Hipwell v. Nat'l Sur. Co. of N.Y.C.

• Decision Date: 16 December 1905
• Citation: 130 Iowa 656,105 N.W. 318
• Parties: HIPWELL v. NATIONAL SURETY CO. OF NEW YORK CITY ET AL.
• Court: Iowa Supreme Court

130 Iowa 656

105 N.W. 318

HIPWELL

v.NATIONAL SURETY CO. OF NEW YORK CITY ET AL.

Supreme Court of Iowa.

Dec. 16, 1905.

Appeal from District Court, Webster County; W. D. Evans, Judge.

The council of the city of Ft. Dodge, by resolution adopted January 28, 1901, appointed a committee of its citizens, consisting of the mayor, S. J. Bennett, and his successors in office, George S. Ringland, O. M. Oleson, Webb Vincent, and Leon Vincent, for and in behalf of the city, “to take charge of the construction of the Public Library in the said city, for which a site has been conveyed to the said city, and the said committee is empowered and directed to do all things necessary and proper in the selection of plans for the said building, and shall have exclusive charge and control of the selection of said plans and the construction of said building; and shall expend all moneys contributed for the construction of said building, and are empowered and directed to receipt to all parties who may contribute moneys for the construction of the said library building, for and in the name of the said city. The said committee, as named, is given full and ample authority to represent the said city in the construction of the said building, and in receipting for any moneys contributed therefor, and this resolution shall be ample authority for the acts of the said committee done thereunder.” This committee entered into a contract with the Northern Building Company of Davenport, Iowa, June 17, 1901, by the terms of which that company undertook “to furnish all the labor and materials and do and perform all the work required for the erection and inclosing of the Library Building at Ft. Dodge, Iowa, according to the specifications and plans,” the same to be completed before January 1, 1902. The contract price was $34,500, but there were additions aggregating to $215.94 and deductions amounting to $1,271. The company was paid $26,584.20 before it abandoned the work and the committee expended $4,046.28 in completing the building, which was not accomplished until August 15, 1903. From the money on hand the court ordered that five claimants who had complied with section 3102 of the Code be paid in full sums amounting to $1,214.27, and the remainder, $1,600.27, to the Commercial National Bank of Ft. Dodge on an order of the building company. Three other claims amounting to $835.47 were established against the building company, and judgments entered against it and the surety company. Judgment was also entered against the contractor and the surety company for $2,417.26, in favor of C. G. Hipwell for labor and materials. The claims of E. C. Wakefield and of the city of Ft. Dodge were rejected. Affirmative relief demanded by the surety company was denied. The city of Ft. Dodge, the Commercial National Bank, and the National Surety Company appeal. Affirmed.Mitchell & Hackler and Lane & Waterman, for appellant National Surety Co.

M. J. Mitchell, for appellant city of Ft. Dodge.

Wright & Nugent, for appellant Commercial Nat. Bank.

Healy Bros. & Kelleher, A. N. Botsford, James Martin, and F. A. Grosenbaugh, for appellees.

LADD, J.

Judgment was entered in favor of all the subcontractors against the National Surety Company of New York, and it contends this was error, in that the bond executed by it was not intended for their benefit, and expressly excluded them therefrom. The agreement between the committee and the contractor, as well as the bond executed by the contractor and the National Surety Company, recited that the committee had been appointed by the city of Ft. Dodge, that the library was being constructed for the city, and, in the contract, that the committee was acting for and in behalf of the city. In effect, then, the agreement was with, and obligation executed to, the municipality of Ft. Dodge. Section 3467 of the Code provides that: “When a bond or other instrument given to the state or county or other municipal or school corporation, or to any officer or person is intended for the security of the public generally, or of particular individuals action may be brought thereon in the name of any person intended to be thus secured, who has sustained an injury in consequence of a breach thereof, except when otherwise provided.” If, then, this bond was intended as security for these particular individuals action may be maintained thereon in the name of any of those intended.

