Kinney Elec. Mfg. Co. v. Modern Elec. Co.

• Decision Date: 02 March 1967
• Docket Number: No. 8383,8383
• Citation: 149 N.W.2d 69
• Parties: KINNEY ELECTRICAL MANUFACTURING COMPANY, a Corporation, Plaintiff and Appellant, v. MODERN ELECTRIC COMPANY, Inc., and the Fidelity and Casualty Company of New York, Defendants and Respondents. Civ.
• Court: North Dakota Supreme Court

Page 69

149 N.W.2d 69

KINNEY ELECTRICAL MANUFACTURING COMPANY, a Corporation Plaintiff and Appellant, v. MODERN ELECTRIC COMPANY, Inc., and the Fidelity and Casualty Company of New York, Defendants and Respondents.

Civ. No. 8383.

Supreme Court of North Dakota.

March 2, 1967.

Syllabus by the Court

1. In the absence of a specific definition providing otherwise, a subcontractor ordinarily is one who contracts with the original contractor to perform a part of the work which the contractor himself has agreed to perform.

2. A remote materialman, that is, one furnishing materials to a supplier or materialman, rather than to a contractor or subcontractor, cannot recover on a public contractor's bond furnished pursuant to the provisions of Section 48--01--01, North Dakota Century Code.

3. Where plaintiff admittedly sold materials to one other than the contractor who was obligated to make the public improvement, and billed the party to whom it sold such materials rather than billing the contractor who was making the improvement, and where the contractor, on receipt of the billing from the party from whom it had purchased such materials, paid such party, the contractor had fulfilled its obligation for paying for such materials, and the surety company which furnished the bond under the provisions of the statute has no further liability for payment of the same.

Whittlesey, Pancratz & Wold, Fargo, for plaintiff and appellant.

Stiening, Olson, Thysell & Gjevre, Moorhead, Minn., and Wattam, Vogel, Vogel, Bright & Peterson, Fargo, for defendants and respondents.

STRUTZ, Judge.

The defendant Modern Electric Company, Inc., hereinafter referred to as 'Modern,' was the contractor for installation of electrical work in North High School of Fargo. As required by law, the defendant Modern furnished a contractor's bond, with the defendant The Fidelity and Casualty Company of New York as surety. This bond provided, among other things, that Modern would fully and faithfully perform all of the terms, conditions, and provisions of the said contract with the Board of Education of Fargo for installation of electrical work in the building of North High School and would pay all bills and claims for labor and material furnished and used in the performance of such contract, including all demands of subcontractors.

Modern thereafter ordered electrical materials and supplies needed to carry out its obligations under the contract with the Board of Education, from Midway Electrical Company, hereinafter referred to as 'Midway.' To fill the order placed by Modern, Midway ordered such materials and supplies from the plaintiff in this action. The plaintiff delivered such materials and equipment directly to the building site in Fargo and then billed Midway for the same. Midway thereafter billed Modern, and was paid. However, Midway became insolvent and went into bankruptcy and did not pay the plaintiff for the equipment and materials which it had ordered and which the plaintiff had delivered. The plaintiff brings suit against Modern and against Modern's public contractor's bond, claiming that it is entitled to recover for such materials and equipment so furnished under the provisions of such bond.

Section 48--01--01, North Dakota Century Code, provides for a public contractor's bond to be posted by any person making public improvements. That section reads as follows:

'Bonds from contractors for public improvements.--Every public officer or board authorized to enter into a contract for the erection, repair, or alteration of any public building or any other public improvement, except a municipal improvement made under special assessment statutes, before permitting any work to be done on such contract, shall take from the contractor a good and sufficient bond for an amount equal at least to the price stated in the contract, conditioned to be void if the contractor and all subcontractors shall fully perform all terms, conditions, and provisions of the contract and shall pay all bills or claims on account of labor and materials, including supplies used for machinery and motor power equipment, performed, furnished, and used in and about the performance of said contract, including all demands of subcontractors. Such bond shall stand as security for all such bills, claims, and demands until the same are fully paid, labor and materialmen to have preference as to payment. Said bond shall run to the state of North Dakota, but any person having a lawful claim against the contractor, or any subcontractor, as provided in this chapter, on account of labor, materials, or supplies, or for a breach of said contract, may sue in his own name on said bond with like effect as though it were payable to him.'

The plaintiff contends that it has furnished such electrical equipment and materials needed in the construction of such public building and that it is entitled to recover payment for the same under the provisions of the contractor's bond. It contends that it furnished such materials, supplies, and equipment to Midway, and that, under the circumstances, Midway is a subcontractor within the provisions of the contractor's bond and the statute requiring the posting of the same.

The trial court held that Midway was not a subcontractor under the facts and circumstances but was, in fact, a materialman and a supplier of equipment, and thus is not covered by the public contractor's bond posted by the defendant Modern as required by law. Judgment...