Aetna Cas. & Sur. Co. v. Geo. L. Mesker Steel Corp., 20419

• Decision Date: 27 February 1967
• Docket Number: No. 2,No. 20419,20419,2
• Citation: 223 N.E.2d 768,140 Ind.App. 400
• Parties: The AETNA CASUALTY AND SURETY COMPANY, Appellant, v. GEO. L. MESKER STEEL CORPORATION, Appellee
• Court: Indiana Appellate Court

Page 768

223 N.E.2d 768

140 Ind.App. 400

The AETNA CASUALTY AND SURETY COMPANY, Appellant, v. GEO. L. MESKER STEEL CORPORATION, Appellee.

No. 20419.

Appellate Court of Indiana, Division No. 2.

Feb. 27, 1967.

Bamberger, Foreman, Oswald & Hahn, Evansville, for appellant.

Isadore J. Fine, Joe S. Hatfield, Charles H. Sparrenberger, Eugene P. Fine, Evansville, Edward E. Meyer, Evansville, of counsel, for appellee.

BIERLY, Judge.

The appellant in this cause, the Aetna Casualty and Surety Company, was surety on a bond executed by Rogers Engineering and Construction Co., Inc., as principal with the Vigo School Township, Knox County, Indiana, as obligee. This bond was for the benefit of the school township, and all persons who might have or acquire a right to recover any money thereon, pursuant to Burns' Ann.Stat. Sections 53--201--53--203 (1964 Replacement.)

From the evidence, which was stipulated in its entirety on June 12, 1962, it appears that the appellee had furnished certain quantities of material, pursuant to an order issued by the principal, Rogers Engineering & Construction Co., Inc., for a price of $6,507.52, which went unpaid. As a result, this action was filed in the trial court against the appellant surety company for the sum stated above. It was further stipulated,

'that plaintiff has not commenced his action or any action against the defendant surety on the bond * * * within sixty (60) days from the date of the final completion and acceptance of said gymnasium, which said date was August 25, 1958, and this action was commenced on May 27, 1959, more than six (6) months after such final completion and acceptance.'

The trial court found for the appellee, and judgment was entered accordingly for the principal sum of $6,507.52, together with interest thereon at the rate of 6% per annum from the 16th day of June, 1958, to the 11th day of February, 1964, in the amount of $2,208.11, making a total of $8,715.63.

The only assignment of error is that the trial court erred in overruling appellant's motion for a new trial. Contained within said motion are the following specifications:

'1. The decision of the Court is not sustained by sufficient evidence.

'2. The decision of the Court is contrary to law.

'3. There is error in the assessment of the amount of recovery in this, that the amount of recovery is too large.'

The appellant, in its argument, presents two objections for our consideration. The first objection is that:

'* * * the appellee, as an unpaid materialman, should have complied with the statutory provision requiring this action to be commenced within sixty days after the date of the final completion and acceptance of the public work by the public contracting officer in order to maintain and pursue to judgment the suit against the Appellant, as surety on a public contractor's bond.'

Appellant's second objection is that:

'* * * the public works contractor's bond in question, being required by Section 53--202, Burns Indiana Statutes, 1964 Replacement, is a statutory bond, and as such, imposes upon the Appellee, who is a materialman proceeding against the Appellant as surety on the bond, certain conditions precedent to a right of action on the bond. The Appellee failed to meet one such condition precedent in that he did not file within sixty days after the last item of material was furnished and the last work was performed by Appellee a duplicate verified statement of the amount he was owed for materials so furnished with the public contracting officer; therefore Appellee has no right of action on the bond.'

The appellee, on the other hand, contends that the procedure outlined in Sections 53--201 and 53--202 is not exclusive, but cumulative, and thus the failure of the appellee to follow the procedure stated in those Sections does not preclude it (the appellee) from recovering on the bond in question.

