State of Kansas ex rel. Winkle Terra Cotta Co. v. U.S. Fidelity & Guaranty Co.

Citation14 S.W.2d 576,322 Mo. 121
PartiesThe State of Kansas at Relation and to Use of Winkle Terra Cotta Company, Appellant, v. United States Fidelity & Guaranty Company
Decision Date02 March 1929
CourtUnited States State Supreme Court of Missouri

Appeal from Circuit Court of City of St. Louis; Hon. Henry A Hamilton, Judge.

Reversed and remanded.

Harry E. Sprague and Franklin Miller for appellant.

(1) The form and style of the action is governed by the lex fori, and Kansas decisions are not applicable. Wharton on Conflict of Laws (3 Ed.) secs. 736B, 747; 31 Cyc. 45; 5 R C. L. 1042; Ruhe v. Buck, 124 Mo. 178; Hefferlin v. Sinsinderfer, 2 Kan. 401; In re Walker Grain Co., 3 F.2d 872. (2) Missouri practice requires that suits on bonds be instituted in the name of the obligee. Secs. 1005, 1033, 1035, 1041, R. S. 1919; United States to use of Hayes v. Ferguson, 16 Mo. 258; 15 Ency. Pl. & Pr. 105. (3) The rule of strict construction as to the liability of sureties does not apply to corporate sureties which are organized solely for furnishing bonds for profit. They are insurers. Hull v. Ins. Co., 86 Kan. 345; Chicago Lbr. Co. v. Surety Co., 89 Kan. 309; State v. Ins. Co., 91 Kan. 75; School Dist. v Ins. Co., 92 Kan. 53; U.S. Fidelity Co. v. Brick Co., 191 U.S. 416; Dorr v. Surety Co., 218 S.W. 398, citing; Lackland v. Surety Co., 256 Mo. 133; Rule v. Anderson, 160 Mo.App. 358; Barton v. Guaranty Co., 192 Mo.App. 564; School Dist. v. Surety Co., 224 S.W. 833; M. K. & T. Ry. Co. v. Am. Surety Co., 291 Mo. 92. (4) The physical and actual completion of the building is what is meant by the statutory provision in Sec. 7570, G. S. Kan. 1915, "from the completion of said public improvement or public building," and not the issuance of a certificate by the architect. Hull v. Ins. Co., 86 Kan. 345; Dickey v. U. S. F. & G. Co., 107 Kan. 607; Coyle v. Gypsum Co., 166 P. 396. (5) The giving of the state architect's certificate in January, 1919, was merely a means of making payment, and does not estop plaintiff, much less relator, from showing the actual physical facts as to the incompletion of the building at the time the suit was brought. State v. Ins. Co., 91 Kan. 75; U. S. F. & G. Co. v. Brick Co., 191 U.S. 416. (6) In Kansas the law is that a corporate surety organized for profit cannot complain of the time and manner of payments unless it can show that it has been damaged thereby. School Dist. v. U. S. F. & G. Co., 96 Kan. 503, citing: Y. M. C. A. v. Ritter, 90 Kan. 332; School Dist. v. McCurley, 92 Kan. 53; Republic Co. v. U. S. F. & G. Co., 96 Kan. 255; Lumber Co. v. Peterson, 124 Iowa 599; Schreiber v. Worm, 164 Ind. 7, and U. S. F. & G. Co. v. Bapt. Ch., 102 S.W. 325; School Dist. v. Ins. Co., 92 Kan. 53. (7) Defendant's telegrams and letters consenting to the making of the $ 23,823.35 payment and the deposit by the contractor of the $ 2500 check to cover objectionable work, estop it from pleading such payment as the commencement of the statutory period of limitation. School Dist. v. Natl. Bank, 63 Kan. 668; M. K. & T. Ry. Co. v. Pratt, 73 Kan. 210; Bridges v. Stephens, 132 Mo. 524; Humphrey v. Flaherty, 98 Kan. 636.

Eugene S. Quinton and Casper S. Yost, Jr., for respondents.

