Getchell & Martin Lumber & Mfg. Co. v. Peterson & Sampson
| Decision Date | 13 July 1904 |
| Citation | 100 N.W. 550,124 Iowa 599 |
| Parties | GETCHELL & MARTIN LUMBER & MANUFACTURING COMPANY, Plaintiff, Appellee, v. PETERSON & SAMPSON and THE NATIONAL SURETY COMPANY, Defendants, Appellants, AND H. W. MCQUAID, W. V. MCQUAID, and the CHICAGO LUMBER & COAL COMPANY, Defendants, Appellees |
| Court | Iowa Supreme Court |
Appeal from Polk District Court.--HON. W. H. MCHENRY, Judge.
Decree AFFIRMED.
Ryan Ryan & Ryan, for appellants.
Spurrier Forbes & Mills, C. C. & C. L. Nourse and Clark & McLaughlin for appellee.
THE opinion states the case.--Affirmed.
The defendant H. W. McQuaid entered into a written contract with the firm of Peterson & Sampson, whereby the latter undertook to furnish the labor and materials and erect for the former a dwelling house in the city of Des Moines for the agreed compensation of $ 2,897. The work was to be done under the direction and to the satisfaction of Libbe, Nourse & Rasmussen, architects. Payments upon the contract price were to be made from time to time, according to the progress of the work, in manner stated as follows: It was also provided that upon a certificate by the architects that the contractors had failed to perform the work as agreed, or to prosecute it with proper diligence, the owner might terminate the employment, take possession of the building, and proceed to its completion; and, if the expense thus incurred should exceed the unpaid balance of the contract price, the contractors would make good the loss. To secure the due performance of the contract, Peterson & Sampson, together with the National Surety Company, made and delivered to the said H. W. McQuaid their bond, the material part of which is the following words:
Know all men by these presents, that we, Peterson & Sampson as principal, and National Surety Company as sureties, are held and firmly bound unto H. W. McQuaid, Des Moines, Iowa and to all persons who may be injured by any breach of any of the conditions, of this bond, in the penal sum of one thousand ($ 1,000) dollars, lawful money of the United States, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, legal representatives and assigns, jointly and severally, firmly by these presents. The condition of the above obligation is such, that whereas the said Peterson & Sampson, entered into contract with H. W. McQuaid, bearing date the 10th day of July, 1901, wherein said Peterson & Sampson undertakes and agrees to erect frame residence on Linden street, Des Moines, Iowa and to faithfully perform all the terms and requirements of said contract within the time therein specified, in a good and workmanlike manner, and in accordance with the plans and specifications attached to said contract, and made a part thereof. Now, if the said Peterson & Sampson shall well and truly perform the covenants and stipulations in said contract contained, and pay all damages which may be sustained to the said H. W. McQuaid, and to any person or persons, resulting from the negligence of said Peterson & Sampson, their agents or employes in the performance of said work, and well and truly pay all claims for labor and material furnished, for said work, and save said H. W. McQuaid harmless from any and all claims for damages, as aforesaid, and from any liens and claims for labor and material under the laws of the State of Iowa then this bond to be void, otherwise to remain in full force and effect.
