Kansas City v. Southern Surety Co.

• Citation: 51 S.W.2d 221
• Decision Date: 23 May 1932
• Docket Number: No. 17238.,17238.
• Parties: KANSAS CITY, to Use of MISSOURI PAC. R. CO. v. SOUTHERN SURETY CO.
• Court: Court of Appeal of Missouri (US)

51 S.W.2d 221

KANSAS CITY, to Use of MISSOURI PAC. R. CO. v. SOUTHERN SURETY CO.

No. 17238.

Kansas City Court of Appeals. Missouri.

May 23, 1932.

Rehearing Denied June 13, 1932.

Appeal from Circuit Court, Jackson County; T. J. Seehorn, Judge.

"Not to be officially published."

Action by Kansas City, to the use of Missouri Pacific Railroad Company, against the Southern Surety Company. From an adverse judgment, plaintiff appeals.

Affirmed.

See, also, 203 Mo. App. 148, 219 S. W. 727.

Hackney & Welch, of Kansas City, for appellant.

John W. Rogers and Morrison, Nugent, Wylder & Berger, all of Kansas City, for respondent.

BOYER, C.

This is an action against the surety on the bond of a contractor to recover charges for freight and demurrage on material transported for the contractor. The petition, answer, and replication constitute the pleadings. The case was submitted to the trial court on stipulated facts, admissions and statements of counsel, and the oral testimony of one witness, from all of which it appears that the material facts are not in dispute. A summary of the record shows that on November 24, 1916, Kansas City, through its proper agents, entered into a contract with the Horton Concrete Construction Company for the erection of a bridge, by the terms of which the contractor agreed to furnish a bond for the faithful performance of the contract, which said bond was executed by the contractor, and the Southern Surety Company and another as sureties. It was to secure due performance of the contract, and by its terms bound the obligors to "pay for all material used in the work and improvements done or made, or to be done or made under said contract, and for all labor performed in such work, whether by sub-contractor or otherwise." The contractor executed and delivered to defendant an application for the bond, which said application among other things provided that, upon notice or discovery of the failure of the contractor to comply with the provisions of the contract, the surety at any time thereafter might take such steps as it deemed necessary or proper to obtain performance of the contract and to secure and indemnify itself against loss. Said application further provided: "That for the better protection of the company the contractor does hereby assign, transfer and convey to the company, all right, title and interest of the contractor in and to all tools, plant, equipment and materials of every nature and description that the contractor may now or hereafter have upon the premises where such contracts are to be performed or in, on or about the sites thereof, including as well, materials purchased for or chargeable to such contracts, which may be in, on, or about the sites thereof, including as well, materials purchased for or chargeable to such contracts, which may be in the process of construction, in storage elsewhere, or in transportation to such sites; and also the contractor does hereby convey and assign unto the company any and all payments, funds, money or property, due or to become due to the contractor."

By the terms of said application the surety company was also authorized, in the event the contractor failed to complete the undertaking, to enter upon and take possession of tools, plant, equipment, material, and subcontracts, and use, sell, or dispose of them as the company might see fit.

The construction company began the work of building the bridge, and continued its prosecution until September 7, 1917. During said period the city made partial estimates of the work done, and paid the construction company 90 per cent. of the amount due and retained 10 per cent. until the work was completed. On said last date the construction company was unable to proceed further with the work, and defendant surety company, pursuant to an agreement with the city authorities, then took over the sole and exclusive control, direction, and completion of the bridge and the performance of the construction company's contract; and also took possession of the tools, plant, equipment, and material then on the premises, including material purchased and in transportation, and claimed all payments, money, and funds due or to become due to the contractor. The defendant completed the work, and same was accepted by the city on May 9, 1918. The total balance due at the completion of the contract was paid to the defendant surety company, which included the 10 per cent. theretofore retained on work done by the contractor. Defendant suffered a loss approximating $21,000.

Prior to September 7, 1917, the surety company took no part in the work of completing the bridge, and in no way controlled or directed said work, and entered into no contracts, orders, or agreements for said work, labor, and materials, and received no money on account of said contract from Kansas City, and exercised no control or direction over the funds or assets of the construction company. The tools, plant, equipment, and machinery located at said bridge were not the property of the construction company, and the surety company got nothing out of said property, and paid rent thereon from September 7, 1917, to the completion of the contract, and returned the property to the owners.

Freight and demurrage charges accrued to the use plaintiff and against the construction company prior to September 7, 1917, in the amounts claimed by the plaintiff in two separate counts of the petition. These charges were for the transportation and storage of material afterwards delivered to the contractor without the prepayment of freight and demurrage, and all of which freight and materials were used in the construction of said bridge. All freight and demurrage charges arising after September 7, 1917, were paid by the defendant.

It is further agreed that on August 7, 1918, the use plaintiff filed its petition in two counts in the circuit court of Jackson county, Mo., against this defendant and two others; that the surety company in said suit filed its demurrer to each count of the petition upon the ground that they failed to state facts sufficient to constitute a cause of action against said defendant, which said demurrer was sustained on November 30, 1918, and thereafter on March 1, 1919, plaintiff dismissed its case as to the other two defendants, at which time the court entered judgment reciting that the demurrer having been sustained and the use plaintiff declining to plead further, the court rendered judgment that plaintiff take nothing by its suit and that the defendant surety company go hence and recover its cost; that the plaintiff appealed from said judgment to the Kansas City Court of Appeals, where the judgment rendered below was duly affirmed and motion for rehearing denied as shown by the report of the opinion in said case. 203 Mo. App. 148, 219 S. W. 727. A copy of the petition in the first suit by the use plaintiff was introduced in evidence, together with other documentary exhibits.

After the final determination of the appeal in the prior suit and within one year thereafter, plaintiff instituted the present action against the surety company to recover payment for freight and demurrage charges which accrued against the contractor prior to September 7, 1917. It appears from the petition and the facts that it was framed in two counts, the first covering freight and demurrage prior to June 1, 1917, which accrued to the receiver of the Missouri Pacific Railway, and the claim therefor was sold and assigned to the use plaintiff, and the second count was for accrued freight and demurrage from June 1, 1917, to September 7, 1917, and both of said counts in this respect were the same and for practically the same amount as that set forth in the two counts of the petition in the first suit.

The answer in the present case, among other defenses, contains a plea of estoppel by judgment. It sets forth in detail the facts relative to the institution of the prior suit, the parties thereto, the contents of the petition, the basis of the cause of action, the plea of defendant, the judgment of the trial court, and the final judgment of affirmance on appeal, and avers that parties...