Mid-Continent Cas. Co. v. P & H Supply, Inc.

• Decision Date: 02 November 1971
• Docket Number: MID-CONTINENT,No. 43551,43551
• Citation: 1971 OK 135,490 P.2d 1358,72 A.L.R.3d 1234
• Parties: , 10 UCC Rep.Serv. 1135 CASUALTY COMPANY, a corporation, and Larry J. McKinney, d/b/a McKinney Construction Company, Plaintiffs in Error, v. P & H SUPPLY, INC., a corporation, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 1358

490 P.2d 1358

72 A.L.R.3d 1234, 10 UCC Rep.Serv. 1135

MID-CONTINENT CASUALTY COMPANY, a corporation, and Larry J McKinney, d/b/a McKinney Construction Company Plaintiffs in Error, v. P & H SUPPLY, INC., a corporation, Defendant in Error.

No. 43551.

Supreme Court of Oklahoma.

Nov. 2, 1971.

Syllabus by the Court

1. Statutes are to be construed as having a prospective operation unless the purpose and intention of the Legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language.

2. The burden is upon one, seeking to recover upon a statutory payment bond for material supplied to a public works project, to prove that such material was consumed in such project. This burden is discharged, prima facie, by proving such material was delivered to the site of the project.

3. Proving delivery of material to the site of a public works project, is not the exclusive method to prove, prima facie, that such material was consumed in such project. If under the circumstances of a case, such as here, the record supports no other presumption as to certain material, such circumstances will support a rebuttable presumption that such material was consumed in the public works project.

Appeal from the District Court of Lincoln County; Donald E. Powers, Judge.

Action upon a statutory payment bond by a supplier of material and equipment to a public works project to recover for material and equipment supplied to a subcontractor on such project for which the subcontractor did not make payment in full. Affirmed as modified.

Lee Gill and Harry Brown, Oklahoma City, for plaintiffs in error.

Glenn A. Young and Earl W. Wolfe, Sapulpa, for defendant in error.

DAVISON, Vice Chief Justice.

This is an action upon a statutory payment bond, filed August 15, 1968, by the P & H Supply, Inc., a corporation, as plaintiff against Mid-Continent Casualty Company, a corporation, Larry J. McKinney, d/b/a McKinney Construction Company, and Board of Education, Independent School District No. 103, Prague, Lincoln County, Oklahoma, as defendants. The action was dismissed without prejudice as to the last named defendant.

The bond was executed by defendant McKinney as principal and the defendant Mid-Continent Casualty Company as surety in the amount of $101,625.00 conditioned that McKinney shall promptly make payment to all claimants for all labor and material used or reasonably required for use in the performance of a contract dated January 20, 1967, between McKinney and the Independent School District above named, wherein McKinney agreed to construct Junior High and Gymnasium Additions for the Independent School District in accordance with drawings and specifications prepared by Locke & Smith, Inc.

The plaintiff claims in his first amended petition, as amended, that between February 28, 1967, and August 31, 1967, at the request of William Henry Mackey, d/b/a General Air Conditioning, a subcontractor under defendant McKinney, that the plaintiff furnished supplies and materials, including heating, air-conditioning and plumbing equipment, for the Junior High and Gymnasium Additions constructed under the contract of January 20, 1967; that the reasonable value of the supplies so furnished was $14,296.52 of which $8933.77 has been paid leaving an unpaid balance of $5,363.75.

In addition to the statutory payment bond, there is attached to plaintiff's first amended petition a performance bond and a verified account expressed entirely in mathematical symbols including invoice numbers. In plaintiff's amendment to plaintiff's first amended petition, there is attached as Exhibit 'E' a bid quotation by plaintiff to William H. Mackey, subcontractor to contractor defendant Larry J. McKinney. This bid quotation alleged to have been accepted and signed by subcontractor is an itemized statement of materials with price quotations alleged by plaintiff to have been furnished to the subcontractor on an open continuous running account, all of which were alleged to have been used in the prosecution of work provided for in the principal contract for building additions to the Prague Junior High and gymnasium.

