Fidelity & Deposit Co. of Maryland v. Shaid

• Decision Date: 12 April 1927
• Docket Number: 5794.
• Citation: 137 S.E. 878,103 W.Va. 432
• Parties: FIDELITY & DEPOSIT CO. OF MARYLAND v. SHAID et al.
• Court: West Virginia Supreme Court

137 S.E. 878

103 W.Va. 432

FIDELITY & DEPOSIT CO. OF MARYLAND v. SHAID et al.

No. 5794.

Supreme Court of Appeals of West Virginia.

April 12, 1927

Syllabus by the Court.

Only the party defendant who is improperly joined as such may demur on that ground, as he alone is prejudiced by such misjoinder.

A suit by a surety on the bond of a state road contractor, seeking application of assets of the contractor in the hands of the state road commission to the discharge of the liability of the bond, or seeking subrogation to the claim of the commission against a subsequent contractor on the same road project who has appropriated to his own use said assets without proper authority, is not a "suit against the state" within the prohibition of section 35, art. 6 Constitution.

A bill seeking consistent forms of relief, or alternative relief all springing from practically the same state of facts, and presenting no inconvenience or injury to any party in the administration of the equities, is not "multifarious."

Courts of equity will always entertain a bill for the assertion of the equitable right of subrogation and for avoiding a multiplicity of suits.

Surety if sued at law by state road commission on bond of state road contractor, could not, under Code, c. 126, § 5, plead equitable offset that commission should hold subsequent contractor liable for first contractor's material taken over by him.

Appeal from Circuit Court, Randolph County.

Suit by the Fidelity & Deposit Company of Maryland against Henry Shaid and others. From an order sustaining a demurrer of the named defendant and a dismissal of its bill, plaintiff appeals. Order sustaining demurrer overruled, bill reinstated, and cause remanded.

D. H Hill Arnold, of Elkins, for appellant.

Leroy See and H. G. Kump, both of Elkins, for appellees.

LIVELY J.

From an order sustaining a demurrer of Henry Shaid and dismissal of its bill, plaintiff appeals.

The defendants are Henry Shaid, the state road commission, L. W. Cole and Jas. A. Lambert, partners as Cole & Lambert, Earle Furr, D. U. O'Brien, Jesse Hanie, P.J. Rigg, Ray Lambert, James Lambert, and the unknown creditors of Cole, or Cole & Lambert, who have furnished labor or material on the construction of a bridge on a public highway, contracted to be built by L. W. Cole with the state road commission. Plaintiff avers that L. W. Cole contracted in writing with the state road commission on April 10, 1924, to build a bridge over Cedar creek on a certain public road for the sum of $19,420, according to plans and specifications, and gave bond in the penalty of $9,760, as required by law, with plaintiff as surety thereon, conditioned for the faithful performance of the contract and specifications therein, and to save harmless the commission from failure to complete the contract, or from damages growing out of carelessness of Cole, and conditioned further that Cole would pay for all labor and material used in the construction for which he was liable. Plaintiff avers that, prior to executing said bond as surety, Cole assigned, transferred, and conveyed to it in writing all his right, title, and interest in and to any and all materials, tools, plant, and equipment then upon, or thereafter placed upon, the project, to be in effect on the date the contractor should fail to complete the contract or whenever he should be in default under the contract, all for the better protection of the surety on the bond (plaintiff). The contract, bond for its performance, and assignment of tools, equipment, material, etc., are exhibited with the bill. The contract with the commission provides, inter alia, that, should the contractor discontinue the work, the engineer in charge shall give notice in writing to the contractor and his surety, and, after ten days and continued default, the commission shall take up the work, appropriate or use all materials and equipment on the ground, and proceed to have the work completed, and, upon completion thereof, if the expense thereof be less than the contract price if it had been completed by the contractor, the remainder (difference between contract price and amount required to complete) shall be paid to the contractor; but, if more, then the contractor and surety are bound to pay the excess.

