Honolulu Roofing Co. v. Felix
| Decision Date | 28 March 1967 |
| Docket Number | No. 4481,4481 |
| Citation | 49 Haw. 578,426 P.2d 298 |
| Parties | HONOLULU ROOFING, COMPANY, Ltd., Plaintiff, v. Albert M. FELIX and Irene P. Felix, Owners, Defendants and Cross-Claimants, and Edward M. Kirk, Contractor, and Shuman Lumber & Supply Co., Inc., a Hawaii Corporation, Surety, Defendants. |
| Court | Hawaii Supreme Court |
Syllabus by the Court
1. In an action on a contractor's bond, the schedule set out in R.L.H.1955, § 219-14 governs the amount taxable as attorneys' fees by plaintiff materialman suing as a third party beneficiary, unless R.L.H.1955, § 219-16.5, which relates to attorneys' fees provided for by a contract in writing, is applicable.
2. The mechanic's lien law does not provide for allowance of an attorney's fee for services rendered to a plaintiff suing on a bond as a third party beneficiary, but does cover services in foreclosing a mechanic's line. R.L.H.1955, § 193-45.
3. The prayer for relief may be looked to in pointing up the issues presented by a complaint.
4. When, on appeal, a court directs that a judgment in favor of a materialman against the surety on the contractor's bond be revised to provide for foreclosure of said plaintiff's mechanic's lien, reserving the question of plaintiff's right on the bond directly against the surety as a third party beneficiary for any deficiency that may arise, and there are unresolved issues in the case as between the owner, the obligee named in the bond, and the surety, including the question of the surety's liability to indemnify the owner against plaintiff's lien, on remand of the case the trial court may determine, pursuant to H.R.C.P., Rule 54 (b), that there is no just reason for delay and may expressly direct the entry of judgment foreclosing plaintiff's lien then and there, the court in that event being empowered to stay enforcement of the judgment so entered until disposition of other issues in the case. Alternatively, the court on remand of the case may withhold entry of judgment foreclosing plaintiff's lien until all issues have been disposed of.
5. When, upon appeal, there is argued the question of whether the plaintiff materialman has a right on the contractor's bond against the surety free of defenses of the surety against the owner, and upon trial of the case the question of freedom from such defenses lay in the background and was not decided by the trial court, the appellate court is not called upon to advance into this point when not satisfied that the surety would not be prejudiced thereby.
6. The completion of a building contract is not synonymous with the completion of the building, and a provision of a contractor's bond that a suit on the bond must be brought within a specified time 'from the date on which said contract is completed' does not signify that the time runs from the substantial completion of the building, when there are defects to be remedied and the amount to be paid remains undetermined because of the defects.
7. The time stipulated for suit on a bond must be a reasonable time in which to commence the action.
8. A provision limiting the time for suit against a surety on a bond is to be strictly construed against the surety.
9. Where a building contract provides that the owner shall have the right to order changes in the work, the surety on the contractor's bond is deemed to assent in advance to the making of such alterations as are within the contemplation of the parties.
10. In respect of the contention of the surety on a contractor's bond that it is entitled to a total discharge because of changes in the work, it is not material that there were changes made without written authorization, though the contract provided for authorization of changes in writing.
11. In the case of a compensated surety on a contractor's bond, the rule of pro tanto discharge to the extent of the prejudice suffered applies in respect of deviations from the contract in the matter of payments.
12. A lumber company executing a bond as surety for a contractor in order to become the supplier of lumber to the contractor, is to be treated as a compensated surety.
13. When the question is one of prejudice suffered by the surety on a contractor's bond because of deviations from the contract in the matter of payments, ordinarily the owner is entitled to credit for payments made by him which satisfied claims for labor or materials for which the surety otherwise would have been liable.
14. When the surety on a contractor's bond, with the assent of the owner, is the assignee of the moneys due under the contract, and the owner without the surety assignee having so requested makes payments to others, he acts at his peril and the burden is on the owner of showing that he is entitled to credit for the payments made to others contrary to the terms of the assignment.
15. A voluntary release of security held by the obligee on a bond in which the surety has rights will discharge the surety to the extent of the security released unless the surety has suffered no detriment or is estopped, and this rule applies to moneys which, under the terms of a building contract and an assignment assented to by the owner, were to be retained by the owner and ultimately paid over to the surety on the contractor's bond.
