Aetna Casualty & Surety Company v. Henslee

• Citation: 260 S.W. 414,163 Ark. 492
• Decision Date: 07 April 1924
• Docket Number: 289
• Parties: AETNA CASUALTY & SURETY COMPANY v. HENSLEE
• Court: Supreme Court of Arkansas

260 S.W. 414

163 Ark. 492

AETNA CASUALTY & SURETY COMPANY v. HENSLEE

No. 289

Supreme Court of Arkansas

April 7, 1924

Appeal from Jefferson Circuit Court; T. G. Parham, Judge; modified.

STATEMENT OF FACTS.

This is an action brought by a subcontractor against the principal contractor and the sureties on his bond for work done and materials furnished in constructing an improved road for an improvement district in Woodruff County, Arkansas.

The Cotton Plant Road Improvement District No. 1 of Woodruff County, Arkansas, was organized under the general laws of the State relating to road improvement districts. R. Mobley entered into a contract with the commissioners for the construction of the road in August, 1917. The AEtna Casualty and Surety Company signed his bond in the sum of $ 40,000 for the faithful performance of his contract and for the payment of all labor and materials entering in the construction of said road. In September, 1917, E. A. Henslee, as subcontractor, entered into a contract with R. Mobley, the principal contractor, by the terms of which he agreed to furnish all tools, labor and equipment and do all the work necessary to prepare a crushed rock base for an asphaltic top for the road to be improved. Their contract provided that the payment for the work done by the subcontractor was to be made, at the prices set out in their contract, at the times the principal contractor received payment from the commissioners of the road improvement district upon monthly estimates.

In August, 1918, R. Mobley refused to make the payments, because he insisted that Henslee had breached the contract by refusing to repair the rock base, which had become worn, and to put it in shape so that the asphalt surface might be laid on it, and because Henslee would not bring up the shoulders of the road in the manner provided in the contract between Mobley and the commissioners of the road district. Henslee refused to do this work because the rock base had become worn by the traffic and weather, due to the delay of Mobley in spreading the asphalt upon the rock base when it had been finished by Henslee. Henslee refused to round up the shoulders of the road, because that was not his duty under the terms of his contract. Testimony was introduced by each party to sustain his contention. Other facts will be stated in the opinion.

The cause was tried before a jury, which returned a verdict in favor of the plaintiff, and from the judgment rendered the defendants have duly prosecuted an appeal to this court.

Judgment reversed.

J H. Carmichael and J. A. Sherrill, for appellant.

The suit should have been brought in the name of the district. Appellee relied on act 446 of the Acts of 1911, in bringing the suit in his own name, whereas act 338 of the Acts of 1915 repeals the former act, so far as relates to roads. 149 Ark 576. The execution of the bond required by the 1911 act is mandatory. 159 Ark. 275. If the action must be maintained under § 5446, C. & M. Digest (Acts 1915), then appellee must follow that statute to be entitled to the relief provided for, and maintain the same in the name of the district; having failed to do this, his suit should be dismissed. 82 Ark. 407; 182 Ark. 247; 153 Ark. 321. Even if both § 6913 (Act 1911) and § 5446 are available to road districts, appellee should seek his relief under the same statute followed by the district. If the suit was brought under § 6913, relating to those who furnish labor and material, it should be dismissed, since appellee did neither. 65 Ark. 183; 102 Ark. 539; 125 Ark. 590; 159 Ark. 21. The fact that a borrower used money loaned to pay persons having a mechanic's lien does not subrogate the lender to such lienor's rights. 155 Ark. 201; 158 Ark 137. It was prejudicial to introduce the judgment obtained in the former suit, since the surety was not a party thereto. 147 Ill. 634, 35 N.E. 820; 21 R. C. L. 1090.

A. F. Triplett, for appellee.

A judgment against a principal is prima facie evidence in a suit against his surety. 89 Ark. 378; 98 Ark. 143; note 16 L. R. A. (N. S.) 911. A construction bond to an improvement district inures to the benefit of a person furnishing the contractor with labor and materials, where the bond contains appropriate provisions with reference to such labor and materials. 126 Ark. 474; 152 Ark. 414; 153 Ark. 142. A subcontractor is a person furnishing labor or materials, and can claim the benefit of such a bond. 152 Ark. 414; note 27 L. R. A. (N. S.) 573. It is the policy of our law that a suit should be prosecuted in the name of the real party in interest, and the statute to this effect, § 1089, C. & M. Digest, is to be read along with § 5446. Section 5446 does not repeal § 1089, nor provide an exclusive remedy.

