National Sur. Co. v. Arizona Grocery Co.

• Decision Date: 19 September 1927
• Docket Number: Civil 2540
• Citation: 259 P. 404,32 Ariz. 399
• Parties: NATIONAL SURETY COMPANY a Corporation, Appellant, v. ARIZONA GROCERY COMPANY, a Corporation, and THE J. D. HALSTEAD LUMBER COMPANY, a Corporation, Appellees
• Court: Arizona Supreme Court

259 P. 404

32 Ariz. 399

NATIONAL SURETY COMPANY a Corporation, Appellant, v. ARIZONA GROCERY COMPANY, a Corporation, and THE J. D. HALSTEAD LUMBER COMPANY, a Corporation, Appellees

Civil No. 2540

Supreme Court of Arizona

September 19, 1927

APPEAL from a judgment of the Superior Court of the County of Maricopa. Dudley W. Windes, Judge. Judgment reversed in part and cause remanded with instructions.

Messrs Stockton & Perry, for Appellant.

Messrs Elliott & Swenson, for Appellee Arizona Grocery Company.

Mr. J L. B. Alexander and Mr. Robert McMurchie, for Appellee J. D Halstead Lumber Company.

OPINION

LOCKWOOD, J.

The state engineer entered into a contract with one A. A. Ray, whereby the latter undertook to perform certain work on the Phoenix-Wickenburg highway. As a condition precedent thereto, Ray was required to, and did execute a bond to the state of Arizona, upon which the National Surety Company, hereinafter called appellant, was surety. Ray completed his contract in accordance with its terms, and drew from the state engineer all the monies to which he was entitled excepting the sum of $1,679.84. There were many persons, however, who alleged that Ray had failed to pay for labor and material used on the job, and presented claims to him, the state engineer, and to appellant. Appellant thereupon brought a suit against Ray, the state engineer, and all other creditors known to it, praying that all creditors be required to appear and establish the validity of their claims; that the amount still due Ray be applied in payment thereof; that the liability, if any, of appellant as surety on the bond be adjudged; and that it have judgment over against Ray for any sum which it might be obliged to pay under its bond.

The case proceeded to trial before the court without a jury, and claims of various creditors were established. The judgment required that the surety company pay into the hands of the clerk of the court for distribution to the creditors the sum of $3,029.16, and that the state engineer pay in the amount still due under the contract, being $1,679.84 as above, and directed the clerk to make distribution of the aggregate of said sums to various creditors, among them being J. D. Halstead Lumber Company, hereinafter called the lumber company, in the sum of $282.15, and to the Arizona Grocery Company, hereinafter called the grocery company, in the sum of $538.37. Pursuant to the judgment and before any notice of appeal was filed, the clerk paid out of said funds on hand with him the amounts above stated to the lumber company and the grocery company. Thereafter this appeal was duly prosecuted.

There are some ten assignments of error which we will consider in accordance with the legal propositions raised thereby. It appears from the evidence that the claim of the lumber company was for material furnished by it, the greater part of which went into the construction of a large rock bin, which, after the completion of the work, was torn down and hauled away, just what finally becoming of the material not appearing in the record. The salvage value of the material furnished by the lumber company was estimated variously at from ten to fifty per cent, some being absolutely useless, and some usable. The claim of the Arizona Grocery Company was for groceries furnished the contractor and used by him in boarding the men working on the job. It appears from the undisputed testimony there was no other place near the work where the men could board, and they would have been forced either to board themselves, or the contractor would have had to provide a boarding place, and he could not, according to his testimony, obtain sufficient men to work on the job unless he provided a messhouse. This messhouse was maintained for the accommodation of his men only, and not for profit.

The real question then is, Do these various items come within the terms of the bond? The condition of the bond was:

"If the said contractor . . .fails to pay all moneys due or to become due for or on account of any materials or property so furnished in the said work or improvement, or the performance thereof, . . . the said surety will pay the same. . . ."

Were the supplies above mentioned and used as above described within these terms? It is argued on behalf of appellant that in the case of United States Fid. & Guar. Co. v. Calif.-Ariz. Con. Co., 21 Ariz. 172, 186 P. 502, we have construed a bond of substantially similar provisions in such manner that under the authority of that case it is not liable for the materials above described. Appellees contend, on the other hand, first, that the bonds in that case and in this are dissimilar in character, and second, that, even if they are similar, our holding in the California-Arizona case in no way conflicts with the judgment rendered by the trial court in this one.

While the precise language of the bonds in the two cases differs somewhat, yet on examination of both the bond and the statute (Civ. Code 1913, par. 1962) involved in the California-Arizona case and the bond involved herein, we are satisfied that the principle of law laid down in that case applies to a bond of the character given herein. That law, so far as pertinent to the facts in this case, is contained in the following quotation:

"It is well settled that the expression 'material furnished for the improvement' does not include all materials furnished to the contractor who makes the improvement. The requirement of the statute and the condition of the bond is not intended, as contended by the lumber company, as security that the contractor will pay for everything he buys and uses in doing the work provided for in the contract. . . . The materialmen protected by the provisions of the statute and by the bond are such only as furnish material used in the work or improvement in the sense that such material actually enters into the work done, or is consumed, or substantially consumed, in doing it, as distinguished from its use as a mere...