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CHAPTER XVIII

BOND

The comparative values of personal Bonds and of surety company Bonds, and of certified checks, have been discussed previously. This chapter is concerned mainly with the form of Bonds.

The Contract Bond adopted by the American Railway Engineering Association has the following form:

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lawful money of the United States of America (or Canada, as the case may be), to be paid to said.. .its successors and assigns, to which payment the undersigned, jointly and severally, bind themselves, their heirs, executors, administrators, successors and assigns.

The Condition of this Obligation is that if. Contractor, shall faithfully furnish and do everything required in the contract, executed in writing, dated...

between. for....

.19..

. Company, .this obligation shall become of no effect; other

. Contractor, and.

wise it shall continue in full force.
Signed, sealed and delivered this........ day of.....
Attest:

.19...

.(SEAL)

This is substantially the same in form as that used by the Cambridge Bridge Commission, the principal point of difference being that the latter refers to the "foregoing Contract" contained probably in a single pamphlet, while the Bond above describes the Contract. The Cambridge Bridge form is this:

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That the undersigned are held and bound unto the Cambridge Bridge Commission in the sum of two hundred thousand (200,000) dollars, lawful money of the United States of America, to be paid to said Commission or its assigns, to which

payment, well and truly to be made, the undersigned jointly and severally bind themselves, their heirs, executors, administrators, successors and assigns.

The Condition of this Obligation is, that if the party designated as Contractor in the foregoing contract shall faithfully furnish, and do everything required therein of said party, this obligation shall become of no effect, otherwise it shall continue in full force.

Signed, sealed and delivered this January 20, 1904.

THE CITY TRUST SAFE DEPOSIT AND GUARANTY
COMPANY OF PHILADELPHIA.

Attest:

Charles H. Laird, Jr.,

Asst. Secty.

By Jos. A. Sinn, 2d Vice Pres.

(SEAL)

The Corporation or Company signing above is incorporated in the State of Pennsylvania, and has its usual place of business in Massachusetts at 23 Central Street, Boston.

The distinguishing feature of either of these is its simplicity. The Contractor has made his Contract and agreed to furnish and to do certain things. A failure to keep his agreement brings the Bond into action. If the Contract recites all that is required of the Contractor, this simple Bond is sufficient. If the first draft of the Contract omits any point ordinarily specially covered in the Bond, the Contract should be revised (before the letting) so that in its final form it will cover everything necessary. For instance, the indemnity clause in the Uniform Contract Form makes an indemnity clause in the Bond superfluous.

In the above forms of Bond, the Contractor is not made the "principal" of the Bond. Why should he be so made the principal? If he does not do what he agreed in his Contract, if he defaults, why should one have further disagreement and trouble with him? The direct way is to reach the surety. A lawsuit with the surety may be unnecessary if the surety is businesslike. The surety will, no doubt, have an agreement with the Contractor by which to recoup himself if the Contractor is solvent, but that is his affair. It is cleaner cut for the railroad, or the City, to look to the surety directly, rather than to straddle between the Contractor and the surety.

The question may arise whether a surety company will sign a Bond in the above form. An answer to this is that the following companies did sign the above form of Bond of the Cambridge Bridge Commission : The Etna Indemnity Company.

United States Fidelity and Guaranty Company.

The City Trust, Safe Deposit, and Surety Company of Philadelphia. American Surety Company of New York.

Empire State Surety Company.

National Surety Company.

Fidelity and Deposit Company of Maryland.

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Another form, even shorter, but in essentials the same, was signed by the Metropolitan Surety Company and is shown here:

C.

BOND

The undersigned surety company hereby binds itself, its successors and assigns, to pay to the Cambridge Bridge Commission the sum of two thousand (2,000) dollars.

This obligation is upon the condition that if the party to the contract hereto annexed, other than the city, shall faithfully furnish and do everything therein required of the party, the obligation shall become of no effect, otherwise it shall continue in full force.

Signed, sealed and delivered this January 3, 1907.

(SEAL)

METROPOLITAN SURETY COMPANY,
A. S. Brown, Jr.
Manager and Attorney in Fact.

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That we,

as principal and

as surety are held and firmly bound unto the Commonwealth of Massachusetts in the sum of...

lawful money of the United States of America, to be paid to the Commonwealth, to which payment, well and truly to be made, we bind ourselves, our respective heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.

