Duncanson-Harrelson Co. v. Travelers Indem. Co.

• Citation: 25 Cal.Rptr. 718,209 Cal.App.2d 62
• Decision Date: 29 October 1962
• Docket Number: DUNCANSON-HARRELSON
• Court: California Court of Appeals
• Parties: TheCO., a corporation, Plaintiff and Respondent, v. The TRAVELERS INDEMNITY COMPANY, a corporation, Defendant and Appellant. Civ. 20396.

Page 718

25 Cal.Rptr. 718

209 Cal.App.2d 62

The DUNCANSON-HARRELSON CO., a corporation, Plaintiff and Respondent, v. The TRAVELERS INDEMNITY COMPANY, a corporation, Defendant and Appellant.

Civ. 20396.

District Court of Appeal, First District, Division 2, California.

Oct. 29, 1962.

Tinning & DeLap, Dana Murdock, Robert N. Sanford, Jr., Richmond, for appellant.

Boekel, Moran & Morris, San Francisco, for respondent.

AGEE, Justice.

In May, 1958, the Central Contra Costa Sanitary District awarded to M. Miller Company a contract for the construction of a portion of an outfall sewer designed to empty into Suisun Bay. Defendant was the surety on Miller's public works bond. (Gov.Code §§ 4200, 4204.) Plaintiff recovered a money judgment upon the bond and defendant has appealed.

On September 3, 1958, respondent subcontracted with Miller to do some of the work called for under Miller's contract. This work was completed by November 3, 1958. Respondent was allowed $9,017.10 by the trial court for said work, and this portion of the judgment is not an issue on this appeal.

Soon after the making of the foregoing subcontract, respondent agreed to and did furnish Miller with steel sheet piling, together with pile driving equipment, to be used by Miller in the performance of its contract. The material and equipment so furnished are set forth in Miller's purchase orders No. 9898, undated, No. 9900, dated October 13, 1958, and No. 9904, dated October 17, 1958. The agreed monthly rental charge for the piling, based upon the tonnage furnished, was specified therein, as was a charge of 8 cents per pound for 'spoilage,' i. e., sheet piling not returned or returned in such a damaged condition that it was not re-usable.

The rental period terminated June 10, 1960. The trial court allowed $24,613.38 for rental and 'spoilage.' The correctness of this amount was arrived at by stipulation and the necessity of producing the invoices and supporting data was dispensed with.

The principal issue on appeal is whether respondent was required to comply with the notice provision in section 4209 of the Government Code in order to have a right of action against the surety upon the bond. The section was enacted in 1959 and became effective September 18, 1959. (Stats.1959, ch. 1594, § 1.) The enacting statute expressly provided that it was not retroactive. (Stats.1959, ch. 1594, § 2.)

In recognition of the effective date of the section, appellant states that its appeal is 'from that portion of the judgment in the trial Court awarding damages to respondent for the furnishing of materials to appellant's principal, * * * after September 18, 1959.' (Emphasis ours.)

Appellant further states: 'Appellant concedes that Section 4209 does not apply to the furnishing of materials prior to September 18, 1959, by respondent. * * * [but] It would seem clear that Government Code Section 4209 would apply to all materials furnished by respondent to Miller after September 18, 1959.'

Appellant contends that, because the charge for the use of the pilings was on a monthly basis, each month is to be considered as a new and separate 'furnishing of materials.' We do not agree. Respondent correctly points out that no materials or labor were furnished by it after October 1958, by which time all of the pilings had been delivered by respondent to the jobsite. The judgment should be affirmed on this ground alone.

However, with the passage of time since the effective date of section 4209, it is unlikely that this particular contention will ever again be presented to us. Therefore, we think it is proper to discuss the principal issue on this appeal, as stated above, because it may arise again.

Section 4209 provides: 'In any case in which the law of this State requires that a contractor for construction of a public work file a payment bond, every person to whose benefit the bond inures who has not been paid in full, other than a person who performs actual labor for wages, and who has no direct contractual relationship with the contractor furnishing said bond shall have a right of action upon the bond only upon having given written notice to said contractor within 90 days from the date on which such person furnished the last of the labor or materials for which such claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the labor or materials were furnished. Such notice shall be served by mailing the same by registered or certified mail, postage prepaid, in an envelope addressed to the contractor at any place he maintains an office or conducts his business, or his residence, or by personal service.'

