Continental Cas. Co. v. Grabe Brick Co.

• Decision Date: 22 April 1965
• Docket Number: CA-CIV,No. 2,2
• Citation: 401 P.2d 168,1 Ariz.App. 214
• Parties: CONTINENTAL CASUALTY COMPANY, a corporation, Appellant, v. GRABE BRICK CO., Inc., Beacon Lighting Fixtures and Lamps, Inc., an Arizona corporation, Columbia Redi-Mix Co., Inc., Appellees. 75.
• Court: Arizona Court of Appeals

Page 168

401 P.2d 168

1 Ariz.App. 214

CONTINENTAL CASUALTY COMPANY, a corporation, Appellant, v. GRABE BRICK CO., Inc., Beacon Lighting Fixtures and Lamps, Inc., an Arizona corporation, Columbia Redi-Mix Co., Inc., Appellees.

No. 2 CA-CIV 75.

Court of Appeals of Arizona.

April 22, 1965.

May & Dees, Tucson, of counsel, Paul F. Newell, Tucson, for appellant.

Lesher, Scruggs, Rucker, Kimble & Lindamood, of counsel, D. Thompson Slutes, Tucson, for appellees.

MOLLOY, Judge.

Appellant Continental Casualty was defendant in three suits on a contractor's license bond issued pursuant to A.R.S. § 32-1152 as amended in 1961. The complaints of the appellees were filed solely against the appellant, it being undisputed that Gavlak, the prime contractor, was insolvent. The three actions were by stipulation consolidated for all purposes.

The plaintiffs filed a motion for summary judgment to which the defendant filed its opposition. The trial court granted plaintiffs' motion for summary judgment in all three actions. It is from this judgment the defendant appeals, contending that the trial court erred in granting summary judgment. The appellees, Grabe Brick Co., Inc., Beacon Lighting Fixtures and Lamps, Inc., and Columbia Redi-Mix Co., Inc., had sold various building materials to a licensed contractor who was bonded by appellant, Continental Casualty. It is stated by the appellees in their respective affidavits that the building materials were sold 'on open account' to the principal contractor; that said materials were used by the contractor in direct performance of a construction contract; that demand was made of the contractor for payment; and that no payment was made.

Referring to the affidavits individually, the Grabe affidavit said that the materials were supplied between March 16, 1962 and March 21, 1962. Grabe filed suit against Continental Casualty on March 18, 1963. The Beacon Lighting affidavit stated that it supplied the materials between February 3, 1962 and April 18, 1962. Beacon filed suit against Continental Casualty on March 25, 1963. The affidavit of Redi-Mix says that materials were furnished between January 25, 1962 and May 7, 1962. Redi-Mix filed suit against Continental Casualty on April 8, 1963.

The only issue in this appeal is whether the trial court erred in granting summary judgment as to all of the claims of the plaintiffs, the defendant contending that the statute of limitations contained within A.R.S. § 32-1152D bars some of the items of account upon which plaintiffs' suits are based.

The pertinent portion of A.R.S. § 32-1152D as amended reads as follows:

'* * * The bond shall be subject to claims by any person who, after entering into a construction contract with the principal is damaged by the failure of the principal to perform the contract or by any person furnishing labor or materials used in the direct performance of a construction contract. * * * No suit may be commenced on the bond after the expiration of one year following the commission of the act on which the suit is based * * *.' (Emphasis supplied.)

The general rule as to the interpretation that our courts must give to acts of the legislature has been enunciated by our Supreme Court in Employment Security Commission of Arizona v. Fish, 92 Ariz. 140, 375 P.2d 20 (1962), in the following words:

'It is so axiomatic as to need no citation that the object of statutory interpretation is to determine the meaning and intent of the legislature. * * *' (92 Ariz. 140, 142, 375 P.2d 20, 22.)

But, where the meaning of the statute is not clear, the Supreme Court in Fish stated:

'* * * Where the words may be susceptible for more than one meaning, the court must adopt such interpretation as is reasonable. Hart v. Arganese, 82 Ariz. 380, 313 P.2d 756 (1957). In seeking the reasonable interpretation, where there is an apparent ambiguity, the court will not be found by the letter, but will consider the statute as a whole to determine its intent and purpose. Adams v. Bolin, 77 Ariz. 316, 271 P.2d 472 (1954). * * *' (92 Ariz. 140, 142, 375 P.2d 20, 22.)

The appellant contends that the legislature must have intended, as applicable to materialmen, that the 'commission of the act on which suit is based' is the delivery of materials for use in the direct performance of the construction contract. In other words, as we understand the appellant's position, each time materials were delivered by the appellees to the appellant, such delivery was the commission of an 'act' which commenced the one year statute of limitations within the meaning of the statute.

The primary purpose of the subject legislation is manifestly to protect laborers and materialmen. The appellant's construction of the statute would be particularly awkward when applied to laborers. What would be the 'act' then--each day's work? or each stroke of the hammer? It appears to this court that there is a simpler meaning to the subject language, and one that applies to both claims of materialmen and laborers. The court believes that the legislature intended that once a person who is entitled to recover on the bond has the legal right to sue, he must pursue his remedy within a year thereafter or not at all.

Although the context in which the word is used is ambiguous, we cannot conceive that the legislature could have intended that 'act' mean anything other than an act (or lack thereof) which gives rise to a legal cause of action. It is our opinion that the 'act on which the suit is based' must reasonably and logically be the breach of the legal duty owed to the appellees, that is, the duty to pay for the materials as agreed. The breach of that duty owed is the 'act' on which suit is based. Reference to 1 C.J.S. Actions § 124 a, is the following definition of a cause of action:

'A cause of action accrues at the time when its owner may legally invoke the aid of a proper tribunal to enforce his demand; when he has a present right to institute and maintain action or suit.'

The United States Supreme Court in Amy v. City of Dubuque, 98 U.S. 470, 25 L.Ed. 228 (1879), held that a cause of action accrues '* * * from the time the right to sue for a breach attaches.' (98 U.S. 470, 476, 25 L.Ed. 228.)

It is reasonable that the legislature intended that the time when the one year limitation would commence to run would be determined by the agreement between the principal (contractor) and the materialmen.

The defense of the statute of limitations is not favored by the courts. In O'Malley v. Sims, 51 Ariz. 155, 165, 75 P.2d 50, 115 A.L.R. 634 (1938), our Supreme Court said:

'* * * We have repeatedly held that while the defense of the statute of limitations is a legitimate one, it is not favored by the courts, and, where two constructions are possible, the one which...