Alabama Marble Co. v. United States Fidelity & Guaranty Co.

• Decision Date: 28 February 1927
• Docket Number: 26026
• Parties: ALABAMA MARBLE Co. v. UNITED STATES FIDELITY & GUARANTY CO. et al. [*]
• Court: Mississippi Supreme Court

111 So. 573

146 Miss. 414

ALABAMA MARBLE Co. v. UNITED STATES FIDELITY & GUARANTY CO. et al. ^[*]

No. 26026

Supreme Court of Mississippi

February 28, 1927

Division B

MECHANICS' LIENS. Bond of contractor for private building held not to protect remote materialman (Laws 1918, chapter 128, section 3).

Bond of building contractor for private building, aided by Laws 1918 chapter 128, section 3, under which it was given, providing that it shall be subject to the additional obligation to make payments to all furnishing labor or material under said contract, held not to cover liability to any subcontractor or materialman beyond the first, who deals with and furnishes materials directly to the principal contractor.

HON NILES MOSELEY, Special Chancellor.

APPEAL from chancery court of Hinds county, HON. NILES MOSELEY Special Chancellor.

Suit by the Alabama Marble Company against the United States Fidelity & Guaranty Company and others. Demurrer to bill sustained, and complainant appeals. Affirmed and remanded.

Decree affirmed, and cause remanded.

Green, Green & Potter, for appellant.

This appellant was entitled to sue under the bond. There was an obligation of the Sumner Sollitt Company for the performance of the work and the furnishing of those materials which were supplied by appellant, and in supplying those materials Sumner Sollitt Company and the surety company were thereby relieved from liability therefor under the bond. The question of the right to sue in Mississippi is dealt with in Lee v. Newman, 55 Miss. 374.

The bond here specifically provides that it shall be applicable to sub-contractors and to furnishers of material on or for said building. The statute was taken from the United States statute, and being adopted in Mississippi, there was thereby made applicable the decisions of the federal supreme court construing this law. U. S. v. Am. Surety Co., 200 U.S. 197, 50 L.Ed. 437; Accident & Indemnity Co. v. W. & J. Knox Net & Twine Co., 132 A. 261 (Md. 1926); Independence Trust Co. et al. v. Porter & Boyd, Inc. et al., 132 S.E. 806 (N. C. 1926); Yawkey-Crawley Lbr. Co. v. Sonaiko, 206 N.W. 976 (Wis. 1926).

So far as this provision of the bond is concerned, substantially similar bonds in public contracts have been made effective by this court in U. S. F. & G. Co. v. Yazoo County (1926), 145 Miss. 378, 110 So. 780. See also, Standard Oil Co. v. Nat'l Surety Co., 107 So. 559, 143 Miss. 841.

In Surety v. Hall-Miller Decorating Co., 104 Miss. 626, a contract of this character was entered into.

Wells, Stevens & Jones, for appellee.

I. Under the bond sued on this complainant has no right of action. The most casual reading of the bond shows that it was not intended to protect any persons except: (a) The Lamer Life Insurance Company; (b) Persons contracting directly with Sumner Sollitt Company, either for labor or materials; that is, its own subcontractors and its own materialman, with whom it contracted. These bonds are given in lieu of the statutory lien and where required by statute conserve only those rights to contractors, subcontractors and materialmen which are given them by the mechanic's lien law.

In this state a subcontractor or a materialman would not have a lien on the property, but he may by giving the proper notice and claiming the benefit of the statute require the owner to pay him, providing the owner has not before that time settled with the original contractor. Laws of 1918, chapter 128, section 1. Hence, it follows that if the subcontractor has no lien, his materialman has none; and since the bond in this case stands in lieu of the statutory lien, appellant is in no better position than he would have been in an attempt to enforce a mechanic's lien against the property and has no right of action against the bond.

This is a private contract and not a public bond; and, hence, the Mississippi cases cited by appellant, to-wit: U. S. F. & G. Co. v. Yazoo County, 110 So. 780; Standard Oil Co. v. Nat'l Surety Co., 107 So. 559; Surety Co. v. Hall Miller Decorating Co., 104 Miss. 826, have no application. So likewise U. S. v. Am. Surety Co., 200 U.S. 1977 50 L.Ed. 437.

Not a single case cited by counsel sustains the proposition that appellant has a cause of action on this bond considering the bond without reference to the effect of chapter 128, Laws of 1918.

II. Under chapter 128 Laws of 1918, this complainant has no right of action. This is a statutory scheme for the protection of subcontractors and laborers. If anything is made plain by section 3, it is that the bond executed by the contractor protects only persons furnishing labor and material under said contract by a formal contract with the original contractor and in this case appellant did not furnish material to the Sumner Sollitt Company nor to Lamar Life Insurance Company, but to a subcontractor of the Sumner Sollitt Company; and there is no allegation in the bill that the Sumner Sollitt Company has not paid its subcontractor nor is the subcontractor complaining.

Section 1, chapter 217, Laws of 1918, provides that the bond given by a contractor shall protect "all persons supplying labor or materials therefor" and further provides that "any person who has furnished labor or material used therein and wherefor payment has not been made" shall have a right to sue. In short, that law protects any person furnishing labor or material on the job.

In contract with the language of chapter 217, Laws of 1918, it will be noted that section 3, chapter 128, Laws of 1918, provides only that the contractor shall promptly make payment "to all persons furnishing labor or materials under said contract." In short, there must be a contractual relation, under this Section, between the original contractor and persons suing the surety of the contractor.

The reason for the difference between the laws is apparent. The legislature could not require any one to become liable for that which he had not agreed to become liable for, nor could it automatically enlarge the liabilities created by the contract of persons who are guaranteed freedom of contract under the law. It could not, as in the case of public contract, require that the contractor and the owner guarantee the rights of remote third persons and the legislature has not so attempted.

The language of section 1, chapter 128, Laws of 1918, is a rescript so far as it defines the persons protected, of section 1381, Code of 1880, and in Rivers v. Mulholland, 62 Miss. 766, this court through Justice CAMPBELL, ruled that subcontractors had no remedy.

OPINION

HOLDEN, P. J.

This suit is by the Alabama Marble Company to recover for certain materials used in the construction of the Lamar Life Building, which was erected by Sumner Sollitt Company, as principal contractors for the erection of the building. The United States Fidelity Company was surety on the bond of Sumner Sollitt Company, and the Lamar Life Insurance Company was the owner of the building.

The suit, according to the complainant's bill, is for the purpose of recovering against the owner of the building and the surety company for about nine thousand dollars worth of marble material furnished by appellant, the Alabama Marble Company, that had not been paid for. The marble was not furnished by the marble company directly to the Sumner Sollitt Company, the original contractors for the erection of the building, but it appears that the marble was furnished to...