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WALRUS MANUFACTURING CO. v. NEW AMSTERDAM CAS. CO.

May 24, 1960

WALRUS MANUFACTURING CO., A CORPORATION, PLAINTIFF,
v.
NEW AMSTERDAM CASUALTY CO., A CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Poos, District Judge.

Plaintiff brings suit against defendant to recover on a performance bond issued by it in Pennsylvania to United Construction Company. The United Construction Company is not a party to this proceeding. It is a resident of Pittsburgh, Pennsylvania. On September 19, 1957, the United Construction Company had a contract to provide the necessary labor and material for the installation of certain equipment in a school building in Pennsylvania. The contract to supply the equipment was signed by plaintiff, a resident of Illinois, in Decatur, Illinois, and was sent to The United Construction Company at Pittsburgh, Pennsylvania, who signed the contract on its part and returned it to plaintiff by United States mail on October 2, 1957.

The defendant is a resident of the State of New York and it executed the bond in Pittsburgh, Pennsylvania. The performance bond is attached to the motion to dismiss as Exhibit 3. The bond recites, so far as important here, that The United Construction Company as principal and New Amsterdam Casualty Company as surety, are held and firmly bound unto the State Public School Building Authority for faithful performance of the contract entered into on August 29, 1957 for the general construction of a New Secondary School Building at Neshannock Township School District, Lawrence County, Pennsylvania. As one of its conditions it provides as follows:

    "Whereas, it is one of the conditions of the
  award of the State Public School Building
  Authority that these presents be executed.
    "Now, therefore, the joint and several
  conditions of this obligation are such:
    "A. If the above bounden principal as
  contractor shall well and faithfully do and
  perform the things agreed by him to be done and
  performed according to the terms of said contract
  and all relating documents thereto and made a
  part of said contract, including the plans and
  specifications therein referred to and made a
  part thereof, and such alterations as may be made
  in said plans and specifications as therein
  provided, and which are hereby made part of this
  bond the same as though they were set forth
  herein, and shall indemnify and save harmless the
  said authority and all of its officers, agents
  and employees from any expenses incurred through
  the failure of said contractor to complete the
  work as specified and for any damages growing out
  of the manner of performance of said contract by
  said contractor or his subcontractors, or his or
  their agents, or servants * * * then this part of
  the obligation shall be void; otherwise it shall
  be and remain in full

  force and effect as though it was provided for
  and in compliance with Section 10 of the Act of
  July 5, 1947, P.L. 1217, as amended [24 P.S.Pa.
  791.10] * * *
    "It is further agreed that in case of default
  in, and/or any action arising out of rights and
  liabilities secured by this obligation, any party
  hereto or any person claiming by or through
  either may use for the purpose of establishing
  his, its or their claim a copy of this obligation
  certified by the Authority and the action or
  actions, if any, arising on the within bond,
  shall not be a bar to any subsequent action that
  may arise through any liability incurred in any
  other action therein and based upon any other
  part of this obligation."

The principal contract guaranteed by the surety bond is made a part of the motion to dismiss as Exhibit 2. The Seventeenth Section of the contract provides:

    "Any person or corporation furnishing materials
  or rendering services to the contractor or any
  subcontractor in connection with performance of
  this agreement may have right of action to
  recover for the same against the contractor and
  the surety on the bond given to secure the
  faithful performance of this agreement as though
  such person or corporation had been named as
  obligee in such bonds, provided that such suit
  shall not be brought later than one (1) year
  after the time the cause of action therefor
  accrued."

The face of the complaint shows that suit was filed in the Circuit Court of Macon County, Illinois, on November 4, 1959. The contract between plaintiff and United Construction Company was dated September 19, 1957, and was received in Decatur, Illinois, by U.S. Mail on October 2, 1957, and the complaint alleges that all items of equipment provided for in the contract were delivered on or prior to July 23, 1959. From all the facts as alleged and from what now appears, this suit was brought within a time not later than one (1) year after the time the cause of action therefor accrued, and the principal contract provides that suit can be brought against the surety.

The defendant moves to dismiss on the following grounds:

(1) The complaint fails to state a claim against the defendant upon which relief can be granted.

(2) The plaintiff has not the capacity to sue the defendant, because the petition filed shows on its face that the contract, under which the bond was given, was to provide the necessary labor and materials to furnish, deliver and install certain equipment in a secondary school in Lawrence County, Pennsylvania, under a subcontract executed by United Construction Company with the plaintiff at Pittsburgh, Pennsylvania.

(3) To dismiss the action on the ground the court lacks jurisdiction because the contract was performed in Pennsylvania and therefore venue cannot be laid in the State of Illinois.

(4) To dismiss the action because of want of jurisdiction over the subject matter.

(5) To dismiss the action on the ground the Court lacks jurisdiction over the person of the defendant, New Amsterdam Casualty Company; and

(6) To dismiss the action because the cause of action on which the complaint is based did not result from the transaction of any business within the State of Illinois.

One of the issues here is this: Does Sec. 17 of the Civil Practice Act control over the provisions of Section 724 of the Insurance Code of Illinois? If Section 17 controls, then the suit must be dismissed.

Section 17 of the Civil Practice Act, Chap. 110, I.R.S., 1959, is as follows:

    "(a) The transaction of any business within
  this State;
    "(b) The commission of a tortious act within
  this State;
    "(c) The ownership, use, or possession of any
  real estate situated in this State;
    "(d) Contracting to insure any person, property
  or risk located within this State at the time of
  contracting.
    "(2) Service of process upon any person who is
  subject to the jurisdiction of the courts of this
  State, as provided in this section, may be made
  by personally serving the summons upon the
  defendant outside this State, as provided in this
  Act, with the same force and ...

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