Cities Service Oil Co. v. Longerbone

• Decision Date: 24 November 1942
• Docket Number: 46092,46093.
• Citation: 6 N.W.2d 325,232 Iowa 850
• Parties: CITIES SERVICE OIL CO. v. LONGERBONE et al. (CONCRETE PRODUCTS CORPORATION (Intervener) (two cases).
• Court: Iowa Supreme Court

6 N.W.2d 325

232 Iowa 850

CITIES SERVICE OIL CO. v. LONGERBONE et al. (CONCRETE PRODUCTS CORPORATION (Intervener) (two cases).

Nos. 46092, 46093.

Supreme Court of Iowa

November 24, 1942

Bradshaw, Fowler, Proctor & Fairgrave, of Des Moines, for appellant.

Franklin Jaqua, of Humboldt, and John H. Mitchell, of Fort Dodge, for appellee Concrete Products Corporation.

MILLER Justice.

This is a consolidation of two cases brought in equity pursuant to the provisions of Chapter 452, Code 1939, to recover upon the bonds of Guy Longerbone, on which the Continental Cas. Co. was surety, given pursuant to said Chapter in connection with two contracts with the State Highway Commission for public improvements. In one case the petition was filed by the Cities Service Oil Co. as plaintiff against Guy Longerbone doing business as the Iowa Construction Co. the State Highway Commission and Continental Casualty Co. and asserted that Longerbone's contract was made June 3 1940; the bond was filed June 4, 1940, in the sum of $9,865.88 and was approved June 11, 1940; the improvement was completed and accepted November 30, 1940. The petition was filed January 13, 1941, and answer of the Highway Commission was filed January 16, 1941. By amendment, January 31, 1941, the Highway Commission asserted that the balance of the contract price in its hands was $2,724.44, against which should be charged penalties for delay in completion amounting to $420 making the net balance due the contractor $2,304.44, which sum it offered to pay into court.

In the other case, the plaintiff and defendants were the same parties. The petition asserted that the contract with the Highway Commission was made June 3, 1940, the bond for $3,971.54 was filed June 4, 1940, and approved June 11, 1940; the work was completed and accepted Nov. 19, 1940. This petition was filed on January 13, 1941, and the Highway Commission filed answer January 16, 1941, stating that the balance of the contract price in its hands was $444.35, against which were penalties for delay amounting to $15, making the net balance due the contractor $429.35, which sum it offered to pay into court.

On June 20, 1941, the Concrete Products Co. made application in each case for leave to intervene and file its claim pursuant to the provisions of Section 10309 of the Code, 1939. On that day the court entered an order in each case granting leave to file claim, and forthwith a petition of intervention was filed in each case, claiming $1,166.72 in one case and $330.30 in the other.

The Continental Cas. Co. filed answer to each petition of intervention, admitting the execution of the contracts and bonds, the completion and acceptance of the work, the timely filing of the claims by Cities Service Oil Co. and the commencement of the actions, but asserting that Concrete Products Corp. failed to file any claim with the State Highway Commission and, because of such failure, it was not entitled to share in any sum retained by the Highway Commission, or recover on the bond.

The two cases were consolidated and were tried on a stipulation of facts. It was agreed that the contracts were executed and the bonds filed as stated in the petitions; in the first case, eight claims were filed within 30 days of the completion and acceptance of the work, and, in the other, two claims were filed within said 30 day period; each action was commenced within 60 days following the completion and acceptance of the work; Concrete Products Co. filed no claim with the Highway Commission but furnished materials on each job; as to the first one, the fair and reasonable value thereof was $1166.72 and, as to the other, $330; in the first case, the eight claims, totaling $5,286.69, have been paid by Continental Cas. Co. and assigned to it, in the other case, the claim of Cities Service Oil Co., amounting to $1,040.32, has been paid by Continental Cas. Co. and assigned to it; as to the first case, the Highway Commission retains $2,724.44 of the contract price subject to penalties of $420, and, as to the second, it retains $544.35 subject to penalties of $15; in each instance the sum retained exceeds 10% of the contract price. The court found for claimant, Concrete Products Corp., in each case and entered decree accordingly. Continental Casualty Co. has appealed and the causes have been consolidated in this court.

The question presented for our decision is clearly drawn. Does the failure of Concrete Products Corp. to file a claim with the Highway Commission within 30 days following the completion and acceptance of the work, in each instance, defeat its right to recover upon the bond of the contractor in each case? The trial court answered in the negative. We agree.

The proceedings herein are somewhat analogous to those for the enforcement of a mechanic's lien. However, since the improvement is owned by the public, no lien attaches thereto. Des Moines Bridge & Iron Works v. Plane, 163 Iowa 18, 22, 143 N.W. 866; Maryland Cas. Co. v. Des Moines City Evangelization Union, 184 Iowa 246, 255, 167 N.W. 695. Originally, those furnishing labor and material for a public improvement were forced to look solely to the contract and bond for protection; if none was expressly afforded thereby, the bond inured solely to the protection of the public body. Carr & Baal Co. v. Consolidated Ind. Dist., 187 Iowa 930, 937, 174 N.W. 780. By Chapter 347, Acts of the 38th G. A., it was enacted that those contracting for a public improvement, to cost more than $1,000, should require a bond of the contractor, "which bond shall run * * * for the use and benefit of all persons, firms and corporations who shall perform any labor or furnish any material." The penalty for the bond was specifically prescribed and the act further provided that its requirements "shall not be modified or annulled by contrary provisions in any such bond or contract". Accordingly, a bond given subsequent to such legislation was interpreted as inuring to the protection of those furnishing labor or material for a public improvement, even though the bond, by its express terms, inured only to the benefit of the public body. Philip Carey Co. v. Maryland Cas. Co., 201 Iowa 1063, 206 N.W. 808, 47 A.L.R. 495. However, the statute also required any one enforcing liability against the bond to file an itemized, verified claim within four months after the date of the last item of labor or material, and failure to so file a claim was fatal to a right of recovery. Francesconi v. Independent School Dist., 204 Iowa 307, 312, 313, 214 N.W. 882; Queal Lumber Co. v. Anderson, 211 Iowa 210, 229 N.W. 707.

The statute has been since codified and amended. See Chapter 452, Code 1939. Section 10301 provides that the requirement for a bond "shall not be limited or avoided by contract". Section 10304 prescribes provisions in the bond for the protection of those furnishing labor or materials. Section 10305 provides for the filing of claims for labor or material. Section 10308 provides that claims may be filed with the public officers: "1. At any time before the expiration of thirty days immediately following the completion and final acceptance of the improvement. 2. At any time after said thirty-day period, if the public corporation has not paid the full contract price as herein authorized, and no action is pending to adjudicate rights in and to the unpaid portion of the contract price." Section 10309 provides: "The court may permit claims to be filed with it during the pendency of the action hereinafter authorized, if it be made to appear that such belated filing will not materially delay the action." Section 10310 provides for a retention of 10% of the contract price. Section 10312 provides that said 10% shall be retained for 30 days after completion and acceptance of the work, and, if claims are filed before the expiration of such 30 day period, the public officials shall continue to retain a sum "not less than double the total amount of all claims on file." Section 10313 provides for an action to adjudicate rights to the fund and liability on the bond "at any time after the expiration of thirty days, and not later than sixty days, following the completion and final acceptance of said improvement."

Under the statute as it now reads, if a claim is not filed within 30 days following completion and final acceptance of the improvement, and the action is not commenced within 60 days following such date, there can be no recovery by such claimant except as to funds then retained by the public body from the contractor's agreed compensation. Perkins B. S....