Finch v. Enke

• Decision Date: 05 January 1929
• Docket Number: 6472
• Citation: 222 N.W. 657,54 S.D. 164
• Parties: C.H. FINCH et al, dba Brookings Coffee Company, Appellants, v. H. ENKE, H. Enke, dba Enke Construction Company, et al, Respondents.
• Court: South Dakota Supreme Court

54 S.D. 164

222 N.W. 657

C.H. FINCH et al, dba Brookings Coffee Company, Appellants,

v.

H. ENKE, H. Enke, dba Enke Construction Company, et al, Respondents. South Dakota Supreme Court Appeal from Circuit Court, Brookings County, SD HoNW W. Knight, Judge #6472—Reversed E. A. Berke, Brookings, SD Attorneys for Appellants. J. N. Johnson, of Canby, Minn., for Respondents. Opinion Filed Jan 5, 1929

MISER, C.

This appeal is from an order sustaining a demurrer to appellant’s complaint. In the complaint it is alleged that defendant Enke made a contract with the state of South Dakota for the building of highway No. 15, and agreed therein the pay “all just claims for materials, supplies, and labor, and all other just claims incurred by him or any of his subcontractors, in carrying out the provisions of this contract,” and further agreed that the contract bond should be held to cover all such claims. The contract bond furnished therewith was executed by respondent Federal Surety Company, as surety. Among the conditions of such bond was one that the principal therein should “pay or cause to be paid the wages stipulated and agreed to be paid each and every laborer employed by the principal, his agent, or subcontractor, and all claims incurred for materials, supplies, tools, and appliances, in carrying out the provisions of said contract.” Thereafter defendant Hammond, as a subcontractor of defendant Enke, did the road work described on the contract. While Hammond was doing the work, appellants sold and delivered to Hammond food, groceries, and necessities of life, which were consumed and used by him in feeding the men who worked on the road project. The complaint alleges eight causes of action. The first, second, third, and fourth were based upon claims for meat, groceries, and necessities of life. The sixth was based upon a check given by Hammond for labor. The seventh and eighth were based upon checks given by him for groceries. The firth cause of action was based upon a claim for bolts, blades, and other material that went into the construction of the road; but the demurrer thereto was overruled.

Two questions are therefore presented by this appeal: First, are the provisions of the contract and bond broad enough to include the groceries, meats, etc., furnished to the subcontractor? Second, do the provisions of the contract and bond and the indorsement and delivery by the payees of checks for labor and groceries used as aforesaid, and which checks have been dishonored, give to the indorsee and holder thereof a cause of action against the surety for the debts incurred by the contractor for such labor and groceries?

Many courts, including the United States Supreme Court, hold that groceries, provisions, supplies, etc., furnished a contractor for public work, and necessarily used and consumed by the men during the progress of the work, are materials within the meaning of a statutory bond conditioned for the payment of all labor or materials used in the performance of the contract. 46 ALR 512. A leading case taking that view is Brogan v. National Surety Co., 38 SCt 250, 62 LEd 703, LRA 1918D, 776. In that case, the bond was such as required by 28 Stat. 278 (40 USCA § 270), and bound the contractor “to ‘make full payment to all persons supplying him with labor or materials in the prosecution of the work provided for in’ the contract.” In the case at bar, it is not alleged that it was absolutely necessary for the sub-contractor to furnish board to the men. However, the language of the bond in the case at bar differs from that of the bond in the Brogan Case. As pointed out by this court in March v. Butler, “supplies” is a broader and more comprehensive term than “materials.” On that point, this court cited the case of Bricker v. Rollins, 178 Cal. 347, 173 P. 592. In the California case, it does not appear that the furnishing of board by the contractor was indispensable to the performance of the work, as it was in the Brogan Case; but, in the California case, as in the case at bar, the language of the bond was much more comprehensive than the language of the bond in the Brogan Case and of 28 Stat. 278, requiring the bond. Furthermore, as stated in Franzen v. Southern Surety Co., 35 Wyo. 15, 246 P. 30, 46 ALR 496, the fundamental question to be determined is whether, when the surety executed the bond, the payment of claims for groceries could reasonably be regarded as within the contemplation of the parties.

In the case last cited, the Wyoming court said:

“We think, in short, that where labor or material furnished is necessary or even proper, for the execution of any particular work, under a contract like that in the case at bar, and the furnishing of such labor and material may be fairly held to have been in contemplation of the parties when executing the contract and the bond therefor, and the same is of a nature so as to be necessarily wholly consumed in the particular work, then it is protected under a contract and bond therefor, and the same is of a nature so as to be necessarily wholly consumed in the particular work, then it is protected under a contract and bond like those in the case at bar.”

In the annotation thereto, 46 ALR 511, it is stated that the question whether such item contributes to, and is necessary in, the completion of the work, and is used or consumed in the prosecution thereof, is generally...