Camdenton Consol. School Dist. No. 6 of Camden County ex rel. W. H. Powell Lumber Co. v. New York Cas. Co.

• Decision Date: 21 April 1937
• Docket Number: 33645
• Citation: 104 S.W.2d 319,340 Mo. 1070
• Parties: Camdenton Consolidated School District No. 6 of Camden County, a Corporation, ex rel. W. H. Powell Lumber Company, a Corporation, v. New York Casualty Company, a Corporation, Appellant
• Court: Missouri Supreme Court

104 S.W.2d 319

340 Mo. 1070

Camdenton Consolidated School District No. 6 of Camden County, a Corporation, ex rel. W. H. Powell Lumber Company, a Corporation, v. New York Casualty Company, a Corporation, Appellant

No. 33645

Supreme Court of Missouri

April 21, 1937

Appeal from Phelps Circuit Court; Hon. J. H. Bowron, Judge.

Reversed and remanded (with directions).

Bryan Williams, Cave & McPheeters for appellant.

(1) The bond in this case was not executed as provided in Section 2890, Revised Statutes 1929, and relator, therefore, has no right to sue on it in the name of the school district for the relators' use and benefit. Secs. 2890, 2891, R. S. 1929; Citizens Trust Co. & Pemiscot County Bank v. Tindle, 272 Mo. 697; Zellars v. Surety Co., 210 Mo. 106; Lumber Co. v. Schwartz, 163 Mo. 664; Lumber Co v. Banks, 136 Mo.App. 56; Board of Education ex rel v. Fidelity & Guar. Co., 155 Mo.App. 109; State ex rel. v. Rubber Mfg. Co., 149 Mo. 212; Cranor v Reardon, 39 Mo.App. 306; Keaton v. Boughton, 83 Mo.App. 165; Nofsinger v. Hartnett, 84 Mo. 549; Henry County v. Salmon, 201 Mo. 152; Guthwright v. Callaway County, 10 Mo. 663; State v. Thomas, 17 Mo. 503; Grant v. Botherton's Admr., 7 Mo. 459 Waterman & Ryan v. Frank, 21 Mo. 108; Selmes v. Smith, 21 Mo. 525; State ex rel. Saline County v. Sappington, 67 Mo. 529; State ex rel. Lafayette County v. O'Gorman, 75 Mo. 370; Williams v. Coleman, 49 Mo. 325; Nations v. Beard, 216 Mo.App. 33; Fellows v. Kreutz, 189 Mo.App. 551; State v. Horn, 94 Mo. 162; State v. Hock, 49 Mo. 188; State v. Blakemore, 275 Mo. 695; Cabool School Dist. v. U.S. Fid. & Guar. Co., 9 S.W.2d 104; State ex rel. v. Detroit Fid. & Surety Co., 326 Mo. 687; St. Joseph ex rel. v. Stone County, 224 Mo.App. 895; State ex rel. Maplewood v. So. Surety Co., 323 Mo. .158; Fogarty v. Davis, 305 Mo. 298; So. Surety Co. v. U.S. Cast Iron Pipe & Foundry Co., 13 F.2d 836; United States v. Starr, 20 F.2d 806; Kansas City v. Youmans, 213 Mo. 162; Babcock v. Am. Surety Co., 236 F. 340; United States v. Stewart, 288 F. 189; United States to the use of Zambetti v. Am. Fence Const. Co., 15 F.2d 450; United States v. Montgomery Heating & Ventilating Co., 255 F. 683; Lafontan v. Elting, 59 F.2d 204; State ex rel. v. Wotring, 49 S.E. 366; Crawford v. Ozark Ins. Co., 134 S.W. 951; Puget Sound Brick, Tile & Terra Cotta Co. v. School Dist., 40 P. 608; Brown Bros. v. Columbia Irr. Dist., 144 P. 75; Stephenson v. Monmouth Min. & Mfg. Co., 84 F. 114; Howard v. Brown, 21 Me. 385; Traweek v. Heard, 12 So. 166; Mayor of Brunswick v. Harvey, 40 S.E. 755. (2) Oral testimony concerning the character of the bond desired by the parties was incompetent as the written instrument could not be varied or enlarged by oral testimony. Sec. 2967, R. S. 1929; Lane v. Price, 5 Mo. 101; Reigart v. Coal & Coke Co., 217 Mo. 154. (3) The surety had such an equity in the funds paid by the district to the contractor and by him paid to the materialman as required the application of that payment to the materials account. 