Donaldson & Yahn v. Benight

• Decision Date: 07 October 1924
• Docket Number: 13701.
• Citation: 232 P. 116,105 Okla. 108,1924 OK 853
• Parties: DONALDSON & YAHN et al. v. BENIGHT et al.
• Court: Oklahoma Supreme Court

232 P. 116

105 Okla. 108, 1924 OK 853

DONALDSON & YAHN et al. v. BENIGHT et al.

No. 13701.

Supreme Court of Oklahoma

October 7, 1924

Rehearing Denied Dec. 23, 1924.

Syllabus by the Court.

The subject-matter out of which this action arose was the extension of the waterworks system for the city of Perry. The process of doing the work was divided into three parts, each covered by separate contracts, between the same parties. The entire work involved the completion of a single project.

Public buildings and structures are not subject to labor and materialmen's liens. The statute has provided for a builder's bond in lieu of the mechanic's lien to protect the labor and materialmen for labor and material furnished and provided for the builder. In addition to the builder's bond and collateral thereto, municipalities and builders may contract for the city to pay any claims for labor and material out of sums owing to the contractor which the latter fails to pay.

Parties may make a contract for the benefit of a third party, who may enforce the same in an action in his own name. If the third party meets the conditions prescribed by the contract so as to entitle him to the benefits created by the same, then the original parties cannot modify or change the terms and provisions of the contract, so as to affect the rights of the beneficiary, without the consent of the latter.

The assignee of the amount due on a contract for a public building takes the assignment subject to the provisions of the contract with the municipality. If the contract provides for the protection of labor and materialmen's claims, out of any indebtedness owing to the contractor, the burden is on the assignee, before taking the assignment, to ascertain if the rights of any labor and materialmen have attached under the contract.

In construing a builder's bond and contract made for the protection of labor and materialmen, in connection with other contracts for the construction of public buildings, the instruments will be construed and applied, as far as practicable, so as to effect the aims and purposes of the mechanics' lien law, in relation to the same class of persons who furnish labor and material for the construction of buildings for private owners.

Record examined; held, the three contracts between the same parties related to the building of a single project. Under the contracts, whatever sums of money the city may hold for the contractor, without regard to the part of the project it may be owing for, and without regard to the part of the project the labor and material was furnished for, the city is bound to pay the sum to the interpleaders herein, according to their rights in the matter. C. D. Benight, the assignee of the contractors, took his assignment subject to the rights of the labor and materialmen, whose rights had attached prior to the date of the assignment.

Commissioners' Opinion, Division No. 4.

Appeal from District Court, Noble County; C. C. Smith, Judge.

Action by C. D. Benight against the City of Perry, in which Donaldson & Yahn, a partnership, and another interpleaded claiming same fund. Judgment for plaintiff, and interpleaders appeal. Reversed and remanded, with directions.

Cress & Tebbe, of Perry, for plaintiffs in error.

W. M Bowles, of Perry, for defendant in error C. D. Benight.

STEPHENSON C.

The city of Perry contracted with Alderson and Knox by separate agreements to construct one dam and reservoir, one pipe line and one filtration plant. The contracts required the builder to give a bond for the protection of the labor and materialmen. In addition to the bond and for the protection of the same class of persons, each contract, covering the construction of the three divisions of the project, contained the following provisions:

"If at any time during the progress of said labor the contractor shall fail or neglect to pay for labor performed or material furnished upon this work, then the city shall have the power to pay for such material or such labor out of amounts that may be due to said contractor, and in any such case the city, through the engineer, is hereby authorized and empowered to ascertain the amount or amounts due and owing to any labor or laborers from said contractors, in such matter and upon such proof as they may deem sufficient, without giving any notice of such proceedings to said contractor; and the amount or amounts so found by the city to be due to such laborer, or laborers, shall be final and conclusive as against said contractor, and may thereafter be paid by said city to such laborer or laborers."

The foregoing provision was made by the city for the protection of labor and materialmen, who provided and furnished material for the completion of the project. The contract in this respect was supplemental to the statutory bond required for like purposes. The surety company, which executed the bond for the protection of materialmen, became insolvent before this action was commenced. At the time the contractors terminated their work on the project, the city was indebted to them in about the sum of $7,400. The contractors were indebted to Donaldson & Yahn for material furnished them for use in the construction work, in about the sum of $6,100. The claimants commenced their action, on the contract referred to above, against the city and others for recovery of the indebtedness owing to them. Judgment went against the plaintiffs, who appealed the cause to this court, styled herein as Donaldson & Yahn v. City of Perry et al. (No. 13702) 232 P. 119. The contractors were also indebted to James Klostermyer for labor and material furnished on the project, in about the sum of $1,200. The claimant commenced his action against the same defendants with like results, and the cause is here on appeal, styled as Klostermyer v City of Perry et al. (No. 13703) 232 P. 119. The Bank of Commerce of Perry had extended credit to the contractors in the course of the construction work in about the sum of $7,800. The indebtedness was evidenced by a note executed and delivered by the contractors to the bank. The...