Milwaukee Bldg. Supply Co. v. Ill. Sur. Co.

• Decision Date: 11 April 1916
• Citation: Milwaukee Bldg. Supply Co. v. Ill. Sur. Co., 163 Wis. 48, 157 N.W. 545 (Wis. 1916)
• Parties: MILWAUKEE BLDG. SUPPLY CO. ET AL. v. ILLINOIS SURETY CO. ET AL.
• Court: Wisconsin Supreme Court

163 Wis. 48

157 N.W. 545

MILWAUKEE BLDG. SUPPLY CO. ET AL.

v.ILLINOIS SURETY CO. ET AL.

Supreme Court of Wisconsin.

April 11, 1916.

Appeal from Circuit Court, Milwaukee County; Lawrence W. Halsey, Judge.

Action by the Milwaukee Building Supply Company and another against the Illinois Surety Company and others. From a judgment for plaintiffs and certain defendants, the named defendant appeals. Affirmed.

This action was brought to foreclose subcontractors' liens for materials furnished in the erection of a store building for defendant Edw. Schuster & Co., upon land to which title was in defendant Schuster Realty Company situate in the city of Milwaukee, and for recovery of personal judgment against the defendants J. W. Utley, principal contractor, and Illinois Surety Company, surety upon Utley's bond. The plaintiffs and all the defendants, except Illinois Surety Company, Schuster Realty Company, Edw. Schuster & Co., J. W. Utley, and Simon W. Strauss, are materialmen; said Strauss being mortgagee of the premises under a mortgage executed subsequently to the commencement of the construction of the building. The plaintiffs and other subcontractors claim to have perfected rights to materialmen liens, and a right of recovery against the defendant Illinois Surety Company as surety upon the bond of Utley for the full performance of his contract for the construction of the building, regardless of whether or not their rights as lien claimants were perfected. The defendants Edw. Schuster & Co. and Schuster Realty Company contend that liens were not, in all cases, perfected, and that as to such as were perfected they claim a right of recovery against the Illinois Surety Company. The Illinois Surety Company contends that claims for lien were not established because of the failure of the lien claimants to perfect their claims by the service of notices required by section 3315, Stats., and insufficiencies in the petitions for liens, and as to three of such lien claimants no right of lien existed because the material furnished or labor performed was not within the provisions of the lien statutes. It further claims that there was no direct liability by it to the materialmen under its bond, but that it was liable only, if at all, as indemnitor to Edw. Schuster & Co., and that as to all claims not perfected as liens it had sustained no liability. It also maintained that as to all claims, whether perfected as liens or not, it was relieved from liability as surety to Edw. Schuster & Co. because of the failure of the latter company to protect itself from such claims by the exercise of its contract right and duty to withhold payments from the principal contractor until such claims were discharged, and because of the failure and neglect of said Edw. Schuster & Co. to demand of Utley the verified statements of the names of all persons furnishing material or labor under the building contract, as required by section 3315, Stats. The defendant J. W. Utley did not appear, and judgment was rendered against him by default, from which he has not appealed. Simon W. Strauss, as trustee, did not answer, and the judgment determined that his mortgage interest was subsequent to that of the lien claimants, and no appeal has been taken from that part of the judgment. As to all the other defendants, namely, J. W. Utley, Ferdinand Pietsch, John Eller Lumber Company, a corporation, Simon W. Strauss, as trustee, Waterproofing Company of America, a corporation, Midland Terra Cotta Company, a corporation, Charles Cowalksy, H. F. Pazik, assignee of Mike McCracken, Math. Schiszler, Hans Lochen, and Chas. Gauger, the court denied relief, either by personal judgment against Illinois Surety Company or foreclosure of liens, and none of said defendants have appealed. The defendants Western Lime & Cement Company, Wisconsin Lakes Ice and Cartage Company, Janesville Sand & Gravel Company, and Moody Transfer Company were awarded judgment upon their claims directly against Illinois Surety Company, but were denied right to liens because of their failure to perfect their right to liens, as required by section 3315, Stats., and none of said defendants has appealed. All other claimants were adjudged to have perfected liens against the property of Edw. Schuster & Co. and of Schuster Realty Company, with judgment of foreclosure of such liens, and were each awarded personal judgment upon their claims against Illinois Surety Company. The Illinois Surety Company only has appealed.Flanders, Bottum, Fawsett & Bottum, of Milwaukee, for appellant.

Marshutz & Hoffman, of Milwaukee, for respondents Milwaukee Bldg. Supply Co. and Waukesha Lime & Stone Co.

Wm. Kaumheimer, J. O. Carbys, L. J. Brabant, G. J. Davelar, Churchill, Bennett & Churchill, Froede & Bodenstab, Connell & Weidner, Lorenz & Lorenz, Edgar L. Wood, Otto Dorner, L. A. Olwell, and H. V. Kane, all of Milwaukee, S. M. Field, of New York City, and C. F. Geilfuss, E. F. Van Vechten, N. L. Baker, W. J. Zimmers, E. J. Patterson, H. W. Connell, Lenicheck, Robinson, Fairchild & Boesel, and Fred Vogt, all of Milwaukee, for other respondents.

KERWIN, J. (after stating the facts as above).

The assignments of error in this case are grouped by appellant and argued under six heads, and we shall treat them in the same order.

1. The first assignment of error treats the proposition whether the bond in question creates a direct liability of the surety to laborers and materialmen. The bond considered in this case is the same bond treated and passed upon in Concrete Steel Company, a Foreign Corporation, Plaintiff and Appellant, v. Illinois Surety Company, a Foreign Corporation, Defendant and Respondent, 157 N. W. 543, decided herewith. The decision in that case as to direct liability of the surety to the laborers and materialmen controls this case.

[1] 2. The second, third, and fourth assignments of error raise the question whether the surety was discharged by acts subsequent to the execution of the bond. J. W. Utley was the principal contractor, and Illinois Surety Company, appellant here, surety on his bond given to secure Edw. Schuster & Co. Under the contract Edw. Schuster & Co. were required to retain 10 per cent. out of each payment for the final payment to be made within 60 days after the completion of the work. It is contended by appellant that this was not done; hence the surety was discharged. On this point the findings of the court below, supported by the evidence, are against the appellant. It appears from the evidence that the architect, in making his certificates in all cases before the final certificate, deducted 10 per cent. in substantial compliance with the contract. It is further contended by counsel for appella...