Coates v. U.S. Fidelity & Guar. Co.

• Decision Date: 10 June 1975
• Docket Number: No. 35770,35770
• Citation: 525 S.W.2d 654
• Parties: Charles COATES et al., Plaintiffs-Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant-Respondent and Third-Party Plaintiff, v. Louis P. JANTZEN et al., Third-Party Defendants. . Louis District, Division Three
• Court: Missouri Court of Appeals

Page 654

525 S.W.2d 654

Charles COATES et al., Plaintiffs-Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant-Respondent and Third-Party Plaintiff, v. Louis P. JANTZEN et al., Third-Party Defendants.

No. 35770.

Missouri Court of Appeals, St. Louis District, Division Three.

June 10, 1975.

Madigan & Maloney, Thomas B. Maloney, Duane Sherman Cox, St. Louis, for plaintiffs-appellants.

Doris Banta, George E. Lee, St. Louis, for defendant-respondent & third-party plaintiff.

Edward D. Weakley, Andrew S. Meyer, St. Louis, for third-party defendants.

McMILLIAN, Judge.

Plaintiffs, former employees of Barkley Contracting Company, a subcontractor, appeal from a judgment entered by the Circuit Court of St. Louis City in their favor for $3074.51 against defendant United States Fidelity and Guaranty Company (hereinafter referred to as USFG). In their amended petition plaintiffs had also sought attorney's fees and a penal amount for vexatious delay. But counsel for plaintiffs, that both these issues should be withdrawn that both these issues should be withdrawn because they were not properly proved below.

The question for decision is whether USFG, a surety on a payment and performance bond for a general contractor under a building contract, is liable on the bond to plaintiffs, employees of a subcontractor on that job, for the penalty set out in § 290.110, RSMo 1969, V. A.M.S., ¹ for the subcontractor's failure to pay plaintiffs' wages for two weeks of work in October 1969. For reasons hereinafter given, we think not and affirm the judgment of the trial court.

On December 10, 1968, George L. Cousins Contracting Company (hereinafter referred to as Cousins) was the general contractor to construct a building known as West Side Community Gardens (hereinafter referred to as West Side) at 5600 Cabanne Avenue, St. Louis, Missouri.

At the time of entering into the construction contract with the owners of West Side, Cousins entered into a payment bond agreement and performance bond agreement with USFG. Thereafter, Cousins entered into a contract with Larry Barkley and the Barkley Real State Company (hereinafter referred to as Barkley) jointly and severally for the performance of certain work at West Side.

All of the eight plaintiffs were former employees of Barkley. Each one except one Brown, made a claim for work performed for Barkley for the pay weeks ending October 22 and October 29, 1969. Each was issued checks by Barkley for those weeks, except plaintiff Brown who left on his own at the end of the October 22nd pay period. All of the checks were dishnonored by Barkley's bank and returned unpaid to the plaintiffs. Plaintiffs claim that they were discharged by Barkley on 3 November 1969 and none of the checks was ever made good by Barkley.

With the exception of Brown, the other seven plaintiffs were employed by Cousins on 3 November 1969, with the understanding that Cousins would pay them for any time worked on October 30 and 31 of 1969. No contention is made that Cousins failed to honor his agreement. after October 31, 1969, plaintiffs except Brown continued in the employment of Cousins. After plaintiffs obtained a default judgment against Barkley in the Circuit Court of St. Louis City in the amount of $26,767.30, they made a demand for the judgment amount against USFG and Cousins. In the action against Barkley, plaintiffs claimed the amount of wages owed, as represented by the dishonored checks, and for penalties due for unpaid wages under § 290.110. Neither Cousins nor USFG received any notice of plaintiffs' lawsuit against Barkley.

Plaintiffs' theory in the instant case is that USFG is obligated to pay the Barkley judgment under the terms of both the payment and performance bonds, including the penalty wages provided by § 290.110.

First, we dispose of plaintiffs' contention that the trial court erred in refusing to rule that all matters in their 'Requests for Admissions' were admitted because USFG's answers were untimely. Rule 59.01, V.A.M.R. (1969). The trial court heard plaintiffs' request that 'Requests for Admissions' be taken as admitted and denied the request, but permitted plaintiffs to read the requests into evidence. The court had before it not only plaintiffs' 'Requests for Admissions,' but also defendants' answer to them filed two years before trial. Plaintiffs neither suggest any lack of good faith in USFG's denial of their 'Requests,' nor indicate any prejudice to them by the claimed untimely filing of USFG's answers thereto. ² We hold that it was within the trial court's discretion to allow the late filing of answers to a 'Requests for Admissions' and absent a showing of either bad faith or prejudice that discretion reposed in the trial court is not abused. See Webb v. Rench, 476 S.W.2d 570 (Mo.App.1972) and Bickel v. American Trust Life Ins. Co., 468 S.W.2d 873 (Tex.Civ.App.1971).

Turning to plaintiffs' second claim, we note that the payment bond is executed for the protection of the owner (West Side) from claims made by claimants who supplied materials and labor reasonably required for use in the performance of the contract. On the other hand, since the building project was an F.H.A. project, in addition to the payment bond, F.H.A. rules required a performance bond for the protection of the owner and the United States. Sun Ins. Co. of New York v. Diversified Engineers, Inc., 240 F.Supp. 606 (Mont.D.Ct., 1965).

We further note that neither the performance bond nor the contract which it secured made any mention of wages. Nor is there any evidence that West Side (owner-obligee named in the performance bond) has incurred any costs or damage owed to plaintiffs. Neither is there any evidence that plaintiffs ever made any claim for wages or penalties against West Side. Moreover, a plain reading of the performance bond gives no right of action to anyone other than West Side. It expressly speaks in terms of a right of action of West Side and Travelers Ins. Co. (lender) and says that the aggregate liability of USFG to obligees or their assigns is limited to the penal sum of the bond, $1,340,503. Nowhere does it purport to give anyone else a right of action. Therefore, if plaintiffs are entitled to a recovery it must be found under the policy terms of the payment bond, not the performance bond.

USFG concedes that plaintiffs are 'claimants' within the definitional terms of the payment bond and agrees that plaintiffs may sue thereunder for such sums as may be justly due them. In addition, USFG does not dispute that the $3074.51 awarded them by the court was the sum justly due. ³

From the terms of the payment bond, we glean that USFG obligated themselves to pay, if sued by and judgment obtained by plaintiffs, any claims for work and labor performed or materials furnished by them such sums as justly due. From this plaintiffs would have us conclude that the penal sanctions of § 290.110 was applicable because of USFG's unlawful withholding of wages in violation of the statute. Section 290.110 provides:

'. . . whenever any corporation doing business in this state shall discharge, with or without cause, or refuse to further employ any . . . employee thereof, the unpaid wages of any such . . . employee then earned at the contract rate, without...