Concrete Steel Co. v. Ill. Sur. Co.

• Decision Date: 11 April 1916
• Citation: 157 N.W. 543,163 Wis. 41
• Parties: CONCRETE STEEL CO. v. ILLINOIS SURETY CO.
• Court: Wisconsin Supreme Court

163 Wis. 41

157 N.W. 543

CONCRETE STEEL CO.

v.ILLINOIS SURETY CO.

Supreme Court of Wisconsin.

April 11, 1916.

Appeal from Circuit Court, Milwaukee County; F. C. Eschweiler, Judge.

Action by the Concrete Steel Company against the Illinois Surety Company. From an order sustaining defendant's demurrer, plaintiff appeals. Reversed and remanded.

This is an appeal from an order of the circuit court for Milwaukee county, sustaining a demurrer to the plaintiff's complaint. The action was commenced in the civil court for Milwaukee county. The demurrer was overruled by said court, and an appeal taken by defendant to the circuit court. In the circuit court the order of the civil court was reversed, and the defendant's demurrer to the complaint sustained. From this order of the circuit court, sustaining the demurrer, the plaintiff appeals to this court.Lenicheck, Robinson, Fairchild & Boesel, of Milwaukee, for appellant.

Flanders, Bottum, Fawsett & Bottum, of Milwaukee, for respondent.

KERWIN, J. (after stating the facts as above).

The cause of action set forth in the complaint was founded upon a bond executed by the defendant as surety for one James W. Utley, which bond is set forth in the complaint. The bond was executed by Utley and said defendant as surety to secure the performance of a contract entered into between said Utley and Edw. Schuster & Co. for the erection of a building for said Edw. Schuster & Co. by Utley as principal contractor. The contract is set out in the complaint. The complaint alleges that plaintiff was employed by Utley under an agreement to furnish certain materials, consisting of steel bars, to be used in the construction of a building to be erected by Utley for said Edw. Schuster & Co. under the contract referred to; that plaintiff furnished said materials, and the same were used in and about said building by Utley, and that there is due plaintiff, on account of said materials so furnished, a balance amounting to $1,830.05; that in furnishing said materials to Utley plaintiff relied upon the credit of the bond executed by the defendant herein as surety for its claim; that the execution and delivery of the bond was a condition precedent to the granting of said building contract to Utley by Edw. Schuster & Co.

[1] The main contention of appellant here is that the defendant, Illinois Surety Company, is liable to a materialman who furnished material to the principal contractor, which material was used in the construction of the building in question. This contention is based upon the promise contained in the bond to pay claims incurred in the construction of the building. The rule is well settled in this court that:

“When a person for a consideration paid to him by another agrees to pay, or cause to be paid, a sum of money to a third person, a stranger to the transaction, the latter thereby immediately becomes possessed of the absolute right to the benefit of the promise, and a right of action thereby accrues to him against the promisor.” Tweeddale v. Tweeddale, 116 Wis. 517, 93 N. W. 440, 61 L. R. A. 509, 96 Am. St. Rep. 1003;Wetutzke v. Wetutzke, 158 Wis. 305, 148 N. W. 1088.

[2] The question arises in the instant case whether third parties, furnishing material used in the construction of the building, can enforce payment in an action against the defendant surety on the bond. The contract between Utley, contractor, and Edw. Schuster & Co., among other things, provides that Utley will “provide all the materials.” The bond given by the defendant to secure the performance of the contract between Utley and Edw. Schuster & Co. for the construction provides:

“The condition of this obligation is such that if the principal shall faithfully perform the contract on his part, and satisfy all claims and demands incurred for the same, and fully indemnify and save harmless the owner from all cost and damage which he may suffer by reason of failure so to do, and shall fully reimburse and repay the owner all outlay and expense which the owner may incur in making good any such default, then this obligation shall be null and void; otherwise it shall remain in full force and effect.”

We think the instant case is ruled by Webster & Co. v. Beaumont H. Co., 151 Wis. 1, 138 N. W. 102,R. Connor Co. v. Ætna I. Co., 136 Wis. 13, 115 N. W. 811, and U. S. Gypsum Co. v. Gleason, 135 Wis. 539, 116 N. W. 238, 17 L. R. A. (N. S.) 906. In Webster & Co. v. Beaumont H. Co., supra, the bond was conditioned--

“that if the construction company should duly perform the contract with the hotel company for furnishing the material and performing the labor agreed upon, and ‘shall duly and promptly pay and discharge all indebtedness that may be incurred in carrying out and completing said contract, and save said building and the Beaumont Hotel Company free and harmless from all mechanics' liens and claims or liens, or other claim or expenses by reason thereof, then this obligation shall be void, otherwise to remain in full force and effect.’ ”

The court said:

“Under such circumstances, third parties furnishing labor and material obtain the benefit of such indemnity, and they can enforce their rights in all respects as if they had been parties to the contracts and bonds. The rights and liabilities of the principal contractors and sureties, and the persons furnishing material and labor within the terms of the transactions covered by the construction contracts and bonds, have, on several occasions, recently been considered in this court, and need no further amplification here.” Webster & Co. v. Beaumont H. Co., 151 Wis. 1, 10, 138 N. W. 102, 105.

In R. Connor Co. v. Ætna I. Co., supra, the bond of indemnity provided for the performances of all the several stipulations in the contract, and to pay for all labor and material that had entered into the construction of the building. It is true in the case at bar there is no express mention in the bond of labor and material, but the provisions of the bond “satisfy all claims, and demands incurred for the same” are broad enough to cover claims and demands incurred for labor and material. In United States Gypsum Co. v. Gleason, 135 Wis. 539, at page 546, 116 N. W. 238, 241 , this court said:

“Since, then, the...