Fry v. P. Bannon Sewer Pipe Company

• Decision Date: 05 March 1913
• Docket Number: 22,114
• Citation: 101 N.E. 10,179 Ind. 309
• Parties: Fry et al. v. P. Bannon Sewer Pipe Company
• Court: Indiana Supreme Court

101 N.E. 10

179 Ind. 309

Fry et al. v. P. Bannon Sewer Pipe Company

No. 22,114

Supreme Court of Indiana

March 5, 1913

From Shelby Circuit Court; Will M. Sparks, Judge.

Action by the P. Bannon Sewer Pipe Company against James W. Fry and others. From a judgment for plaintiff, the defendants appeal. (Transferred from the Appellate Court under § 1405 Burns 1908, Acts 1901 p. 590.)

Affirmed.

Hord & Adams and Bennett & Davidson, for appellants.

Carter & Morrison and Davison Wilson, for appellee.

OPINION

Myers, C. J.

Appellee sued James W. Fry and Frank Lewark as partners and contractors under the name and style of J. W. Fry & Company for the construction of three separate sewers in the city of Greensburgh under contracts with that city, and six other persons as sureties upon three several bonds claimed to have been executed by them as sureties for J. W. Fry & Company for the performance of their contracts and payment for material, sewer pipe, claimed to have been ordered by the contractors for the construction of sewers contracted by them to be built in Greensburgh, under the style of J. W. Fry & Company, and shipped to Greensburgh, consigned by that style.

The complaint is in one paragraph, counting upon three separate contracts, and three separate bonds executed concurrently therewith, and the complaint was challenged upon the ground of its insufficiency of facts to constitute a cause of action. In one of the contracts it is provided that the contractor will "save the city free and harmless from any and all liability that may be occasioned through any fault or negligence on their part or their agents or employes in the performance of the conditions imposed upon them herein; that they will pay for all materials and labor, and save the first party free from any and all liability from liens." Two of the contracts provide that the contractor will save said city free and harmless from any and all liability that may be occasioned through any fault or negligence on their part, their agents or employes in the performance of the conditions imposed upon them herein; that they will pay for all materials and labor and save said first party free from any and all liability by reason thereof and free from any and all liabilities from liens, etc. Two of the bonds are conditioned that the contractor "shall well and truly perform all and severally the conditions" of the contracts and hold and save the city harmless and free from liability or the payment of any debt or damage by reason of the act of the contractor in the execution of the work "and shall pay all claims for labor and material used in making such improvement." The third bond set out in the complaint omits any mention of payment for material and labor, but is otherwise similar in its conditions to the other two bonds. There were answers in general denial, and also answers of nonexecution of the bonds, verified.

The sufficiency of the complaint is challenged upon the ground that it is not alleged that the material furnished by appellee was used in the construction of the work. The allegations in this particular are, "That plaintiff at said prices and upon said terms for the purpose of being used in the erection, construction and building of said storm districts, sold and delivered to said J. W. Fry & Company at Greensburgh, Indiana, at the prices and upon the terms named in said proposal, a large amount of sewer tile, a bill of particulars of which is filed herewith and made a part hereof marked "Exhibit H.' That said sewer tile was received f. o. b. cars at Greensburgh, Indiana, by said J. W. Fry & Company and by it hauled to various parts of said city, and were distributed along the lines of and adjacent to said sewers so to be constructed, and for the purpose of being used in the construction thereof. That plaintiff does not know, and has no means of knowing to what storm districts, and in what quantities it was so hauled, but the plaintiff avers that it was so accepted and distributed by said J. W. Fry & Company, and said Frank Lewark, the latter one of the alleged members of the alleged copartnership of J. W. Fry & Company." The contention of appellants is, that the same rule in regard to showing that the material or labor for which a lien is sought under the mechanic's lien law, obtains under this class of contracts and bonds; that sureties are the favorites of the law, and that their contracts are not to be extended by construction. The proceedings for the construction of the sewers were had under the cities and towns act of 1905 (Acts 1905 p. 219). By § 8959 Burns 1908, Acts 1905 p. 219, § 265, it is provided, that "Upon the acceptance of any such bid the successful bidder shall enter into a written contract for the faithful execution of such work and shall give bond in an amount equal to fifty per cent of the contract price of such work, with freehold sureties, two of whom shall be residents of the county in which such city or town is located, to the approval of said common council or board of trustees to secure the performance of such contract and to hold such city or town harmless from the payment of any debt or damage by reason of the act of such contractor and to secure the payment of all claims for labor and material used in such improvement, which bond shall be in lieu of any and all other bonds heretofore provided for by any other law or laws of this state: Provided," etc. The bond required is therefore a statutory bond, and, in so far as within the statute, should receive a construction to effectuate its purpose. In such cases the provision of the statute itself furnishes a consideration for the conditions thereby imposed. Bildersee v. Aden (1872), 62 Barb. 175; Shirley v. Byrnes (1870), 34 Tex. 625; Thompson v. Blanchard (1850), 3 N.Y. 335; Sterner v. Palmer (1859), 34 Pa. 131; Richards v. Morse (1853), 36 Me. 240; Carpenter v. Mather (1842), 4 Ill. 374.

