Great Am. Ins. Co. v. Busby

• Citation: 247 Miss. 39,150 So.2d 131
• Decision Date: 25 February 1963
• Docket Number: No. 42430,42430
• Parties: GREAT AMERICAN INSURANCE COMPANY v. A. L. BUSBY et al.
• Court: Mississippi Supreme Court

Page 131

150 So.2d 131

247 Miss. 39

GREAT AMERICAN INSURANCE COMPANY v. A. L. BUSBY et al.

No. 42430.

Supreme Court of Mississippi.

Feb. 25, 1963.

White, Buntin & Martin, Gulfport, for appellant.

Jones, Phillips & Watkins, Meridian, Rushing & Guice, Biloxi, E. J. Ford, Jr., Gulfport, for appellee.

KYLE, Justice.

This case is before us on appeal by Great American Insurance Company, surety on an indemnity bond executed by Trosper Construction Company, Inc., as principal, in favor of Midwest Contracting Company, as obligee, from a judgment rendered by the Circuit Court of Harrison County in favor of A. L. Busby and others, claimants, for rentals on heavy construction equipment and labor and materials alleged to have been furnished to Trosper Construction Company, Inc., a subcontractor engaged in the execution of a portion of the work contracted for by Midwest Contracting Company.

As a background to this litigation, the record shows that a basic contract was entered into on September 2, 1959, between Busboom & Raugh and C. E. Fritch, a joint venture, and the United States of America, for the construction of 130 housing units at Keesler Air Force Base at Biloxi, Mississippi. Thereafter Busboom & Raugh and C. E. Fritch, the joint venture, subcontracted a portion of the work to Midwest Contracting Company, which in turn on September 24, 1959, subcontracted a portion thereof to Trosper Construction Company, Inc. The indemnity bond executed by Trosper, as principal, in favor of Midwest, as obligee, was written by the appellant Great American Insurance Company, as surety. Trosper abandoned the subcontractor in February 1960, and ceased all activity toward the completion of the job. The controversy between the parties in this suit involves the question as to the liability of Great American, as surety on the indemnity bond executed by Trosper to Midwest, for the payment of claims filed by Busby and the other claimants against the surety company for equipment rentals, repairs and repair parts, small tools and other supplies furnished by the claimants to Trosper prior to the abandonment of the subcontract.

The original declaration in this cause was filed on behalf of A. L. Busby, as plaintiff, on the 26th day of July 1960 against Trosper Construction Company, Inc., and Great American Insurance Company, as defendants. The declaration set forth the fact that Trosper Construction Company, Inc., had subcontracted from Midwest Contracting Company a portion of the work to be performed under the basic contract mentioned above, and that Great American Insurance Company was the surety on Trosper's indemnity bond; that in furtherance of the subcontract agreement between Trosper and Midwest an equipment lease agreement was entered into on October 15, 1959, between the plaintiff and the defendant Trosper whereby the plaintiff leased to Trosper certain equipment necessary to the performance by Trosper of its subcontract with Midwest; that plaintiff furnished said equipment to Trosper as provided in said agreement; that sometime during the month of February 1960 Trosper abandoned the performance of his subcontract with Midwest; and that there remained due and unpaid to the plaintiff for rental on said equipment and for services and materials furnished, the amount of $10,738.99. An itemized statement of the account was attached as an exhibit to the plaintiff's declaration. The plaintiff further alleged that under the terms and provisions of Section 376, Miss. Code of 1942, Rec., the plaintiff and other claimants similarly situated were authorized to commence action on the above mentioned bond. The complainant therefore demanded judgment against Trosper and Great American Insurance Company for the above stated amount with interest.

The defendant Great American Insurance Company filed its answer on February 24, 1961, in which there was incorporated a suggestion of nonjoinder of necessary parties. In its answer the defendant alleged that Trosper had abandoned the job during the month of February 1960, as stated in the plaintiff's declaration, and that under the terms of the bond executed by the defendant as surety the defendant had become indebted to Midwest Contracting Company for such loss as Midwest might sustain on account of Trosper's failure to fulfill its subcontract, and also to other parties for labor and materials, as provided by Section 374, Mississippi Code of 1942, Rec.; that, in accordance with Section 376, Mississippi Code of 1942, Rec., plaintiff and other parties similarly situated were authorized to commence suit to enforce payment of any claims that they might have; and inasmuch as the plaintiff had actually filed suit, and Section 377, Code of 1942, Rec., limited claimants to one action, it was necessary that other claimants similarly situated be summoned to interplead and assert their claims, so that their claims might be finally adjudicated in the manner prescribed by law. The names and addresses of other claimants and the amounts of their alleged claims were stated in the answer.