Section 53--201 provides that:

'* * * when any public building or other public work or public improvement of any character whatsoever is being constructed * * * at the expense of * * * any other political subdivision * * * it shall be the duties of any such * * * political subdivision * * * to withhold final payment to the contractor until such contractor has paid to the * * * materialmen * * * all bills due and owing the same; Provided, That * * * materialmen * * * shall file with any such board, * * * their claim * * * within sixty (60) days * * * from the last labor performed, last material furnished, or last service rendered by them, as provided in Section Two (§ 53--202) hereof. * * * Provided, however, That nothing in this act contained shall prevent or preclude a full, final, and complete settlement upon a contract with the contractor or contractors after thirty (30) days from the date of the completion and acceptance of the work as completed upon the * * * showing the payment in full of all subcontractors, materialmen, laborers, or those furnishing services in the performance of said contract; Provided, further, That the surety of said contractor or contractors shall not be released until the expiration of one (1) year after the final settlement with said contractor or contractors.'

Section 53--202 provides that:

'* * * all contracts awarded contractors for * * * any * * * public work * * * of any character whatsoever, as provided in section one (§ 53--201) of this act, provision shall be made in said contract for the payment of * * * materialmen * * * by withholding by such board * * * or agent acting on behalf of said * * * political subdivision * * * funds sufficient from the contract price to pay such * * * materialmen * * * and a good and sufficient bond shall be executed by the contractor to the state of Indiana, and approved by and for the benefit of any such board * * * or agent acting on behalf * * * or other political subdivision * * * in an amount equal to the total contract price, and further conditional for the payment by the contractor * * * of all indebtedness, which may accrue to any person, firm or corporation on account of any labor or service performed or materials furnished or service rendered as herein provided in the construction * * * or any other public improvement * * * such bond by its terms also shall be conditional as to directly inure to the benefit of subcontractors, laborers, materialmen, * * * and said bond shall be further conditional that no change, modification, omission or addition in and to the terms or conditions of said contract, plans, specifications, drawings or profile or any irregularity or defect in said contract or in the proceedings preliminary to the letting and awarding thereof shall in any wise affect or operate to release or discharge said surety, and that the provisions and conditions of this act shall be, operate and become a part of the terms of any such contract and bond for any such public work or improvement as contemplated herein and (that they) are subject thereto; Provided, That any person, firm or corporation to whom any money shall be due on account of having * * * furnished any material * * * within sixty (60) days after the last item of material shall have been furnished by them shall file with such board, commission, trustee, officer, clerk, or agent of the state or if (of) any such political subdivision, assessment district or commission created by law entering into contract with the principal contractor for any such public work * * * duplicate verified statements of the amount due and owing and it shall be the duty of such board * * * or any such political subdivision * * * to forthwith deliver to the surety or sureties on such bond one (1) of said duplicate statements; but the failure so to do on the part of such board, commission, trustee, officer, authorized clerk or agent of the state or any such political subdivision or assessment district shall in no way effect (affect) or invalidate the rights of any such person, firm or corporation to whom money shall be due on account of having * * * furnished material, nor shall the failure so to do operate as a defense for the surety.

'No suit shall be brought against such surety or sureties on such bond until the expiration of thirty (30) days after the filing of such verified duplicate statement. If such indebtedness shall not be paid in full at the expiration of such thirty (30) days such person, firm or corporation may bring an action in a court of competent jurisdiction in his or its own name upon such bond, which action shall be commenced within sixty (60) days from the date of final completion and acceptance of the public building or public work, as herein provided and unless commenced within such period, action on such bond or against such surety or sureties shall be barred. On state highway road and bridge contracts the provisions of the state highway commission act with respect to the bond shall govern.'

Section 53--203 provides that:

'This Act (§§ 53--201--53--203) shall not be construed as conflicting with any other laws for the protection of labor, subcontractors or materialmen, but is supplemental thereto.'

It appears upon examination of these statutes that clarity is not among their virtues. Unfortunately, we think the legislature has seen fit to adopt the above in somewhat piecemeal fashion, adding on amendments as time went on. The original acts were passed in 1911, but Sections 201 and 202 were subsequently amended in 1925, 1931, and 1933. Thus, we are left with a most confusing and ambiguous act, which has, unfortunately, as the case law history indicates, created more problems and litigation than it has attempted to solve.

In the case of Natural Rock Asphalt Corp. v. Highways Imp. Corp. (Ind.App., 1929), 168 N.E. 865 (not reported in the state reports), a similar argument to the one advanced by the appellant, in the case at bar, was considered by the court, and it was held that the filing...