30 Cyc. 1237; Crane Co. v. Pacific H. & P. Co., 36 Wash. 95, 78 P. 460; Chapman v. Commonwealth, 25 Gratt. 721; Columbia Digger Co. v. Sparks, 227 F. 780; Sturdevant Co. v. Fid. & Dep. Co., 92 Wash. 52; United States to the use of Heise v. Am. Bonding & Trust Co., 89 F. 925; Sioux City Foundry & Mfg. Co. v. Merten, 156 N.W. 367; Ida County Sav. Bank v. Seidensticker, 126 Iowa 54, 102 N.W. 821; Thompson v. Commercial Union Assur. Co., 20 Colo.App. 331; 5 Page on Contracts (2 Ed.), p. 5026, sec. 2843; Bross v. McNichols, 66 Ore. 42; First Natl. Bank v. City Trust, S.D. & Surety Co., 114 F. 529; Alexander Lbr. Co. v. Aetna Acc. & Liab. Ins. Co., 206 Ill. 500; First Natl. Bank v. Natl. Surety Co., 130 F. 401; Clow & Sons v. Goldstein, 147 Ill.App. 571; Williams v. Willingham-Tift Lbr. Co., 5 Ga.App. 533; United States v. Johnston, 67 F.2d 123; Nelson v. Withrow, 14 Mo.App. 270. (4) The relator, by lending money to the contractor, which the contractor used in paying the claims of laborers, acquired no rights to or equities in the funds of the district which had been obtained for the purpose of paying for the construction of the building. Griswold v. Ry. Co., 18 Mo.App. 52; Ray County Sav. Bank v. Cramer, 54 Mo.App. 593; Brown v. Railroad Co., 36 Mo.App. 461; O'Connor v. Ry. Co., 111 Mo. 192; Mo. State Highway Comm. ex rel. v. Coopers Const. Co., 220 Mo.App. 406; Ittner v. Hughes, 154 Mo. 66; Lovingood v. Butler Const. Co., 131 So. 126, 74 A. L. R. 513; Cairo & V. Railroad Co. v. Fackney, 78 Ill. 116; First Natl. Bank v. Campbell, 24 Tex. Civ. App. 160; Burr v. Peppers Cotton Lbr. Co., 91 Cal.App. 268; Godeffroy v. Caldwell, 2 Cal. 489; Dart v. Mayhew, 60 Ga. 104; Hewitt v. Buchanan, 4 S.W.2d 169. (5) If the bond were a statutory one and could be recovered on without reformation the charges for structural steel would have to be very materially reduced as they are grossly excessive. Pond Creek Mill Co. v. Clark, 270 F. 482; Ill. Cent. Ry. Co. v. Brooks Scanlon Co., 241 F. 445; Nash v. Towne, 5 Wall. 689; Street v. Bag & Burlap Co., 198 Mo.App. 336. (6) Considering the character of the bond in this case and all the facts, the court was not warranted in penalizing the surety by the assessment of damages and attorneys' fees as for a vexatious delay in payment. Sec. 5929, R. S. 1929; Breeden v. Frankfort Marine, Indemnity & Plate Glass Ins. Co., 220 Mo. 360; Most v. Mass. Bonding & Ins. Co., 196 S.W. 1065; Mangelsdorf v. Pa. Fire Ins. Co., 224 Mo.App. 273; State ex rel. Peach v. Bonding & Surety Co., 279 Mo. 557; Kusnetsky v. Ins. Co., 313 Mo. 159; Gott v. Fid. & Dep. Co. of Maryland, 298 S.W. 91; Shoe Co. v. Assur. Co., 277 Mo. 422; Dolph v. Maryland Cas. Co., 303 Mo. 552; Kahn v. London Assur. Corp., 187 Mo.App. 216; Frazer v. Commercial Union Assur. Co., 189 Mo.App. 464; Strawbridge v. Fire Ins. Co., 193 Mo. 689.

Gossett, Ellis, Dietrich & Tyler for respondent.

