All Bay Mill & Lumber Co. v. Surety Co

In All Bay Mill & Lumber Co. v. Surety Co. (1989) 208 Cal. App. 3d 11, a building material supplier brought an action against a general contractor and the contractor's license bond surety to recover for unpaid materials it had supplied. (All Bay Mill & Lumber Co. v. Surety Co., supra, 208 Cal. App. 3d at pp. 14, 17.) The contractor did not answer the complaint and a default judgment was entered against it. ( Id. at p. 17.) The action against the surety went to trial and the surety prevailed. ( Id. at p. 14.) The reviewing court rejected the plaintiff's contention the default judgment against the contractor was binding on the surety. ( Id. at p. 17.) In concluding the judgment against the principal was not binding on the surety, All Bay Mill & Lumber Co. explained: " ' "In the case of official bonds, the surety undertakes in general terms that the principal will perform his official duty. They do not agree to be absolutely bound by any judgment obtained against the principal for official misconduct nor to pay any such judgment. They are only held for a breach of their own obligations. It is a general principle that no party can be so held without an opportunity to be heard in defense. This right is not divested by the fact that another party has defended on the cause of action and has been unsuccessful. As the surety did not stipulate that it would be absolutely bound by the judgment against the principal or permit it to conduct the defense and be themselves responsible for the result of it, the fact that the principal has unsuccessfully defended has no effect on their rights." ' ( All Bay Mill & Lumber Co., supra, 208 Cal. App. 3d at pp. 17-18.)