OPINION

HART, J., (after stating the facts).

Inasmuch as the cause of action of the plaintiff is based upon a statutory bond for work done in the construction of a public road by an improvement district, we have deemed it appropriate to give a brief history of statutes of this sort and our decisions construing the same.

Section 6913 of Crawford & Moses' Digest, which was passed by the Legislature of 1911, provides that, whenever any public officer shall, under the laws of this State, enter into a contract with any person for the purpose of making any public improvement, or constructing any public building, such officer shall take from the principal contractor a bond with sufficient sureties, conditioned that such contractor shall pay all the indebtedness for labor and materials furnished in the construction of said public building or in making said public improvement.

This court has held that school directors and commissioners of road districts are public officers, and that the bond of the contractor given under the statute inures to the benefit of those furnishing labor and materials, and that an action may be maintained thereon by one of such persons for labor performed, or materials supplied in the construction of a schoolhouse or an improved public road. Reiff v. Redfield School Board, 126 Ark. 474, 191 S.W. 16; Oliver Construction Co. v. Williams, 152 Ark. 414, 238 S.W. 615; and Arkansas Road Const. Co. v. Evans, 153 Ark. 142, 239 S.W. 726.

In the two cases last cited special acts of the Legislature had been enacted creating the road improvement districts, and the acts contain no provisions providing for the execution of a bond by the principal contractor to pay subcontractors and other persons furnishing labor and materials for the construction of the improved road, and the court held that the provisions of § 6913 were broad enough to include laborers who have performed work on the road proposed to be improved, or those who have furnished materials which the principal contractor had obligated himself to furnish.

The record in the case at bar shows that the road district was organized under the general statutes of this State providing for the creation and establishment of road improvement districts. This act was passed by the Legislature of 1915, and § 5446 of Crawford & Moses' Digest is § 30 of the act. It reads as follows: "All contractors shall be required to give bond for the faithful performance of such contracts as may be awarded to them, with good and sufficient security, in an amount to be fixed by the board of commissioners, and said bond shall contain an additional obligation that such contractor, or contractors, shall promptly make payment to all persons supplying him or them labor and materials in the prosecution of work provided for in such contract. Suit may be brought by and in the name of the district upon the bond given to the board. Any person, individual or corporation supplying labor and material shall have the right of action, and shall be authorized to bring suit in the name of the district for his, their, or its use and benefit, against said contractor and surety, and to prosecute same to final judgment and execution, but such action and its prosecution shall involve the district in no expense whatsoever."

Inasmuch as the improvement district in question was organized under the general laws of the State, it results that the bond given by the principal contractor was given in compliance with the terms of § 5446 of the Digest quoted above. The bond sued on was given for two purposes. In the first place, it was given to secure to the commissioners of the district the faithful performance of the contract of the principal contractor with the district; and, in the second place, to protect third persons from whom the contractor may obtain materials or labor used in the construction of the improved road. Acts of this kind are intended to furnish the obligation of a bond as a substitute for the security which might be obtained by a mechanic's lien, such liens not being given in the case of public works. The purpose of the Legislature in providing security for the payment for labor and materials going in the construction of an improved public road was intended to provide indemnity to persons furnishing such labor or materials, thereby enabling the principal contractor to meet his contracts with road improvement districts in supplying the labor and materials necessary to the construction of the proposed road.

In construing a similar statute passed by Congress, the Supreme Court of the United States has held that work done and materials furnished by subcontractors come within the provisions of the statute, and that they are protected by it. Guaranty Co. v. Pressed Brick Co., 191 U.S. 416, and Mankin v. United States, 215 U.S. 533, 54 L.Ed. 315, 30 S.Ct. 174.

In Hill v. American Surety Co., 200 U.S. 197 50 L.Ed. 437, 26 S.Ct. 168, the protection of the statute was extended to materials furnished to...