At the time this proceeding was had, and the bonds were executed, there was no provision of the statute, as there now is (Acts 1907 p. 167, § 8712 Burns 1908), for acquiring liens against public property, hence the provisions of the contracts, and bonds, as to saving the city harmless from liens, were of no consequence at that time, and the provision for the payment of all claims for labor and material used in such improvement could only be for the benefit of third persons, and not the city, and the contract and bond are dual in character, and run to third persons. Aetna Indemnity Co. v. Indianapolis, etc., Fuel Co. (1912), 178 Ind. 70, 98 N.E. 706; Knight & Jillson Co. v. Castle (1909), 172 Ind. 97, 87 N.E. 976, 27 L. R. A. (N. S.) 573.

The moral obligation would be sufficient in connection with the statute, to raise the implication of such liability. This being true, the contracts and bonds will be construed together, and the provisions of the statute will be read into such contracts and bonds, and the liability will be confined to that contemplated by the law requiring it, and that the parties contract with reference to that law. § 1221 R. S. 1881, § 1278 Burns 1908; Herrod v. State, ex rel. (1896), 15 Ind.App. 648, 43 N.E. 144, 44 N.E. 378; United States v. Stephenson's Exrs. (1839), 1 McLean 462, F. Cas. No. 16,386; Carneal's Heirs v. Day (1821), Lit. Sel. Cas. (Ky.) *492; Robling v. Board, etc. (1895), 141 Ind. 522, 525, 526, 40 N.E. 1079; Faurote v. State, ex rel. (1890), 123 Ind. 6, 23 N.E. 971; Faurote v. State, ex rel. (1887), 110 Ind. 463, 11 N.E. 472; Holthouse v. State, ex rel. (1912), 49 Ind.App. 178, 97 N.E. 130; Hart v. State, ex rel. (1889), 120 Ind. 83, 21 N.E. 654, 24 N.E. 151; Graham v. State, ex rel. (1879), 66 Ind. 386; State, ex rel., v. Rowles (1912), 177 Ind. 682, 98 N.E. 722; Opp v. TenEyck (1885), 99 Ind. 345; Scudder v. Union Nat. Bank (1875), 91 U.S. 406, 23 L.Ed. 245; Green v. Sarmiento (1811), 3 Wash. C. C. 17, 10 F. Cas. 1117, F. Cas. No. 5,760; Turpin v. Povall (1837), 8 Leigh (Va.) 93; Crumlish's Admr. v. Central Improv. Co. (1893), 38 W.Va. 390, 18 S.E. 456, 45 Am. St. 872, 23 L. R. A. 120.

The covenant for the payment for materials is independent of the covenant for the protection of the city. United States Fidelity, etc., Co. v. American Blower Co. (1908), 41 Ind.App. 620, 84 N.E. 555; United States Fidelity, etc., Co. v. Omaha, Bldg., etc., Co. (1902), 116 F. 145, 53 C. C. A. 465; School Dist., ex rel., v. Livers (1899), 147 Mo. 580, 49 S.W. 507.

Whilst the bond required by the statute runs to those who furnish labor or material to a contractor it has been repeatedly held that such bond does not run to those furnishing labor and material to a subcontractor; Faurote v. State, ex rel. (1887), 111 Ind. 73, 11 N.E. 476; Faurote v. State, ex rel. (1887), 110 Ind. 463, 11 N.E. 472; Miller v. State, ex rel. (1905), 35 Ind.App. 379, 74 N.E. 260; Swindle v. State, ex rel. (1896), 15 Ind.App. 415, 44 N.E. 60. And, that a bond complete and unambiguous on its face, can not be recovered upon for lack of something claimed to be omitted, without allegation or proof that it was omitted, where the statute does not require the claimed omitted terms to be inserted. Hart v. State, ex rel. (1889), 120 Ind. 83, 21 N.E. 654, 24 N.E. 151.

These holdings imply that the obligations of the sureties shall not be extended beyond their undertaking under the statute, but within that undertaking, a liberal interpretation is indulged in favor of the material man, and laborer. Closson v. Billman (1904), 161 Ind. 610, 69 N.E. 449; United States Fidelity, etc., Co. v. AmeriCan Blower Co., supra; Buffalo Forge Co v. Cullen, etc., Mfg. Co. (1904), 105 Mo.App. 484, 79 S.W. 1024. This being true, sureties on such bonds must take notice of the default of their principals. Hohn v. Shideler (1905),...