Ingold v. City of Hickory

• Decision Date: 10 December 1919
• Docket Number: 509.
• Citation: Ingold v. City of Hickory, 178 N.C. 614, 101 S.E. 525 (N.C. 1919)
• Parties: INGOLD ET AL. v. CITY OF HICKORY ET AL.
• Court: North Carolina Supreme Court

101 S.E. 525

178 N.C. 614

INGOLD ET AL. v. CITY OF HICKORY ET AL.

No. 509.

Supreme Court of North Carolina

December 10, 1919

Appeal from Superior Court, Catawba County; Webb, Judge.

Action by F. B. Ingold and others against the City of Hickory, the American Surety Company of New York, and Charles A. Kline.From a judgment for plaintiffs against the Surety Company, it appeals.Affirmed.

Under Laws 1913, c. 150, as amended byLaws 1915, c. 191, requiring public building contractor to give bond for the payment of all labor and material, and giving laborers and materialmen a right to sue thereon, a provision, in a bond by a contractor for the construction of a school building for a city, that no right of action should accrue to or for the use or benefit of any one other than the city, is in violation of the statute opposed to public policy, and does not prevent a materialman from recovering against the surety, since the statutory provision may not be waived by agreement.

This is an action brought by the plaintiff against Charles A. Kline the city of Hickory, and the American Surety Company of New York for material furnished to the defendantChas. A. Kline for the erection of a school building for the defendant the city of Hickory.The real purpose of the action is to hold the defendant the American Surety Company liable for the claims of the plaintiffs, on account and by virtue of a bond executed by the defendant the American Surety Company to the defendant the city of Hickory in the sum of $3,500.No judgment was taken by the plaintiffs against the defendantChas. A. Kline, and at the close of the plaintiff's testimony a nonsuit was granted by the court as against the defendant the city of Hickory.There was judgment for the plaintiffs against the defendant the American Surety Company of New York for $3,500, the amount of the bond above referred to, same to be discharged upon the payment of the plaintiffs' claims, and the defendant the American Surety Company appealed.

The defendant Kline entered into a contract with the city of Hickory for the erection of a school building, and executed a bond to the city of Hickory with the American Surety Company one of the defendants herein, as surety.There is no controversy as to the amount due the plaintiffs for materials furnished to erect the school building.The parts of the bond necessary to be set out are the conditions and section 5, which are as follows:

Conditions of bond: "Now, therefore, the condition of this obligation is such that, if the principal shall indemnify the obligee against any loss or damage directly arising by reason of the failure of the principal to faithfully perform and discharge his duties thereunder, in the payment and satisfaction of all claims and liens for labor and material furnished in the erection of said building under and by virtue of section 2020a, page 2019, Gregory's Supplement to Pell's Revisal, vol. 3, Session North Carolina Legislature1913, and chapter 191, Laws of 1915, and shall save harmless and fully indemnify the obligee against any and all loss that may accrue for labor or material under and by virtue of the laws of North Carolina, then this obligation shall be void; otherwise, to remain in full force and effect: Provided, however, and upon the following express conditions, the performance of each of which shall be a condition precedent to any right to recovery hereon."

Section 5 of bond: "Fifth.That no right of action shall accrue by reason hereof, to or for the use or benefit of any one other than the obligee herein named, and that the obligation of the surety is, and shall be construed strictly as, one of suretyship only, shall be executed by the principal before delivery, and shall not, nor shall any interest therein, or right of action thereon, be assigned without the prior consent, in writing, of the surety."

The defendant moved to dismiss the action upon the ground that the complaint does not state a cause of action in behalf of the plaintiffs, for that: (1) No one can sue on the bond under section 5 except the city of Hickory, named therein as obligee.(2) That the bond shows on its face it was not executed under section 2020a of Gregory's Supplement, because the penalty is only $3,500, when it should have been about $6,500 under this statute.(3) It is not shown the city of Hickory owes the contractor anything, and there are no contractual relations between plaintiffs and defendant.(4) That plaintiffs did not give the notice to the city required by section 2020 of Revisal.

Harry K. Wolcott, of Norfolk, Va., and Walter C. Feimster, of Newton, for appellant.

A. A. Whitener, of Hickory, for appellees.

ALLEN J.

The public policy of this state, relating to claims for labor done and materials furnished, is shown in its legislation, and in the constant effort to remedy defects found in existing law, and to secure the payment of these claims.The first statute(chapter 117,Laws 1868-69) regulated the filing and enforcement of the lien, but soon after its enactment--

"it was held by the Supreme Court that no right to a lien was conferred by the statute, unless there was a contract express or implied, with the owner, creating the relation of creditor and debtor (Wilkie v. Bray,71 N.C. 205), and as a result subcontractors were excluded from its benefits, because they had no express contract with the owner, and none could be implied from the use of the materials as they were furnished to the contractor, and under the express contract between him and the owner.The next step was the act to give subcontractors a lien (chapter 44, Special Session of 1880), which, with the...