Christman v. Southern Surety Co.

• Decision Date: 11 January 1929
• Citation: 43 F.2d 452
• Parties: CHRISTMAN et al. v. SOUTHERN SURETY CO. et al.
• Court: U.S. District Court — Western District of Michigan

43 F.2d 452 (1929)

CHRISTMAN et al. v. SOUTHERN SURETY CO. et al.

District Court, W. D. Michigan, S. D.

January 11, 1929.

Lawrence W. Smith, of Grand Rapids, Mich., for plaintiffs.

Knappen, Uhl & Bryant, of Grand Rapids, Mich., and C. C. Coulter, of Detroit, Mich., for defendants.

RAYMOND, District Judge.

This is an action brought to recover from the surety on a public contractor's bond the amount claimed to be due plaintiff for materials furnished for the construction of a sewer in the village of Spring Lake.

Motions for directed verdict made by both parties at the close of the proofs recognize that the determination of this case depends substantially upon the construction to be given that portion of section 2, of Act No. 384, of the Public Acts of Michigan of 1925, which relates to the notice of indebtedness or of furnishing materials to be given to officers or agents of municipalities by materialmen. A copy of section 2 is appended, the amendments made by this act being in italics.¹

The clear weight of authority is that such statutes are to be liberally interpreted in favor of the materialman and laborer with a view to effecting their purpose to require payment to those who have contributed by their labor and material to the erection of buildings, or the making of public improvements. Guaranty Co. v. Pressed Brick Co., 191 U. S. 416, 24 S. Ct. 142, 48 L. Ed. 242; U. S. for Use of Hill v. American Surety Co., 200 U. S. 197, 26 S. Ct. 168, 50 L. Ed. 437; McQuillin Municipal Corp. (2d Ed.) § 2108, and cases cited. Interpretation should be with a view to effectuating the legislative purpose manifested by such enactments (St. Louis v. Construction Co., 175 Mo. App. 555, 158 S. W. 98; U. S. for Use of Hill v. American Surety Co., supra; Clow & Sons v. A. W. Scott Co., 162 Minn. 501, 203 N. W. 410; 25 R. C. L. 1012, 1013), which is not solely for the benefit of the materialman. In the case of Equitable Surety Co. v. McMillan, 234 U. S. 448, 456, 34 S. Ct. 803, 805, 58 L. Ed. 1394, it is said: "The public is concerned not merely because laborers and materialmen (being without the benefit of a mechanic's lien in the case of public buildings) would otherwise be subject to great losses at the hands of insolvent or dishonest contractors, but also because the security afforded by the bond has a substantial tendency to lower the prices at which labor and material will be furnished, because of the assurance that the claims will be paid."

The history of this class of legislation in Michigan is important. Act No. 94, Pub. Acts 1883 (3 Comp. Laws 1897 § 10743 et seq.), entitled "An act to insure payment of wages earned, and for materials used in constructing, repairing or ornamenting public buildings and public works," offered no protection to subcontractors, and in a number of cases arising thereunder and the amendment of 1905 the distinction between materialmen and subcontractors was made. See Avery v. Board of Supervisors, 71 Mich. 538, 39 N. W. 742; Hirth v. Powers, 108 Mich. 339, 66 N. W. 215; People v. Cotteral, 119 Mich. 27, 77 N. W. 312; People v. National Construction Co., 159 Mich. 133, 123 N. W. 801; People v. Finn, 162 Mich. 481, 127 N. W. 704. No notice of reliance upon or acceptance of benefits of the bond was required by that act as a condition precedent to action.

Act No. 187 of Pub. Acts 1905 (3 Comp. Laws 1915, § 14827 et seq.), included subcontractors among those entitled to the protection of the bond, but required as an express condition precedent to benefits thereunder that, "in the case of a subcontractor, he shall give notice in writing before payment is made for the work or materials furnished by him to the said board of officers or agents, that he is a subcontractor for the doing of some part of such work which he shall specify in his notice and that he relies upon the security of the bond by this act required to be given by the principal contractor, and that in the case of the giving of such notice to the said board of officers or agents said subcontractor shall also notify the principal contractor that he has done so, and whenever this shall have been done, the said subcontractor shall be entitled, subject to the rights of the persons with whom he has contracted for labor and materials, to the benefit of the security given by the principal contractor," etc. Section 2 (Comp. Laws 1915, § 14828).

Act No. 384, Pub. Acts 1925, imposed additional duties upon the subcontractor, and provided for notice of claim of reliance upon the bond to be given by subcontractors relying on the bond, to the sureties of the contractor, and, in the case of materialmen, provided for notice as appears by the amendment.

The controlling question here presented is whether the notice required to be given by a materialman is a condition precedent to a right of action upon the bond. The statutes of some jurisdictions clearly make the right to maintain action upon the bond depend upon giving the notice provided for therein. See Huggins v. Sutherland, 39 Wash. 552, 82 P. 112; Grant v. Berrisford, 94 Minn. 45, 101 N. W. 940, 1133; San Dimas Quarry Co. v. American Surety Co., 30 Cal. App. 3, 157 P. 548; Otis Elevator Co. v. Long, 238 Mass. 257, 130 N. E. 265; Tower v. Miller, 211 Mass. 113, 97 N. E. 748; Power Regulator Co. v. Taylor, 225 Mass. 292, 114 N. E. 356; Shea v. City of Springfield, 252 Mass. 571, 147 N. E. 829; Greene County v. Southern Surety Co., 292 Pa. 304, 141 A. 27.

No case has been found in which such a notice has been held to be a condition precedent to action where not clearly made so by statute. It is noted that title 40, § 270, U. S. Code (40 USCA § 270), which provides for furnishing of an affidavit and the obtaining of a certified copy of bond by materialmen and laborers on United States government contracts, has been uniformly construed in such manner as not to make compliance a prerequisite to the right to maintain an action. See Title Guaranty & Trust Co. v. Crane Co., 219 U. S. 24, 31 S. Ct. 140, 55 L. Ed. 72; United States v. Massachusetts Bonding & Insurance Co. (D. C.) 198 F. 923; American Surety Co. v. United States, 77 Ill. App....