2. But was it intended as security for those furnishing labor or material for the construction of the building? It is stipulated in the agreement “that the party of the second part further covenants and agrees to promptly pay for all labor and materials used in and about the building, and to hold and save the said first party harmless from and against all and every demand, or demands, of any nature or kind, for and on account of liens for labor and materials, or of the use of any patented invention, article or appliance included in the materials hereby agreed to be furnished under this contract.” In no plainer language could the contractor have agreed “to promptly pay for all labor and materials used in and about the building.” This cannot be regarded as merely introductory to what follows, as no liens for labor and material could in any event be asserted against the municipality, and such a construction would destroy the meaning of the entire paragraph, save the portion relating to patented inventions and the like. Who then were to be paid? Manifestly those furnishing the labor and materials. The provision was for their benefit. No purpose other than this could have been served by the city, for in no event would it have been liable therefor. The evident object was to secure subcontractors to the end that knowing “they were secured, would do better work and furnish better material than if they felt uncertain about their pay.” As directly in point, see Baker v. Bryan, 64 Iowa, 561, 21 N. W. 83. Also Jordan v. Kavanaugh, 63 Iowa, 152, 18 N. W. 851;Wells v. Kavanagh, 70 Iowa, 519, 30 N. W. 871. In Green Bay Lumber Co. v. Ind. School Dist. of Odebolt, 121 Iowa, 663, 97 N. W. 72, the contract contained no promise to pay for labor or materials, and for this reason alone liability on the part of surety was denied. It is contended, however, that, even if this paragraph be so construed, all liability to subcontractors is obviated by a subsequent provision that “it is the express condition of this contract that no member of said committee, or other person, whose name is not at this time disclosed, shall be admitted to any share of this contract, or to any benefit to arise therefrom; and it is further covenanted and agreed that this contract shall not be assigned.” That is, under the construction contended for the parties, after specifically agreeing that payment shall be promptly made for labor and materials, they then stipulated that none other than those named shall derive any benefit therefrom. It seems all but inconceivable that after recognizing that labor and materials must be bought by the contractor, and obligating him to promptly pay therefor, that this paragraph was intended to exclude those furnishing them from “any share of this contract or to any benefit arising therefrom.” Just how such a feat, paying without conferring a benefit, may be performed, is not explained. But such is the construction contended for by the surety company, and, without undertaking to say what the parties did mean, we shall content ourselves with the easier task of determining what they did not mean.

As said, the first paragraph quoted is an absolute promise on the part of the contractor to pay for all labor and materials, but this, if the last paragraph be construed as contended, can be done only on the condition that the labor and materialmen derive no benefit from, or thereby share in, the contract. But this involves an utter impossibility. How could such payment be exacted without benefiting these men? And how were it possible for these men to sell materials and furnish work for the building in furtherance of the contract under a stipulation that the contractor promptly pay therefor without being “admitted to any share of the contract?” If the construction contended for be accepted, the agreement “to promptly pay for all labor and materials used in and about the building” would be absolutely contradictory and inconsistent with the condition that no labor and materialman “shall be admitted to any share of this contract or to any benefit to arise therefrom,” and this result should be avoided for a proviso in a contract totally repugnant to the contract itself is void. Benjamin v. McConnell, 46 Am. Dec. 474;Rice v. Webster, 18 Ill. 331. In the last case it was said: “The condition, therefore, is repugnant to the previous covenant, and must destroy or be destroyed by it. When this is the case, the rule of law is well settled that the condition must give way that the covenant may stand.” A rule of construction requires us to so construe each provision as to give it effect, if possible; and, in view of the result of that contended for, we are inclined to reject it as not intended and to hold that some other purpose, not disclosed, was sought to be attained by inserting the paragraph last quoted. The bond provides that “if the said Northern Building Company shall well and truly perform all the terms and conditions of said contract, according to the plans and specifications made part thereof for said Library Building, and fully comply with each and all of the said conditions of said contract, then this bond to be void and of no effect; otherwise in full force and effect, and for the payment of damages of any kind that may result by reason of the failure of said Northern Building Company to comply with the said contract, as aforesaid, according to its strict terms and conditions.” The condition, it will be observed, is not limited to the payment of damages suffered by the committee, but...