Peterson & Sampson proceeded with the construction of the house, but, failing to complete it within the time agreed, McQuaid took possession, and employed other mechanics to finish the work. Before the discharge of the contractors they had purchased materials for the building in considerable amounts from the plaintiff and from the defendant Chicago Lumber & Coal Company, whose claims on such accounts are unpaid. This action was begun by the plaintiff to establish and enforce a lien upon the building for the amount of its said claim. Subsequently, by an amendment to its petition, the surety company was made a defendant, and recovery demanded upon the bond to which reference has already been made. The defendant Chicago Coal & Lumber Company by cross-bill also sets up the indebtedness of Peterson & Sampson to itself for materials, claims a lien therefor on the building, and asks to recover the amount of said claim from the surety company on the bond. H. W. McQuaid, answering, alleges that of the contract price of $ 2,897 he has paid to Peterson & Sampson $ 2,003.54, and expended the further sum of $ 252.95 in completing the building after the contractors were discharged, leaving in his hands an unexpended balance of $ 640.51, against which he makes a claim of further damages in the sum of $ 300 on account of the failure of said contractors to have the building ready for use within the time fixed by the contract. The surety company denies all liability on the bond for the alleged reasons; (1) that it was deceived and misled into signing the bond by false representations of H. W. McQuaid as to the ownership of the land on which the building is erected; and (2) that, without its consent, McQuaid failed to observe the terms of the contract, and made payments to Peterson & Sampson without requiring certificates and estimates from the architects. By the decree of the trial court plaintiff's claim for a lien was established in the sum of $ 812.60, and subject thereto, the lien of the Chicago Lumber & Coal Company was also established for $ 593.78. It was also found that, after giving McQuaid credit for all payments made on the contract, and for all damages to which he was entitled, there remained in his hands applicable to the claims of subcontractors the sum of $ 400.51, which sum he was ordered to pay over to the plaintiff, to be applied in reduction of the amount of its recovery as aforesaid. It was further adjudged that the surety company be required to pay upon the bond in suit the sum of $ 1,045, the same to be applied pro rata to the discharge of the judgments in favor of plaintiff and the Chicago Lumber & Coal Company, and, in case such judgments shall have been discharged by McQuaid or by the sale of his property, he shall be entitled to receive the indemnity paid by said surety. From this decree the surety company and Peterson & Sampson alone appeal, and of these appeals that of the surety company is alone argued.
Counsel for the appellant have simplified the somewhat complicated record by stating certain specific propositions upon which they rely for a reversal, and we shall confine our review entirely to the questions thus presented. These propositions are: (1) that the payments by McQuaid to Peterson & Sampson were made without requiring the architects' estimates and certificates, thus releasing the surety; (2) the bond never became of binding force or effect, because of the false representations by McQuaid as to the ownership of the property; (3) the surety cannot be held liable beyond the compensation named in the contract; (4) there is no privity of contract between the subcontractors and the surety. McQuaid is the only person protected by the bond, and the only person who can maintain action upon it; (5) no recovery can be had against the surety until the entire contract price has been paid by the owner; (6) since the trial below, McQuaid has taken an assignment of the subcontractors' claims; and (7) judgment cannot be rendered against the surety in excess of the penalty named in the bond.
I. Reversing to some extent the order of discussion pursued by counsel, we first consider whether there is any such privity between the subcontractors and surety as will enable the former to maintain an action upon the bond. Whatever may have been the rule of the earlier cases in other jurisdictions, it is well established in this State--as it is in many others--that a promise made by one person to another for the benefit of a third person may be enforced by the latter in an action in his own name. Schemerhorn v Vanderheyden, 1 Johns. 140 (3 Am. Dec. 304); Lawrence v. Fox, 20 N.Y. 268; Hall v. Marston, 17 Mass. 575; Johnson v. Knapp, 36 Iowa 616; Knott v. R. R., 84 Iowa 462, 51 N.W. 57; McHose v. Dutton, 55 Iowa 728, 8 N.W. 667; Bank v. Rowley, 92 Iowa 530, 61 N.W. 195. See, also, authorities collected in 15 Ency. Pl. & Pr. 510. This rule has often been applied to bonds of similar nature to the one now under consideration. Jordan v. Kavanaugh, 63 Iowa 152, 18 N.W. 851; Baker v. Bryan, 64 Iowa 561, 21 N.W. 83; Whitehouse v. Surety Co., 117 Iowa 328, 90 N.W. 727; Doll v. Crume, 41 Neb. 655 (59 N.W. 806); Kaufmann v. Cooper, 46 Neb. 644 (65 N.W. 796); Am. S. Co. v. Thorn-Halliwell Cement Co., 9 Kan.App. 8 (57 P. 237); Burton v. Larkin, 36 Kan. 246 (13 P. 398, 59 Am. Rep. 541); Am. S. Co. v. Reeder, 15 Ohio Cir. Ct. 47 (8 O. C. D. 684). Following the doctrine thus stated, if the language of the bond and the proved circumstances of the case make plain the intention of the parties to secure not only the owner of the building, but the laborers and material men as well, then the latter may avail themselves of the security thus provided, even though they are not specifically named in the bond, and no consideration passes directly from them to the surety. That the bond in suit was intended to secure the debts incurred by Peterson & Sampson for labor and materials admits of no reasonable doubt. By its...
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