Haakinson & Beaty Co. v. McPherson

• Decision Date: 12 January 1918
• Citation: 166 N.W. 60,182 Iowa 476
• Parties: HAAKINSON & BEATY COMPANY, Appellant, v. W. T. McPHERSON et al., Appellees
• Court: Iowa Supreme Court

166 N.W. 60

182 Iowa 476

HAAKINSON & BEATY COMPANY, Appellant, v. W. T. McPHERSON et al., Appellees

Supreme Court of Iowa, Des Moines

January 12, 1918

Appeal from Sioux District Court.--WILLIAM D. BOIES, Judge.

Defendant McPherson contracted with Sioux County to do certain bridge work. The appellant is a subcontractor, who furnished materials that went into said construction. The defendants other than McPherson became sureties on a bond running to the county. The appellant brought suit on the bond, and, because a demurrer to its petition was sustained, it appeals.--Reversed.

Reversed and remanded.

Klay & Klay, for appellants.

C. E Gantt, for appellees.

SALINGER J. PRESTON, C. J. LADD and EVANS, JJ., concur.

OPINION

SALINGER, J.

I.

The trial court sustained the demurrer because it was its understanding that the ruling was compelled by Green Bay Lbr. Co. v. School Dist., 121 Iowa 663, 97 N.W. 72. That case and Hunt v. King, 97 Iowa 88, 66 N.W. 71, and Weller v. Goble, 66 Iowa 113, 23 N.W. 290, merely declare the self-evident proposition that, where a bond does not run to a party, and undertakes no more than to indemnify the party to whom it does run, against breaches of contract, no one may recover on such bond except those to whom it runs. On the other hand, Jordan v. Kavanaugh, 63 Iowa 152, 18 N.W. 851, and Baker & Co. v. Bryan, 64 Iowa 561, 21 N.W. 83, declare the equally self-evident proposition that, no matter to whom a bond runs, if the contract which it secures contains a provision that certain things shall be done for parties not named in the contract, then a breach of that agreement gives these other parties the right to sue and recover upon the bond. Such parties are the real parties in interest. See Home Sav. & Trust Co. v. Polk Dist. Court, 121 Iowa 1, 95 N.W. 522; Hipwell v. National Surety Co., 130 Iowa 656, 105 N.W. 318. This rule is applicable to contracts and bonds like the one here under consideration. Code, 1897, Sec. 3467; Hay v. Hassett, 174 Iowa 601, 156 N.W. 734; Aetna Indemnity Co. v. Indianapolis M. & F. Co., 178 Ind. 70 (98 N.E. 706); United States on Relation of Hill v. American Surety Co., 26 S.Ct. 168, 50 L.Ed. 437; 9 Corpus Juris 87. This is, of course, permitted where the contract has an express provision that the builder shall pay all just claims for material furnished. Jordan v. Kavanaugh, 63 Iowa 152, 18 N.W. 851; Baker & Co. v. Bryan, 64 Iowa 561, 21 N.W. 83. But it is not necessary that either contract, bond, or both show on their face that they are or cover an agreement to perform some act for the benefit of a third person, and that breach thereof is guaranteed against. If the two papers, or others related and involved, fairly construed together, show an obligation on part of the contractor to pay the subcontractor for material put into the contract work, and the bond is an undertaking to make good any loss suffered for any breach of the contract, the subcontractor may sue and recover on the bond. Hay v. Hassett, 174 Iowa 601, 156 N.W. 734; Jackson County v. Freeborn E. & C. Co., 174 Mo.App. 28 (160 S.W. 271); Dupont De Nemours Powder Co. v. Culgin-Pace Cont. Co., 206 Mass. 585 (92 N.E. 1023); Korsmeyer P. & H. Co. v. McClay, 43 Neb. 649 (62 N.W. 50); Lyman v. City of Lincoln, 38 Neb. 794 (57 N.W. 531). The decision must turn upon the construction of the contract. Baker v. Bryan, 64 Iowa 561, 21 N.W. 83. So the sole question for us is whether what is alleged in the petition as amended, and what is referred to in these pleadings, being confessed by demurrer, disclose that the parties named in the contract did make provisions that the contractor should pay materialmen. If there is such a provision, then the contract is available to this plaintiff, who furnished materials as a subcontractor, and he may sue and recover on this bond in his own name.

The original petition alleges that a contract was made by the county and the defendant principal contractor, and that such contract is found in Exhibit A, attached to and made part of the petition. Exhibit A recites that the parties entered into contract on the 6th day of April, 1915; that payment shall be made "as set forth in specifications therefor," and that plans and specifications on file with the county auditor, by true copy, "are a part of and the basis of this contract." It is expressly stated that "this contract shall include the 1915 state specifications of the State Highway Commission, the specific contract, the contractor's bond, and the general and detailed plans." It is further alleged that the completed contract was initiated by a written notice to contractors. In an amendment to the petition, the 1915 state specifications of the State Highway Commission, referred to in Exhibit A, are set out, and one of the provisions of these specifications is that "the successful bidder shall be required to furnish a bond, issued by responsible surety, approved by the board, and drawn to protect the county and any subcontractor." It is a further provision of said State Highway Commission, specifications that "this contract shall include the proposal, the instructions to bidders, these specifications, the specific contract, the contractor's bond, and the general and detailed plans." The instructions to bidders referred to were in writing. They exact once more that "the successful bidder will be required to furnish a bond for 50% of contract price issued by responsible surety, approved by the board, and drawn to protect the county and any subcontractor." In this amendment to petition, it is further set out that, when this instruction to...