L & W Const. Co. v. Kinser, 49700

• Decision Date: 17 November 1959
• Docket Number: No. 49700,49700
• Citation: 99 N.W.2d 276,251 Iowa 56
• Parties: L & W CONSTRUCTION COMPANY, Inc., Appellee, v. Leo KINSER and Richard E. Morris, d/b/a Kinser and Morris Construction Company and the Employers Mutual Casualty Company of Des Moines, Iowa, Appellants.
• Court: Iowa Supreme Court

Page 276

99 N.W.2d 276

251 Iowa 56

L & W CONSTRUCTION COMPANY, Inc., Appellee, v. Leo KINSER and Richard E. Morris, d/b/a Kinser and Morris Construction Company and the Employers Mutual Casualty Company of Des Moines, Iowa, Appellants.

No. 49700.

Supreme Court of Iowa.

Nov. 17, 1959.

Stuart & Stuart, Chariton, for appellee and cross-appellant.

Bradshaw, Fowler, Proctor & Fairgrave, Des Moines, for appellant and cross-appellee Employers Mut. Cas. Co.

GARRETT, Justice.

This is an action at law by L & W Construction Company, a corporation, sub-contractor, against Kinser and Morris, a partnership, principal contractor, and Employers Mutual Casualty Company, a corporation, surety on the principal contractor's bond, for money due for materials furnished Kinser and Morris by L & W Construction Company.

On August 11, 1955 Kinser and Morris entered into a contract with the Iowa State Conservation Commission to construct certain improvements in the Colyn Conservation Area in Lucas County. The casualty company signed as surety on the required statutory bond given to secure performance of the contract and payment for labor and materials furnished in performance thereof. The contractor purchased from plaintiff rip-rap rock amounting to $8,580.60 the last of which was delivered February 20, 1956. The commission accepted the finished work on April 16, 1956. Kinser and Morris had experienced financial difficulties and claims considerably in excess of the funds remaining in the hands of the commission were filed with the commission as provided by law. Plaintiff did not file its claim to bring itself within the provisions of Chapter 573 of the 1954 Code of Iowa, I.C.A.

Claims filed with the commission amounting to $26,581.98 were paid by the surety on the contractor's bond and the surety was partially indemnified by the receipt from the commission of the final amount held by it or $16,448.82. The contractor then gave the surety its promissory note for the difference.

The contractor admitted liability but the surety defended on the ground the claim of plaintiff not been filed with the commission within thirty days after the completion and acceptance of the work and action had not been commenced within sixty days thereafter, as required by Chapter 573 of the Code, I.C.A. The plaintiff conceded it had not filed its claim with the commission within thirty days after the acceptance of the work, as required by section 573.10 and that it had not commenced an action on the bond within sixty days thereafter, as required by section 573.16, but alleged that the surety was estopped from relying on such failure (1) by its wrongful statements, actions and conduct preventing plaintiff from filing its claim, (2) by the representations and statements of the contractor to plaintiff to induce plaintiff not to file its claim made for and on behalf of and at the suggestion of the surety, and (3) by the wrongful actions, conduct and representations of the contractor in privity with the surety by virtue of the surety bond and the assignment by the contractor to the surety of the funds remaining in the hands of the commission, which prevented plaintiff from filing its claim. The defendant surety denied it was estopped to rely upon the provisions of Chapter 573, denied it had in any way induced plaintiff not to file its claim or to commence action and denied it was in any way bound by the conduct of the contractor, if any, which might have induced plaintiff not to file its claim or commence action.

The trial court overruled the defendant surety's motion for a directed verdict at the close of the evidence and submitted the case to the jury upon the issue whether the surety had directly or indirectly induced the plaintiff not to file its claim. The jury returned a verdict for the plaintiff for $8,580.60 and judgment was entered thereon. Defendant surety's motions for judgment notwithstanding verdict and for a new trial, attacking the sufficiency of the evidence to sustain the verdict on the issue of estoppel were overruled.

I. Defendant-appellant assigns as error the failure of the court to sustain said motions, since, as it claims, 'there was no proper evidence in the record to support the jury's finding that the defendant surety had induced plaintiff not to file its claim with the Conservation Commission so as to be estopped to deny liability on account of such failure to file' and because the 'plaintiff failed to establish any claim against the * * * surety not barred by Chapter 573, for failure to file within thirty days and to commence action within sixty days.'

