Monona County v. O'Connor

• Decision Date: 25 October 1927
• Docket Number: 38301
• Citation: 215 N.W. 803,205 Iowa 1119
• Parties: MONONA COUNTY, Appellee, v. JAMES O'CONNOR et al., Appellees; GENERAL CASUALTY & SURETY COMPANY, Appellant
• Court: Iowa Supreme Court

215 N.W. 803

205 Iowa 1119

MONONA COUNTY, Appellee, v. JAMES O'CONNOR et al., Appellees;

GENERAL CASUALTY & SURETY COMPANY, Appellant

No. 38301

Supreme Court of Iowa, Des Moines

October 25, 1927

REHEARING DENIED APRIL 5, 1928.

Appeal from Monona District Court.--MILES W. NEWBY, Judge.

Action by Monona County to adjudicate the right of claimants to share in the distribution of the balance due on final estimate of a highway improvement. The court, with slight modifications in the amounts, found in favor of the claimants, and the defendant General Casualty & Surety Company appeals.

Reversed.

Kennedy Holland, De Lacy & McLaughlin and Underhill & Miller, for appellant.

Prichard & Prichard and Oliver P. Bennett, for appellees.

STEVENS J. EVANS, C. J., and FAVILLE, KINDIG, and WAGNER, JJ., concur.

OPINION

STEVENS, J.

I.

This is an action brought under the provisions of Section 10313, Code of 1924, to adjudicate the rights of claimants to a fund of $ 6,100.20, final estimate on a highway improvement in Monona County, known as Federal Project No. 184; but, as finally tried and submitted, it assumes a much broader aspect.

The controversy on this appeal is between C. J. Hysham, McElwain & Son, Van Eaton Company, John Mathys, Ethel Taylor, Arley Waugh, and E. L. Hogue, all of whom filed claims in the office of the county auditor for allowance and payment out of the fund in question, and the appellant General Casualty & Surety Company, surety on the bond of the contractor. All parties appeared and filed appropriate pleadings, praying the relief usually sought in such cases and other relief hereafter stated. The contractor defaulted on his contract, and the work was completed by appellant, who demands payment of the entire fund, which is now held by the clerk of the district court of Monona County to abide the result of this litigation. The fund includes 10 per cent of the monthly estimates reserved by the county under the contract for the improvement, and also the balance due on the final estimate of the work.

The case was tried and submitted in part upon the theory that the bond in question is the bond required by Chapter 347, Acts of the Thirty-eighth General Assembly (Chapter 452, Code of 1924), to be given by public contractors, and no reference is made by counsel to any of the provisions of the statute relating to Federal and state projects for the improvement of the public highways; and we shall so treat it in disposing of the appeal. The improvement was completed in November, 1923, and the claims of Hysham, McElwain & Son and the Van Eaton Company were filed within four months after the date of the last item of their respective claims; but the claims of the other parties named were not so filed. Section 2, Chapter 347, Acts of the Thirty-eighth General Assembly, as amended by Section 1, Chapter 147, Acts of the Thirty-ninth General Assembly, is applicable, if the claimants have standing under the statute, and under it all provable claims must have been filed within four months after the date of the last item. Francesconi v. Independent Sch. Dist., 204 Iowa 307, 214 N.W. 882.

The contention of appellees that the filing of claims within the period required by the statute is not essential where the controversy involves only the question of distributing the fund among competing claims which are contractual in character will be later discussed.

None of the claims are for labor performed or material furnished to the contractor or subcontractors. They include claims for groceries, board, and rental, for equipment for horses and mules and equipment used by the contractor, and for hay and pasture. The statute in force at the time the several claims arose provided for the filing of the claims in the office of the county auditor, for labor performed and material furnished for a public improvement. This statute was later amended, so that the term "material" is now defined, in addition to its ordinary meaning, so as to "embrace feed, provisions, and fuel." Section 10299, Code of 1924. This statute went into effect in October, with the Code of 1924. All of the claims of appellees arose and the time for filing thereof expired prior to the time the foregoing statute went into effect. It therefore has no application to the facts of this case. Teget v. Polk County Drainage Ditch, 202 Iowa 747, 210 N.W. 954. As already stated, none of the claims are for material furnished or labor performed upon the improvement, and do not, therefore, come within the provisions of the statute in force and controlling as to claims of the class stated.