Appellant contends that this section should be so interpreted as to arrive at the following result: 'In other words, persons who perform actual labor for wages and persons who are not in a direct contractual relationship with the contractor are given no direct right of action upon the prime contractor's payment bond. Only those persons who have a direct contract with the contractor are given a direct right of action upon the payment bond and then only if they comply with the notice requirements of Section 4209.' We do not agree with this interpretation.

Does Section 4209 Require Respondent To Give Notice To The Contractor As a Condition Precedent To Maintaining a Direct Cause of Action Against the Surety?

For the purpose of clarification, the clause in section 4209, 'other than a person who performs actual labor for wages,' should be eliminated from our discussion of this issue, since respondent is obviously not such a person. The clause is set off from the rest of the main sentence by commas and should be read as a parenthetical clause. It clearly indicates an intent to segregate this clause from the rest of the sentence. While not controlling, punctuation is to be considered in the interpretation of a statute. (45 Cal.Jur.2d, Statutes, § 154, 'Punctuation'; Estate of Coffee, 19 Cal.2d 248, 251, 120 P.2d 661.)

If it were not for this exclusionary clause, a person 'who performs actual labor for wages' but who does not have a direct contractual relationship with the general contractor would be required to give the notice in question. This result would obviously be contrary to the express wording of the statute.

Deleting this clause for the sole purpose of the instant case, the pertinent provision of section 4209 would then read: '[E]very person to whose benefit the bond inures who has not been paid in full, and who has no direct contractual relationship with the contractor furnishing said bond shall have a right of action upon the bond only upon having given written notice to said contractor * * *' (emphasis ours).

While respondent comes within the first category, it does not come within the second, since it is not disputed that respondent did have a direct contractual relationship with Miller. We therefore conclude that respondent was not burdened with the notice requirement imposed by section 4209.

It may be noted that section 4210 of the Government Code provides as follows: 'In any case in which the law of this State affords a right to a person furnishing labor or materials for a public work who has not been paid therefor to file a stop notice with the public agency concerned and thereby cause the withholding of payment from the contractor for the public work, any such person having no direct contractual relationship with the contractor, other than a person who performed actual labor for wages, may file such a notice, but no payment shall be withheld from any such contractor pursuant to any such notice, unless such person has given written notice to said contractor and the public agency concerned within 90 days * * *.' (Emphasis ours.)

The similarity in the wording of these two statutes is of significance. Both were enacted into law in the same Act. (Stats.1959, ch. 1594.) They are essentially notice statutes which grant different remedies to a person who has no direct contractual relationship with the contractor on a public works project. Each is conditioned by notice requirements in order to protect the contractors from so-called 'secret liens' arising under work and materials furnished by subcontractors. Each contains the exclusionary clause, 'other than a person who [performed or] performs actual labor for wages,' which clause is set off by commas, leaving the notice requirement applicable to all others '[having] no direct contractual relationship with the contractor.'

In comparing section 4210 with section 1193 subdivision (a) of the Code of Civil Procedure, also enacted in 1959 (Stats.1959, ch. 2034), the Attorney General of California opined: 'Similarly to Government Code section 4210, persons having a direct contractual relationship with the owner or those performing actual labor are excepted from the notice requirements. As respects these exceptions, the Legislature apparently felt there existed no need for such preliminary notification either because the owner would already have cognizance of such potential claims or for other reasons.' (35 Ops.Cal.Atty.Gen. 136, 139.)

Section 1193 subdivision (a) of the Code of Civil Procedure provides: 'Except one under direct contract with the owner or one performing actual labor for wages, every person who furnishes labor, service, equipment or material for which a lien otherwise can be claimed under this chapter, must, as a necessary prerequisite to the validity of any claim of lien subsequently filed, cause to be given not later than 15 days prior to the filing of a claim of lien a written notice as prescribed by this section, to the owner or reputed owner and to the original contractor.' (Emphasis ours.)

The foregoing section, of course, deals with mechanics' liens on real property arising under private construction contracts, but the interpretation of the italicized clause, as quoted above, is of assistance herein. In Alta Bldg. Material Co. v. Cameron,...