By way of a special affirmative defense the defendant denied any and all liability to any of the above mentioned claimants for the reason that the indemnity type bond involved in the suit, a copy of which was attached to defendant's answer, created an obligation by Great American only to Midwest Contracting Company, obligee in the instrument, and such persons as had furnished labor and materials to Trosper, in accordance with Section 374, Miss. Code of 1942; and that none of the claimants mentioned in the answer had furnished any labor or materials to Trosper within the contemplation of the Mississippi statute. The defendant therefore asked that the matters of affirmative defense, as thus stated, be separately heard and disposed of before the principal trial of the cause, and in the event the defense was held to be sufficient in law, that plaintiff's declaration and all claims of intervenors be dismissed; that otherwise the cause proceed to trial with the defendant demanding strict proof of all claims.

Process was had on the various parties named in the suggestion of nonjoinder, returnable to the April 1961 term of the court; and other parties were permitted to intervene and file claims. The cause was heard at the April 1961 term of the court on the defendant's special affirmative defense; and at the conclusion of the hearing the Court overruled the defendant's motion to dismiss the claims of A. L. Busby, Dousson Tool & Supply Company and Griffin Wellpoint Corporation; and the court ordered that the remaining issues be reserved for hearing upon the trial in chief.

The cause was tried by agreement of the parties, without a jury, at the August 1961 term of the court, and a final judgment was entered on August 17, 1961. Trosper did not defend the action.

In its judgment the court allowed the claim of A. L. Busby for rentals on equipment, transportation charges for return of equipment and repairs on pickup truck and jeep, in the amount of $10,738.99 with interest thereon from March 1, 1960, and the claim of Griffin Wellpoint Corporation for rental on equipment in the amount of $7,522.00 with interest thereon from April 1, 1960. The court rendered judgments against Trosper and Great American for the amounts stated. The court also allowed the claim of Morris King for rental on G.M.C. two-ton truck, $360.00 and miscellaneous supplies or repairs, $57.32, making a total of $417.32, and rendered a judgment against Trosper and Great American in favor of the claimant for the total amount of the claim. The court also allowed and awarded judgments against Trosper and Great American in favor of the claimants for other amounts as follows: Combel Hardware Store, for miscellaneous supplies in the amount of $34.29; Biloxi Battery Company, for miscellaneous repairs, repair parts and supplies in the amount of $249.78; Gauthreaux Machine Shop, for repairs and repair parts on equipment in the amount of $86.41; and Doussan Tool and Supply Company, for miscellaneous items of merchandise and supplies in the amount of $650.57, together with interest from January 1, 1960. Doussan's total claim was $844.14. The court disallowed several items for small tools and equipment in the total sum of $193.47 on the Doussan Tool and Supply Company's claim as against Great American, but rendered judgment against Trosper for the full amount.

The court ordered that the claims of Midwest Contracting Company, Coast Materials Company, Inc., and Dale Bollier be dismissed with prejudice as to Great American, and without prejudice as to Trosper; that the claims of Biloxi Stationery Company in the amount of $47.27, Southern Bell Telephone and Telegraph Company in the amount of $347.48, James W. Booker in the amount of $868.32, and the claim of Patterson's Auto Repair in the amount of $123.74, be disallowed as to Great American Insurance Company; and judgments were entered for the amounts of those claims against Trosper only.

The defendant Great American Insurance Company has appealed from the judgments entered against it as surety on the indemnity bond, and the claimant, James W. Booker, has filed a cross appeal from that part of the judgment disallowing his claim against Great American.

The attorneys for Great American Insurance Company have assigned and argued only two points as grounds for reversal of the judgment of the lower court: (1) That the court erred in overruling the special affirmative defense set forth in the appellant's answer, wherein the appellant denied all liability to the plaintiff and the other claimants on the ground that the bond sued on was an indemnity bond creating an obligation to Midwest, as obligee, only, and that none of the claims for which payment was demanded of the appellant were for labor and materials furnished to Trosper under the subcontract referred to in the bond, or were within the coverage of the bond; and (2) that the...