II. The remaining matters to be discussed relate to the scope and validity of certain terms and provisions of the bond which appellees, in effect, classify as non-statutory, and as purely contractual in character. It is essential to a thorough understanding and decision of the questions involved at this point that the pertinent provisions of the bond be kept in mind. They are as follows:

"Now, therefore, the condition of this obligation is such that if the principal shall faithfully perform the contract on his part, and satisfy all claims and demands, incurred for the same, and shall fully indemnify and save harmless the owner from all cost and damage which he may suffer by reason of the failure to do so, and shall fully reimburse and repay the owner all outlays and expense which the owner may incur in making good any such default, and shall pay all persons who have contracts directly with the principal or subcontractors for labor or materials, then this obligation shall be null and void; otherwise it shall remain in full force and effect; and if the said James O'Connor as principal, shall in all respects fulfill his said contract according to the terms and tenor thereof, and shall faithfully discharge the duties and obligations therein assumed, then the above obligation is to be void and of no effect; otherwise to be and remain in full force and virtue in law."

The two instruments must be construed together. As we have already stated, the bond was executed in compliance with the requirements of the statute, and is statutory in character. The penalty thereof, we must assume, was fixed primarily to meet the statutory requirement of the contract, which was for the construction of a public improvement. Contracts for public improvements of the character described in the contract and bond are let to the lowest responsible bidder. In so far as the bond was essentially and in a primary sense a statutory bond, the obligation is measured by the statute which is a part of it.

It is the law of this state, long established, that the liability of a surety on a statutory bond does not extend beyond the statutory obligations. Field v. Schricher, 14 Iowa 119; United States F. & G. Co. v. Iowa Tel. Co., 174 Iowa 476, 156 N.W. 727; Schisel v. Marvill, 198 Iowa 725, 197 N.W. 662; Zapf v. Ridenour, 198 Iowa 1006, 200 N.W. 618; Joint Board of Supervisors v. Title G. & S. Co., 198 Iowa 1382; Nebraska Culvert & Mfg. Co. v. Freeman, 197 Iowa 720, 198 N.W. 7. This rule was first declared by this court in Field v. Schricher, supra. A supersedeas bond which contained provisions in excess of the obligations imposed by statute was held invalid as to such provisions. The rule and the reason therefor are well stated in Schisel v. Marvill, supra, which was an action on a contractor's bond for damages for personal injuries resulting from the tortious or negligent acts of the contractor's employees. We said:

"The effect of this holding is that the liability of a surety under a statutory bond is measured and defined by the statute; and that a construction of the statute is a construction of the bond. In such a case, the statute becomes a guide to the surety as to the extent of the obligation assumed. Manifestly, if a bond required by statute for purposes defined by statute and in an amount fixed by the statute may be extended voluntarily to cover other obligations than those required by the statute, such extraneous obligations might of themselves absorb the full penalty of the bond and defeat the statutory purpose for which the bond was required. If it be found, therefore, that the purported obligation of the bond by its terms extends beyond the limits fixed by the statute, such excess provisions will be deemed surplusage, and the bond will be enforced in accord with the statute. The authorities are fully reviewed in the cited case, and we shall not repeat them."

Appellees recognize the rule announced by the court in the above cited cases, but they assert that the same are not applicable to the facts of this case. This contention is predicated upon the so-called independent and non-statutory obligations of the bond and contract. The contractor agreed to "pay all just claims for materials, supplies, tools, labor and all other just claims, filed against him or any of...