The bill charges that the contractors began on the work, opened a quarry, and assembled a large amount of stone on the ground cut and ready to be placed, worth approximately $2,000, and other stone worth $300 or more, and had made large excavations for beginning the substructure of the bridge, but had not been paid therefor by the commission. On August 4, 1924, notice was served on plaintiff that the work was not progressing according to the contract, and that, if that condition continued, a default of the contract would be declared, and on August 22d a default was declared by the commission, and an order entered, "that all materials and equipment on the ground suitable and acceptable to the commission for said work be and they are hereby appropriated by the commission," and the bill says that said materials were appropriated by the commission, and that said materials thus appropriated were assets of Cole, the contractor, in the hands of the commission, and should have been used by it for the benefit of the contract, and to lessen the liability of the plaintiff as surety. The commission then called on plaintiff to complete the contract, a privilege which it waived. Thereupon the commission readvertised the project upon the same unit quantities and original specifications contained in the first advertisement for bids, and Henry Shaid, defendant, was awarded the contract for $21,795. The cost of building the bridge under the Shaid contract was $22,965, to which the commission added its expense for readvertising, $43,72, making a total of $23,008.72, or a difference of $2,796.72 in excess of the Cole contract price of $20,212, for which excess the commission has demanded payment of plaintiff, and is threatening to sue for that amount. The bill further says that defendant Shaid, well knowing that the material on the ground had been taken over by the commission, and well knowing that plaintiff as surety for Cole had the right to the benefit of the materials on the ground, and excavations and cribbage already made, appropriated all of it to his own use, and therefore is entitled to account therefor; that the commission has paid Shaid in full in good faith, not knowing that he had used said material, and, upon a fair settlement of the equitable rights of plaintiff by application of the materials, etc., as an offset against the $2,796.62 claimed as due from it, there will be nothing due from it by reason of its suretyship, and that Shaid should be compelled to account to the road commission and repay to it the worth of the materials, excavations, etc. appropriated by him without authority, for the relief of plaintiff against the demand of the commission. The bill offers to confess judgment in favor of the commission for the sum of $2,796.72, if the court or commission should require, subject to the court's decision upon the equities set up by plaintiff in its bill.

In addition to its obligation to pay the commission any excess over the contract price in finishing the work, if default was made, the bond required that the contractor should also pay for labor and material, and the bill charges that about 18 suits had been instituted by laborers on the bond for sums aggregating $2,696.44, which suits and claims plaintiff has settled in full by paying the claimants the sum of $2,100; that said labor was upon the materials furnished and excavations made for Cole, wherefore plaintiff is subrogated to the rights of these laborers to their liens and claims thereon, and that Shaid should account to the commission or to plaintiff for the fair value of the material and equipment thus appropriated. The bill further charges that Shaid, when he began the work, agreed with Cole that he would pay a stated price for the stone quarried, the total of which price, ascertained by measurement of the stone, should be applied by Shaid to payment of the laborers, but that Shaid failed to do so, and made no payment for the stone, except a royalty of 30 cents per cubic yard to O'Brien, the owner of the land on which the quarry was opened. The bill charges that the other defendants, Furr, O'Brien, Hanie, Rigg, the two Lamberts, and other claimants unknown to plaintiff, are claiming from plaintiff as surety sums due them as laborers on the project, and asks that they be required to set up their claims in this suit. The bill calls upon Shaid for a full discovery of all the work and material on the bridge for which he received pay from the commission, and a full discovery of the material on the ground used by him which was formerly the property of the original contractors.

The prayer of plaintiff's bill is that the threatened suit of the commission for the excess claimed by it under the bond be stayed, until plaintiff's equities as stated be ascertained; that Shaid be required to account for the material so taken and used by him in the bridge; that the value thereof be treated as a fund applicable to the claim of the road commission against plaintiff; and that any surplus be applied to the laborers' claims paid by plaintiff; that any unpaid laborers' claims may be ascertained; that plaintiff may have decretal judgment against its principal for sums paid by it as surety; and for general relief.

Shaid's demurrer says: (1) That one of his codefendants, the state road commission, is a state agency, and the bill is in fact against the state, and therefore cannot be maintained; (2) that the bill is multifarious; and, (3) that plaintiff's relief is...