Sur. Co., 157 Misc. 275). Further, the bonds were primarily conditioned upon performance rather than payment. "In such a situation a materialman may not maintain a separate suit as a third-party beneficiary because the primary or dominant purpose of the combined bond is regarded as 'performance' which should not be dissipated or defeated by the neglect of the subcontractor to meet his obligation(Fosmire v. National Sur. Co., 229 N. Y. 44)." (Daniel-Morris Co. v. Glens Falls Ind. Co., 308 N. Y. 464, 468; see, also, McGrath v. American Sur. Co. of N. Y., 307 N. Y. 552; Eastern Steel Co. v. Globe Ind. Co., 227 N. Y. 586). The fact that the obligee did not exhaust the penal sums of the bonds cannot serve to convert their purpose to one of benefiting suppliers of labor and materials. The intent of the bonds may not be altered to allow one who is only an incidental beneficiary thereof to recover (cf. Saucke Bros. Constr. Co. v. Comstock, 139 Misc.106, affd. 235 App. Div. 650, affd. 260 N. Y. 546; Tomaso, Feitner & Lane v. Brown, 4 N.Y.2d 391, 393).

19680610

© 1998 VersusLaw Inc.



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