We are thus confronted with the question, was there sufficient competent evidence in the record to justify the verdict of the jury? We have held that where the evidence is in conflict and the verdict has ample support in the evidence, it is not proper for this court to re-evaluate the evidence and substitute its opinion for the determination of the jury. Schoonover v. Fleming, 239 Iowa 539, 32 N.W.2d 99, and cases cited.

The evidence and such inferences as may be drawn therefrom must be viewed in the light most favorable to the plaintiff if there is competent evidence to sustain his claim and it is not for this court to do otherwise than sustain the findings of the jury when based on competent evidence. Young v. Blue Line Storage Co., 242 Iowa 125, 44 N.W.2d 391.

'Where reasonable minds, searching for the truth, might justly differ touching the proper inference to be drawn from proven facts, the conclusion reached by the jury will not be disturbed by this court.' Carpenter v. Loetscher-Jaeger Mfg. Co., 178 Iowa 320, 332, 157 N.W. 938, 942.

We have read and re-read the record and are unable to find therein any evidence, including the most favorable inferences that may be drawn therefrom, which would justify the jury in finding that the surety directly or indirectly induced the plaintiff not to file its claim or bring suit thereon within the time limited by statute.

Chapter 573 provides that contracts for the construction of public improvements shall be accompanied by a bond, with surety conditioned for the performance of the contract. Section 573.6 requires that every principal and surety shall agree to pay to all persons, firms and corporations having contracts directly with the principal or subcontractors, all claims due for labor and materials furnished in the performance of contracts when the same are not satisfied out of the portion of the contract price which the public corporation is required to retain until the completion of the improvement, providing the claims are established as provided by law. Section 573.10 provides claims may be filed before the expiration of thirty days immediately following the completion and final acceptance of the improvement. It is undisputed that the commission paid the contract price in full soon after the expiration of thirty days from the acceptance of the improvement, that plaintiff's claim was not filed and is unpaid and that suit was not commenced within sixty days.

The court gave the jury the following instruction: 'In this connection you are instructed that by the terms of its bond the Employers Mutual Casualty Company was only required to pay the claims filed with the Conservation Commission, and since plaintiff's account was never filed with the Commission the Employers Mutual Casualty Company would not be liable for its payment, unless it in some manner induced the plaintiff to refrain from filing its claim as required by law. Hence, before plaintiff can recover in this action it must establish by the preponderance of the evidence that the Employers Mutual Casualty Company in some manner, either directly or indirectly, induced the plaintiff to believe that its claim would be paid without filing the same with the Conservation Commission and to refrain from filing the same as required by law. However, if the plaintiff has established by the pre-ponderance of the evidence that the Employers Mutual Casualty Company sought to prevent the plaintiff from filing its claim and authorized the defendant Morris to try and induce plaintiff not to file its claim, and Morris did by giving his check for the amount with the request that it be held and by telling plaintiff that the bonding company had stated that plaintiff had a year in which to file its claim induce plaintiff not to file its claim, you are instructed that the Employers Mutual Casualty Company would be estopped from denying liability to plaintiff, and plaintiff would be entitled to judgment for the amount of $8,580.60. But if the Employers Mutual Casualty Company did not induce the plaintiff through Mr. Morris to refrain from filing its claim, then plaintiff cannot recover in this action even though you believe that Mr. Morris acting for himself, and not at the suggestion or request of the Bonding Company may have induced plaintiff not to file its claim.' The above instruction became the law of the case.

Richard E. Morris, a partner in Kinser and Morris testified for plaintiff: 'Between April 16 and May 1, of 1956, I was called into the office of Employers Mutual Casualty Company and made several trips there. I could not tell the exact dates, I recall giving a check which was dated May 1st and I was in the office of the Company between April 16th and before I gave the check on May 1st. I was called there by Clarence Johnson (admittedly a representative of Employers Mutual Casualty Company). I was called * * * primarily on our financial situation and on the claims being filed against us as contractor and the bills on the Colyn area. Our financial condition was not good and I talked with Mr. Johnson about that. * * * He asked me about a bank account and I told him I did not have any. * * * Mr. Johnson had figures on the amount of the balance that was due on the contract. He knew it would be around $16,000.00. That is all the money that I had and I told him that. On...