(1) The bond given by the New York Casualty Company in this case in the eyes of the law is conditioned for the payment of all labor and material furnished or performed, and such provision will be read into it and enforced. Secs. 2890, 2891, R. S 1929; Fogarty v. Davis, 305 Mo. 288, 264 S.W. 879; Cabool District v. U. S. F. & G. Co., 9 S.W.2d 103; State ex rel. v. Detroit Fid. & Surety Co., 32 S.W.2d 572; State ex rel. v. Rubber Mfg. Co., 149 Mo. 181; Inman v. Nolan, 288 S.W. 1007; Metz v. Warrick, 217 Mo.App. 505, 269 S.W. 626; County of Jackson ex rel. Bryson v. Enright, 198 Mo.App. 527; Henry County v. Salmon, 201 Mo. 136; St. Louis v. Surety Co., 333 Mo. 180; State ex rel. Winebrenner v. Detroit Fid. & Surety Co., 326 Mo. 648, 32 S.W.2d 572; Kansas City ex rel. Barlow v. Robinson, 322 Mo. 1050; 9 C. J. 34, sec. 56; Springfield v. Koch, 228 Mo.App. 511; State v. Nutter, 44 West Va. 385, 30 S.E. 67; Crawford v. Ozark Ins. Co., 97 Ark. 551, 134 S.W. 951; Chambers v. Cline, 60 West Va. 588, 55 S.E. 999; Mix v. Vail, 86 Ill. 40; People v. Met. Surety Co., 211 N.Y. 107, 105 N.E. 99; People v. Wilson, 169 Ill.App. 452; Chladek v. Brown, 58 Ill.App. 379; Lowe v. Guthrie, 4 Okla. 287, 44 P. 198; Graeter v. DeWolf, 112 Ind. 1, 13 N.E. 111; 9 C. J. 34, sec. 56; M., K. & T. Ry. Co. v. Am. Surety, 291 Mo. 92; Hartford Acc. & Indemnity Co. v. Board, 15 F.2d 317; School District No. 18 of Caruthersville v. McClure, 224 S.W. 831; Board of Education v. U. S. F. & G. Co., 155 Mo.App. 632; State v. Wotring, 56 West Va. 328, 33 S.E. 313; Post v. Doremus, 60 N.Y. 371; State v. Shain, 334 Mo. 153, 66 S.W.2d 102; Maryland Cas. Co. v. Ohio River Gravel, 20 F.2d 514; Maryland Cas. Co. v. Fowler, 27 F.2d 421. (2) In the case at bar the intentions of the parties, the surrounding circumstances and the inducement to purchase the bond are substantial and requisite evidence in the matter of its construction, and therefore oral testimony on such points is not only proper but necessary in its interpretation. (a) The surrounding circumstances and intentions of the parties: M., K. & T. Ry. v. American Surety, 291 Mo. 103; Kansas City ex rel. Barlow v. Robinson, 322 Mo. 1050; Hartford Acc. & Indemnity Co. v. Board of Education, 15 F.2d 317; Jones Commentaries on Evidence, sec. 1488; Folinsbee v. Sawyer, 157 N.Y. 196; Clapp v. Bank, 35 N.E. 308; Dennison & Co. v. Aldrich, 114 Mo.App. 700; McKim v. Met. St. Ry., 196 Mo.App. 544. (b) The inducement to execute the contract, when fraudulent, may be shown outside the terms of the instrument itself: Derby v. Donahoe, 208 Mo. 685; Grigsby v. Stapleton, 94 Mo. 423; Cecil v. Spurger, 32 Mo. 462; Manter v. Truesdale, 57 Mo.App. 435; Met. Paving Co. v. Brown-Crummer Inv. Co., 309 Mo. 662; Bank v. Kellems, 9 S.W.2d 967; Veney v. Furth, 171 Mo.App. 678; 26 C. J. 1071; Guess v. Russell, 231 S.W. 1015; Met. Discount v. Wasson, 235 S.W. 465; 5 Wigmore on Evidence (2 Ed.), p. 273; Loomis v. Day, 52 Conn. 483; Employers' Indemnity Corp. v. Garrett, 327 Mo. 874. (3) The law of Missouri is settled to the effect that where the debtor pays the contractor a sum on account, the contractor may apply such sum on any part of the indebtedness on the particular contract on which the surety is liable, and the surety has no equitable right to have such sum applied to any specific item or items of liability. This is especially true where the surety comes into court admitting that it has not, itself, done equity, the contract gives it no right to direct the application of the payments, the payment in question was not earmarked and the trier of the facts has determined that the contractor and the materialman made no misrepresentation as to such intended application. 48 C. J., pp. 643, 646, 647; Burchard v. Western Commercial Travelers Assn., 139 Mo.App. 606; Mo. Central Lbr. Co. v. Stewart, 78 Mo.App. 456; Western Sash, etc., v. Young, 48 Mo.App. 505; ...