Lister v. Great American Insurance

ELLETT, Justice

(concurring in the result) :

I concur in affirming the judgment of the trial court; however, I prefer to base my concurrence on somewhat different grounds from those stated in the prevailing opinion.

I am unable to see any connection in this case with the law of insurance. This matter involves the law of suretyship only and the fact that the bond was written by an insrirance company does not inject insurance law into the case. An insurance contract is one whereby one undertakes to indemnify another against loss, damage or liability arising from an unknown or contingent event. A contract of surety on the other hand is one whereby the surety promises to answer for a debt, default or miscarriage of another. One company may be qualified to write a policy of insurance and also to issue a surety bond, but the same law does not apply to the two transactions.

A case in point is that of Meyer v. Building & Realty Serv. Co. (1935), 209 Ind. 125, 196 N.E. 250, 100 A.L.R 1442, which was an action upon a building contract and the contractor’s bond The bond contained a provision that “Legal proceedings for recovery hereunder may not be brought unless begun within twelve months from the time of the discovery of the act or omission of the principal on account of which claim is made.”

The appellant claimed the limitation was void by reason of a statute which prevented any insurance company from requiring suit *16to be brought within a period of less than three years.

In holding that suit must be commenced within 12 months, the court said: “ * * * [W]hen the courts are dealing with the rights, remedies, and defenses of surety, the rules of insurance furnish no help. * * * While insurance contracts are in many respects similar to surety contracts, yet there is a very wide difference between the two kinds of contracts.”

The bond in question here was given to cover a construction contract in the state of Nevada under a contract with the government of the United States of America. One would think the laws of Nevada would control the interpretation and construction to be placed upon the provisions of the bond.1

Rule 44(f), U.R.C.P. permits the courts of Utah to' consult the statutes of other states 'in order to ascertain what the law therein is. Section 339.035 of the Nevada Revised Statutes provides that laborers and materialmen who furnish labor or material in the prosecution of work covered by a bond such as the one involved herein may bring an action on such bond. However, Section 339.055 N.R.S. contains the following limitation:

2. No such action may be commenced after the expiration of 1 year from the date on which the claimant performed the last of the labor or furnished the last of the materials for the payment of which such action is brought.

The six months limitation for bringing an action thus would conflict with the above statute and must be ignored. Even if the Nevada statute had no application to this matter, we would have the simple question of whether the contract provision limiting the time to sue is reasonable.

These plaintiffs are third-party beneficiaries under the contract of suretyship as made. Many courts have considered the matter and have held that a provision in the bond limiting the time to sue thereon is valid even though such limitation is less than the period fixed in the statute regarding the general statute of limitation, provided it is not unreasonably short.2

Since this action was not commenced until more than four years after the completion of the project, I concur in affirming the judgment of the trial court.

. 16 Am.Jur.2d, Conflict of Laws, Sec. 40.

. Reichsteiner v. National Surety Co. of N. Y. (1919), 44 Cal.App. 774, 187 P. 34; Ilse v. Aetna Indemnity Co. (1912), 69 Wash. 484, 125 P. 780; Sheard v. United States Fidelity & Guaranty Co., 58 Wash. 29, 107 P. 1024; Adams v. Standard Accident Ins. Co. (1932), 124 Cal. App. 393, 12 P.2d 464.