16. An obligee on a bond has a duty of prudence in preserving security under his control.
17. A contractor's bond for delivery of work free of liens and claims and without cost, expense or charge to the owner, and for holding the owner harmless from all liens, actions or damages, covers indemnification against an attorney's fee allowed a materialman upon foreclosure of his lien under the mechanic's lien law (R.L.H.1955, § 193-45), and the reasonable fee of the owner's attorney in defending against the lien necessitated by the surety's denial of liability under the bond.
18. R.L.H.1955, § 219-16.5 (Supp.1965), by the provisions of clause (a) of the third paragraph, prohibits the recognition of a contractual obligation for an attorney's fee of a plaintiff unless there is a signed instrument in writing providing for the payment of an attorney's fee, and an obligee on a contractor's bond cannot recover, as damages covered by the bond, the expense incurred for an attorney's fee in enforcing the bond. In such case, R.L.H.1955, § 219-14, relating to assumpsit actions, governs.
19. A disqualifying affidavit under R.L.H.1955, § 213-3(b) (Supp.1965) must be filed before the hearing of contested preliminary motions, if any, unless the failure to file within such time is excused for good cause.
20. A judge owes a duty not to withdraw from a case-however much his personal feelings may incline him to do so-where he is not legally disqualified, yet there may be circumstances that cast suspicion on the fairness of the judge proceeding in the case so that it may be advisable for a judge not technically disqualified to withdraw sua sponte.
Abe Kazuhisa, Hilo, for Shuman Lumber & Supply Co., defendant-appellant.
L. N. Nevels, Jr., Hilo (Nevels & Chang, Hilo, of counsel), for Albert M. Felix and Irene P. Felix, defendants and cross-claimants-appellees.
James Wohl, Honolulu (W. Lawrence Clapp, Honolulu, on the brief, Carlsmith, Carlsmith, Wichman & Case, Honolulu, of counsel), for plaintiff-appellee.
Before RICHARDSON, C. J., and CASSIDY, WIRTZ, LEWIS and MIZUHA, JJ.
By this appeal, taken by defendant Shuman Lumber & Supply Co., Inc., surety on a contractor's bond, hereinafter referred to as 'surety' or 'Shuman,' the surety (1) contests its liability to plaintiff, Honolulu Roofing Company, Ltd., which supplied materials and labor for sanding of floors, floor covering, and ceramic tile work in the construction of a residence for Albert M. Felix and his wife, hereinafter referred to as the 'owners'; and (2) contests its liability to the owners.
The contractor, Edward M. Kirk, the principal on the bond, has made no appearance in the action. Service on the contractor by registered mail was ordered on the basis of an affidavit that he was residing outside the State, and the court found in its decision that this service was made. We have no occasion to consider the judgment that was entered against the contractor.
Liability of Surety to Plaintiff.
The judgment appealed from awarded plaintiff judgment against the surety for plaintiff's $935 claim, plus interest and an attorney's fee. But plaintiff sued to foreclose Mechanic's Lien No. 61, which was filed against the owners' property on February 26, 1963, after an affidavit of publication of notice of completion of contract was filed pursuant to R.L.H.1955, § 193-42, the mechanic's lien law, on January 14, 1963. Plaintiff sought personal judgment against the contractor and surety on the bond if it should be adjudged that the lien was not valid, or if a deficiency should remain after sale of the property and application of the proceeds to the lien. There has been no adjudication of invalidity of the lien. Nor has there been an ascertainment of a deficiency or provision for ascertainment thereof, if any. Judgment has been entered in favor of the plaintiff against the surety on the bond without foreclosure of the lien.
We note that by its decision the court ruled, not only that judgment should be rendered against the surety, but also that: 'As to Defendants Felix, the remedy against them is for the enforcement of lien.' However, no provision for enforcement of the lien was made in the judgment entered on the decision.
The surety's amended specification of error 4(b) 1 presents the contention that plaintiff should not have had judgment against it by reason of the trial court having found that plaintiff had a valid lien on the property. Amended specifications 4(1) and 5(g) attack the judgment rendered in favor of plaintiff against the surety for $935, court costs and an attorney's fee of $500.
The owners conceded in their brief in this court that 'in its Decision filed on July 14,...
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