Whereas, the said principal has made a contract with the Commonwealth, .day of...... .1906, for.. bearing date the..

Now, the Condition of this Obligation is such that, if the said principal shall in all things stand to and abide by and well and truly keep and perform all the agreements, terms and conditions of said contract on his part to be kept and performed, and shall also pay for all labor performed or furnished, and for all materials used in the carrying out of said contract, then this obligation shall be void; otherwise it shall remain in full force and virtue.

In Witness Whereof, we hereunto set our hands and seals this...
.in the year nineteen hundred and...

day of.....

(SEAL) .(SEAL)

And the following differs mainly in phraseology from the form next above:

E.

BOND FOR PERFORMANCE OF CONTRACT

Know all Men by These Presents,

That we.... .

held and firmly bound unto The City of New York, in the sum of. ...dollars ($)

as principal; and as surety, are

.), lawful

money of the United States of America, to be paid to The City of New York, or to its certain attorney, successors or assigns, for which payment, well and truly to be made, we bind ourselves, our successors and our several and respective heirs, executors and administrators, jointly and severally, firmly by these presents. Sealed with our seals. Dated this....

...one thousand nine hundred and nine. Whereas, the above bounden...

.day of

by an instrument in writing, bearing even date with these presents, has contracted with The City of New York to furnish all the materials and labor for, and in good, sufficient and workmanlike manner, construct Hill View reservoir and portions of Yonkers and Van Cortlandt siphons in the City of Yonkers, Westchester county, New York:

Now, Therefore, the condition of the above obligation is such, that if the said

shall well and truly, and in a good, sufficient and workmanlike manner, perform the said contract, and each and every provision therein contained on his part to be done and performed, and complete the same in accordance with the terms and provisions therein stipulated, and in each and every respect comply with the conditions therein contained, then this obligation shall be void, otherwise it shall remain in full force and virtue.

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hereinafter called the Sureties are held and firmly bound unto The City of New York, hereinafter called the City, in the sum of forty thousand dollars ($40,000) lawful money of the United States of America, to be paid to the City, for which payment well and truly to be made the Contractor and the Sureties do hereby bind themselves and their, and each of their, executors, administrators, successors and assigns firmly by these presents, as follows: The Contractor to be so held and bound for the full amount of the said sum of forty thousand dollars ($40,000) and

each of the said Sureties to be so held and bound only for a portion of said sum as

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In Witness Whereof, The Contractor and the Sureties have hereunto set their hands and seals and such of them as are corporations have caused their respective seals to be hereto affixed and these presents to be attested by the proper officers, this.... ...day of..... ...1916.

Whereas, the City by the Public Service Commission for the First District (hereinafter called the "Commission") is about to enter into a contract with the Contractor for the construction by the Contractor of station finish for that portion of a Rapid Transit Railroad known as Sections Nos. 7 to 11, inclusive, of Route No. 5, in the Borough of Manhattan, in the City of New York; and

Whereas, The City is about to enter into such contract with the Contractor upon the condition, and not otherwise, that this bond shall be given to the City, and upon the faith thereof,

Now, Therefore, the condition of the foregoing obligation is such that if the Contractor shall faithfully perform all the conditions, covenants and requirements specified and provided for in said contract, then this obligation shall be null and void, but else it shall remain in full force and virtue.

It is Expressly Agreed between the City and the Sureties (and it is only upon such agreement that the City accepts this bond) that the Sureties will and do waive any and every notice of default on the part of the Contractor; that they will and do permit the City to extend the time of the Contractor to do any act; that no omission on the part of the City to give any notice of extension of time granted by or on behalf of the City shall be availed of by the Sureties or any of them as a defence upon this bond; that the Sureties shall not set up or have any defence upon this bond by reason of any alteration of the said contract unless such alteration shall be represented by a formal written instrument duly executed between the City and the Contractor which shall have been duly authorized by a vote of the Commission and entered into without the consent of the Sureties; and that in case of such alteration, however made, the same shall be a defence to the Sureties only to the extent of the actual injury or damage caused to the Sureties by said alteration.

If the Contract provides for changes in the Contract, and covers all requirements upon the Contractor, the final clause appears unnecessary. If provisions for extension of time are considered necessary they should be made a part of the Contract.

A clause like the following is sometimes added to the Bond:

G. And the surety hereby stipulates and agrees that no change, extension, alteration or addition to the terms of the Contract or Specifications shall in any wise affect his obligation to this Bond.

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