Ceco Steel Products Corporation v. Tapager

• Decision Date: 04 October 1940
• Docket Number: No. 32576.,No. 32577.,32576.,32577.
• Citation: 294 N.W. 210,208 Minn. 367
• Parties: CECO STEEL PRODUCTS CORPORATION et al. v. TAPAGER et al.
• Court: Minnesota Supreme Court

294 N.W. 210

208 Minn. 367

CECO STEEL PRODUCTS CORPORATION et al. v. TAPAGER et al.

No. 32576.

No. 32577.

Supreme Court of Minnesota.

October 4, 1940.

Appeal from District Court, Mower County; Norman E. Peterson, Judge.

Actions on a contractor's bond by the Ceco Steel Products Corporation and others against Christian M. Tapager and others, and the Glens Falls Indemnity Company. From judgments for the plaintiffs, last-named defendant appeals.

Reversed, with directions.

Orr, Stark & Kidder, of St. Paul, for appellant.

Nelson & Plunkett, of Austin, for respondents.

JULIUS J. OLSON, Justice.

Plaintiffs brought separate actions against defendant construction company and its surety upon bonds furnished by the contractor, pursuant to statutory direction requiring such, to protect laborers and materialmen who furnish labor or materials "for the doing of any public work." 3 Mason Minn.St.1940 Supp. § 9700. The labor and materials here involved were furnished and supplied in the construction of two school buildings at Austin. In each action plaintiff alleged that the surety had waived compliance with our statute requiring claims so arising to be filed with the county auditor within 90 days after the completion and acceptance of the work. The court determined that the surety had waived this statutory requirement "by accepting said claim and advising plaintiff that it was investigating the same," and "that the reservation of rights * * * referred to the merits of the claim and not to the procedure adopted in filing the same." Judgments for the respective amounts sought plus attorneys' fees and disbursements were ordered. These were entered accordingly, and the surety appeals from each thereof.

The facts are not in dispute. The sole issue is whether upon the facts now to be recited the surety is liable by reason of its waiver of the mentioned statutory requirement.

The work was completed and accepted on September 18, 1937. Neither plaintiff has filed its claim with the county auditor. On November 17 plaintiff in the first cause wrote the surety and the school district stating that it was "attaching the necessary exhibits setting forth an unpaid balance due" it from the construction company "for materials furnished in connection with the job named in the subject of this letter. We have been unable to accomplish collection of this balance from" the construction company "and are therefore desirous of filing with you this claim against funds due or to become due * * * in connection with their contract with you on this job. Will you kindly acknowledge receipt by return mail, and oblige." The surety promptly answered acknowledging receipt of the letter and enclosures. "We are at this time investigating the matter. You, of course, understand that this letter is written and our investigation is being made under a complete reservation of rights. It is our desire, however, to cooperate with you." On December 2, 1937, the plaintiff in the other action wrote the surety saying: "We are filing claim as per enclosed statement and ask that you kindly acknowledge receipt of same and oblige." A statement of its claim for labor and material furnished was enclosed. On December 8 the surety wrote: "We acknowledge registered letter of December 2nd enclosing statement of claim in connection with * * * jobs at Austin, Minn. The matter is receiving our attention." Then followed the same language in respect to reservation of rights as was contained in the letter to the plaintiff in the first action.

At the trial it was stipulated that both plaintiffs were ignorant of our statute requiring claims such as these to be filed in the office of the county auditor; likewise, that the surety was not aware that plaintiffs, or either of them, had not filed the claims as provided by the statute.

The statute 3 Mason Minn.St.1940 Supp. § 9705, reads: "No action shall be maintained on any such bond unless within ninety days after the completion of the contract and acceptance thereof * * * claimant shall file a written notice specifying the nature and amount of his claim and the date of furnishing the last item thereof, in the office * * * of the county auditor of the county * * * in which such municipal corporation, public board or body is situate * * *. The county auditor shall enter the time of filing every such notice in a book kept for that purpose which shall be properly indexed." (Italics supplied.)

Upon these undisputed facts the surety contends that the statutory provision quoted above had not been waived by it in either case; hence that the court's findings and resulting judgment are in both cases so lacking in factual foundation as to be without support to sustain the imposed liability.

1. The purpose of the statute, 3 Mason Minn.St.1940 Supp. § 9700, is to protect laborers and materialmen who perform labor or furnish material for the execution of a public work to which the mechanic's lien statute does not apply. The bond required and given by the act "stands as security for the payment of all obligations incurred by the contractor in the prosecution of the work, and the general rules and principles of the law of suretyship apply to and govern the rights of the parties." Wilcox Lumber Co. v. School District No. 268, 103 Minn. 43, 45, 114 N. W. 262, 263. Obviously, the surety is...