Coon River Co-Operative Sand Ass'n v. McDougall Const. Co. of Sioux City

• Decision Date: 19 October 1932
• Docket Number: No. 41610.,41610.
• Citation: 244 N.W. 847,215 Iowa 861
• Parties: COON RIVER CO-OPERATIVE SAND ASS'N ET AL. v. MCDOUGALL CONST. CO. OF SIOUX CITY ET AL.
• Court: Iowa Supreme Court

215 Iowa 861

244 N.W. 847

COON RIVER CO-OPERATIVE SAND ASS'N ET AL.

v.MCDOUGALL CONST. CO. OF SIOUX CITY ET AL.

No. 41610.

Supreme Court of Iowa.

Oct. 19, 1932.

Appeal from District Court, Ringgold County; H. H. Carter, Judge.

An action to determine the rights of various parties to certain funds in the hands of the Iowa State Highway Commission, and to determine the liability of a surety on a bond. From a decree entered therein, the Surety Company appeals.

Affirmed in part; reversed in part.Parrish, Cohen, Guthrie & Watters, of Des Moines, for appellant Consolidated Indemnity Co.

Carr, Cox, Evans & Riley (by John Inghram), of Des Moines, for appellees Coon River Co-Operative Sand Ass'n, F. Kann, O. Kellner, and Commercial Credit Co.

Lewis & Lewis, of Mt. Ayr, and Stipp, Perry, Bannister & Starzinger, of Des Moines, for appellee First Trust & Savings Bank of Moville.

J. C. Pryor, of Burlington, for appellee Chicago, B. & Q. Ry. Co.

L. A. Philpot, of Glenwood, for appellees C. D. Allemang, Fred Drenkhahn, Standard Oil Co. (Indiana) K. W. Carlisle, and A. Weber.

Spence & Beard and Grant L. Hayes, all of Mt. Ayr, for appellees Mt. Ayr Service Station, S. W. and A. F. Holland, Butler Market, Jennie C. Butler, Carr Chevrolet Co., Miller's Café, Johnston Auto Co., E. E. Edwards, and E. F. Bowman.

Maxwell A. O'Brien, of Des Moines, for appellee Iowa State Highway Commission.

Lehmann, Hurlburt & Hossfeld, of Des Moines, for appellee General Tire Co.

ALBERT, J.

Two cases were originally filed in equity which were later consolidated, resulting in an action under chapter 452, Code 1931 (section 10299 et seq.), to determine the rights of the respective parties involved. On the 6th day of January, 1931, the McDougall Construction Company was awarded a contract by the state highway commission for the improvement by graveling of project 613, Ringgold county, Iowa. On the same day the construction company made application to the Consolidated Indemnity & Insurance Company for the execution of a statutory bond to accompany said contract, and such bond was executed and filed with the Iowa state highway commission. The contract price for the construction of the project was $44,986.92.

On May 14, 1931, the McDougall Construction Company executed and delivered to the First Trust & Savings Bank of Moville, Iowa, a written assignment which will be later set out.

On June 12, 1931, the McDougall Construction Company filed a notice of abandonment of the project with the Iowa state highway commission. The insurance company then completed the work at an expense of $5,764.17. Many additional lienable claims have been filed against the project in the sum of $28,843.95, making a total liability on the part of the insurance company of $34,608.12, less any amount of the moneys in the hands of the Iowa state highway commission which may be allocated to the payment of these claims. There is $26,630.04 in the hands of the highway commission, being the balance due on this contract, which amount includes a warrant of $7,940.70, which, prior to the abandonment of the contract on June 8, 1931, was issued by the state auditor of the state of Iowa and delivered to the First Trust & Savings Bank of Moville. On presentation of the same to the treasurer of the state, payment was refused because of the fact that the contractor had abandoned its contract prior to the time the same was presented to the state treasurer for payment.

Ten thousand dollars was loaned by the Moville Bank to the construction company on the Ringgold county project, and $17,749.79 was paid to the bank under its assignment from the proceeds of the project.

When the McDougall Construction Company made application to the insurance company for the bond in question, as a part of such application was the following provision: “That in further consideration of the execution of said bond, the undersigned hereby assigns, transfers and conveys to the Company all the deferred payments and retained percentages, and any and all moneys and properties that may be due and payable to the undersigned at the time of any breach or default in said contract, or that may thereafter become due and payable to the undersigned on account of the said contract, or on account of extra work or materials supplied in connection therewith, hereby agreeing that such money, and the proceeds of such payments and properties shall be the sole property of the Company, and to be by it credited upon any loss, cost, damage, charge and expense sustained or incurred by it under said bond.” This bore date January 6, 1931.

The assignment by the construction company to the Moville bank read as follows: “That we McDougall Construction Co., in consideration of the sum of one dollar and other good and valuable consideration in hand paid, the receipt whereof is hereby acknowledged, do hereby sell, assign, transfer, and set over to First Trust & Savings Bank of Moville, Iowa, all moneys due or to which we may be now or hereafter entitled on account of work on Project No. 613 Ringgold County, Iowa, under and by virtue of a certain contract entered into between the said McDougall Construction Co., and Iowa State Highway Commission of Ames, Iowa, under date of January 6, 1931, also hereby assigning and transferring all estimates now on file or hereafter allowed on account of work done under said contract and authorize and direct all payments of moneys due or hereafter becoming due on account of said work to be paid to said First Trust & Savings Bank of Moville, Iowa. Dated this 14th day of May, 1931.”

This assignment was duly acknowledged before a notary public, and was filed with the Iowa state highway commission on the 16th day of May, 1931. The assignment to the bonding company, above set out, was filed with the Iowa state highway commission on the 12th day of June, 1931. It appears, therefore, that, while the assignment to the bonding company was first in time, the assignment to the Moville Bank was first in time of filing with the highway commission.

The district court held that the rights of the bank, under its assignment, were superior to the rights of the bonding company under its assignment. This is the first question raised on this appeal. Reliance is largely, if not wholly, based upon the case of Ottumwa Boiler Works v. M. J. O'Meara & Son, 206 Iowa 577, 218 N. W. 920, 923. In that case we announced the rule as follows: “We hold at this point that the appellant, being in fact the first assignee, was entitled to priority over the bank, the second assignee, although the latter first gave notice of its assignment to the county official.”

The question to be determined is whether or not this rule should be applied to the case under consideration. In the O'Meara Case, the first assignment in time was on April 29, 1922, in which the contractors assigned...