(1) As it appears from the petition that the statutory bond sued on herein was executed to secure the performance of a certain contract between said State of Kansas and Olson & Johnson for the erection of a state building at the city of Lawrence, Kansas, to pay for labor and material furnished therefor, and that both the contract and bond were entered into pursuant to and in conformity with the requirements of the statutes of Kansas, it follows that both said contract and bond, and any action accruing thereon, are governed by the laws of the State of Kansas, and not by the laws of the State of Missouri. 6 Page, Law of Contract, sec. 3567; 2 Parsons, Contracts (9 Ed.) 734; Smoot v. Judd, 161 Mo. 673; Brokerage Co. v. Stevens, 160 Mo. 516; Vernon v. Mertens, 119 Mo.App. 464; Liebing v. Ins. Co., 276 Mo. 118; Gaylor v. Duryes, 95 Mo.App. 574; Securities Co. v. Moore, 280 Mo. 315; Lee v. Ry. Co., 195 Mo. 400. (2) In order for the State of Kansas to maintain this action in Missouri, it must appear from the petition that, under the laws of Kansas, a cause of action has accrued in its favor and that it is authorized to prosecute the action. Sec. 1162, R. S. 1919; McGinnis v. Car & Foundry Co., 174 Mo. 225; Woodward v. Bush, 282 Mo. 173. (3) The petition does not show that, under the laws of the State of Kansas, a cause of action has accrued in favor of the plaintiff on the bond sued on, or that the plaintiff is entitled to the proceeds of this cause of action, or that the plaintiff is authorized to bring this action as is required by Sec. 1162, R. S. 1919, in order to entitle the plaintiff to prosecute this suit. The bond was given for the benefit of the relator and others who furnished labor or material for the construction of the building. They are personally authorized to bring action on the bond for such indebtedness. A recovery herein by the State of Kansas would not bar relator from recovery on the bond in its own right. Risse v. Planing Mill Co., 55 Kan. 522; Griffith v. Stucker, 91 Kan. 51; Manufacturing Company v. Deposit Company, 100 Kan. 33. (4) The petition does not show that the plaintiff has any interest in the result of this action, or that it is authorized by statute to prosecute the same, which is necessary, in order to prosecute an action in this State, as well as in the State of Kansas. R. S. 1919, sec. 1158; R. S. Kansas, 1923, secs. 60-401; Burdett v. Surdez, 94 Kan. 497; State ex rel. v. Commissioners, 11 Kan. 66. (5) Under the law of Kansas, as declared by the Supreme Court of that State, no private person has the right to use the name of the State to prosecute an action for his benefit, and a suit cannot be maintained in the name of the State, unless it has an interest in the matter in controversy. State ex rel. Ry. Co. v. Co. Commrs., 11 Kan. 66; State ex rel. Wells v. Martson, 6 Kan. 524; Risse v. Planing Mill Co., 55 Kan. 522; Jewell v. Mfg. Co., 52 Kan. 257; McConnell v. Hicks, 64 Kan. 828; Burdett v. Surdez, 94 Kan. 497; Mfg. Co. v. Deposit Co., 100 Kan. 33; Coffman v. Parker Treasurer, 11 Kan. 1; Ward v. Ryba, 58 Kan. 741; State ex rel. v. Bentley, 96 Kan. 346.

Higbee, C. Davis and Henwood, CC., concur.

OPINION

The statement made by appellant's counsel reads:

"This is a suit against the surety on a general contractor's bond for an unpaid balance for terra cotta used in one of the buildings at the Kansas University. At the conclusion of the case the court gave a peremptory instruction for defendant and the relator (suit having been brought in the name of the State of Kansas as obligee in the bond to the use of the Winkle Terra Cotta Company, which had furnished the terra cotta) took a nonsuit with leave to move to set same aside. The motion to that end being overruled, this appeal is prosecuted.

"The abstract is extremely long because of the many lengthy contracts which are set out in full, and this statement is intended to be an impartial condensation of the record.

"The facts are simple. On November 2, 1917, the State of Kansas let a contract to the Olson & Johnson Company (which later on changed its name to the Olson-Magee Company) to build an addition to its administration building and college of liberal arts at the University of Kansas, located at Lawrence, Kansas. The contract, which is in evidence, was for $ 195,125. The Olson & Johnson Company let the contract for the terra cotta in the building to the Winkle Terra Cotta Company, the relator herein, for $ 53,130, including an ornamental panel which was not used and carried an allowance of $ 1,580 from the contract price. Other terra cotta valued at $ 110 was substituted for the unused panel, making the actual contract $ 51,660. Relator performed its contract, but has received only $ 19,402.69 of the contract price, leaving a balance of $ 32,257.31 owing, which is the amount sued for herein.

"At the time of said contracts Kansas had two statutes (Secs. 7569 and 7570 of the General Statutes of Kansas, 1915, now Secs. 60-1413 and 60-1414, R. S. 1923) reading as follows:

"Sec. 7569, now Sec. 60-1413: That whenever any public officer shall, under the laws of the state, enter into contract in any sum exceeding $ 100, with any person or persons, for the purpose of making any public improvements, or constructing any public building or making repairs on same, such officer shall take from the party contracted with a bond with good and sufficient sureties to the State of Kansas, in a sum not less than the sum total in the contract, conditioned that such contractor or contractors shall pay all indebtedness incurred for labor or material furnished in the construction of said public building or in making said public improvements.

"Sec. 7570, now Sec. 60-1414: That such bond shall be subject to the approval of the clerk of the district court of the county in which such public improvements is to be made or such public building is to be erected and shall be filed in the office of said clerk. When such bond is so approved and filed, no lien shall attach under this article, and if when such bond is filed, liens have already been filed, such liens shall be discharged. Any person to whom there is due any sum for labor or material furnished, as stated in the preceding section, or his assigns, may bring an action on such bond for the recovery of such indebtedness: Provided, That no action shall be brought on said bond after six months from the completion of said public improvements or public buildings.

"Pursuant to those statutes the Olson & Johnson Company furnished a bond to the State with defendant as surety in the sum of its contract,...

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