The answer of defendant Larry J. McKinney to plaintiff's first amended petition alleged several defenses including the defense that plaintiff's cause of action is barred by the Statute of Limitations provided in Chapter 57 of the 1968 Session Laws of Oklahoma and provided in Chapter 213 of the 1965 Session Laws. Additionally the answer alleged two defenses, which were withdrawn during the trial and several were ignored and abandoned in the briefs of the parties.

The essential defenses that remain to be considered under the proposition advanced on appeal by defendants and the response of the plaintiff are (1) the general denial of the defendants; (2) the specific denial that plaintiff furnished all the material described in Exhibit 'E' to plaintiff's first amended petition; (3) plaintiff is seeking to charge prices in excess of the price quotations in said Exhibit 'E;' (4) the specific denial that all the material furnished was used in building additions to Prague Junior High and the gymnasium; (5) the denial of defendants that the material supplied by plaintiff was supplied on an open, continuous running account; (6) the bar of the statute of limitations.

The answer of co-defendant Mid-Continent Casualty Company raises substantially the same fact issues raised by defendant McKinney.

The plaintiff's reply consisted of a general denial and a specific denial of the conversations bearing upon the alleged effort of defendant McKinney to protect plaintiff in his payments to Mackey. Plaintiff admitted in reference to material supplied but not used that Mackey was entitled to a credit of $656.62 and indicated plaintiff's willingness to issue a credit memorandum to plaintiff in that amount.

Upon a trial to District Court of Lincoln County, Oklahoma (a jury was waived) the District Court rendered judgment for the plaintiff in the sum of $4583.33 with interest at 10% Per annum from the date of judgment. Recitals in the journal entry reflect that the District Court arrived at this figure, with a 35cents error, by subtracting from $5360.73 the sum of $777.75 representing credits plaintiff was entitled to in the judgment of the court including the above mentioned credit of $656.62.

The motion of each of the defendants for a new trial was overruled. The defendants in the trial court filed their joint petition in error in this court as plaintiffs in error Mid-Continent Casualty Company, a corporation, and Larry J. McKinney. The defendant in error, P & H Supply, Inc., was plaintiff in the trial court. The parties are referred to in this opinion by their trial court designations.

The defendants in their brief, under appropriate assignments of error, confine their attack upon the judgment of the trial court to three propositions: (1) The action of the plaintiff upon the statutory payment bond is barred by the applicable Statute of Limitations; (II) To recover upon a statutory payment bond the material man (plaintiff in this action) must show material furnished was used or consumed in the public work provided that if it is established that material was delibered to the job site a rebuttable presumption arises that the material was used or consumed in the work; (III) Instruments offered in evidence by plaintiff to show delivery of materials to job site are inadmissible hearsay because such instruments were not created by plaintiff but by a supplier who shipped materials, not on order from the subcontractor, but on order, from plaintiff, that subcontractor Mackey had ordered earlier from plaintiff.

We shall consider first the defense that plaintiff's action is barred by the Statute of Limitations. The relevant facts follow: The last material for which plaintiff makes claim was furnished August 19, 1967. The work on additions to the Prague Junior High and gymnasium was completed December 15, 1967. The statute in effect when plaintiff could first have brought this action was Chapter 518, § 2, 1965 Oklahoma Session Laws, which required that a payment bond be taken when a contract is entered into by any public officer in any sum exceeding.$1000.00 for making any public improvements or constructing any public buildings or marking repairs on the same. Section 2 provides in part '* * * provided that no action shall be brought on said bond after one (1) year from the completion of said public improvements or buildings * * *.' The statute of limitations began to run on plaintiff's cause of action December 15, 1967, and plaintiff's suit was filed on August 15, 1968, well within the one year limitation provided for in said statute.

On March 15, 1968, a new statute was passed (61 O.S.Supp.1968, §§ 1 and 2). In this latter statute it was provided that no action shall be brought on such a bond after one (1) year from the day on which the last of the labor was performed or material furnished. The defendants rely on this latter statute for their defense of the statute of limitations.

This latter statute was not available to defendants for the reason that plaintiff's cause of action has accrued under the first (1965) statute.

We have consistently held that a new statute of limitations, as far as it affects existing rights of action, must be held to begin when cause of action is first subjected to its operation, absent contrary provisions. Graner Construction Co. v. Brandt, 180 Okl. 221, 68 P.2d 788.

We have also held that 'accrued right' as used in Section 54,...