O'Neal Steel Co. v. Leon C. Miles, Inc., 44010

• Decision Date: 30 May 1966
• Docket Number: No. 44010,44010
• Citation: 187 So.2d 19
• Court: Mississippi Supreme Court
• Parties: O'NEAL STEEL COMPANY, Inc. v. LEON C. MILES, INC., et al.

Page 19

187 So.2d 19

O'NEAL STEEL COMPANY, Inc. v. LEON C. MILES, INC., et al.

No. 44010.

Supreme Court of Mississippi.

May 30, 1966.

Ebb J. Ford, Jr., Gulfport, Cumbest, Cumbest, O'Barr & Shaddock, Pascagoula, for appellant.

Richard D. Foxworth, Ernest R. Duff, Columbia, for appellees.

BRADY, Justice.

This is an appeal from a judgment in favor of appellees, Leon C. Miles, Inc., Travelers Indemnity Company, Pascagoula Municipal Separate School District and the City of Pascagoula, Mississippi. The judgment was based on a peremptory instruction granted these appellees by the Circuit Court of Jackson County upon the appellant resting its case.

This case is complicated, with numerous pleadings and an abundance of prolix facts. Its disposition, however, does not require an enumeration of all the facts or a consideration of the sundry issues which are ably presented in the excellent briefs of counsel representing the litigants. The minimal, essential facts are these.

On April 30, 1962, a contract was duly consummated between Leon C. Miles, Inc., General Contractors, Columbia, Mississippi, and Pascagoula Municipal Separate School District, Pascagoula, Mississippi, for the construction of a white elementary school building in Pascagoula, at a cost to the owner, the Separate School District, of $311,885. A performance bond was properly executed by Leon C. Miles, Inc., as principal, and Travelers Indemnity Company of Hartford, Connecticut, as surety, in the penal sum of $311,885, with the usual standard provisions and requirements.

Simultaneously with the execution of the performance bond, a Labor and Material Payment Bond was also executed by Leon C. Miles, Inc., hereinafter designated as Miles, Inc., as principal, and Travelers Indemnity Company, as surety, in the sum of $155,942.50, with the customary obligation that the contracting principal promptly make payment to all claimants as therein defined, for all labor, materials, equipment or supplies used or reasonably required for use in the performance of the contract, as provided by Mississippi Code Annotated sections 9014-9017 (1956), and other pertinent sections. A portion of the Labor and Material Payment Bond reads as follows:

A Claimant is defined as one having a direct contract with the Principal or which a subcontractor of the Principal for labor, material, or both, used or reasonably required for use in the performance of the Contract * * *.

The Labor and Material Payment Bond provides or other relief and embodies certain conditions precedent which we are not presently required to consider, including the prohibition that:

3. No suit or action shall be commenced hereunder by any Claimant,

(a) * * *

(b) After the expiration of one (1) year following the date on which Principal ceased work on said Contract.

The record discloses that the appellees admitted that Miles, Inc., purchased certain items of fabricated steel and metal from Ramsay Steel and Supply Corporation, hereinafter called Ramsay Steel, for use in the building. Appellees further admitted that Miles, Inc., issued what they designate as a purchase or work order to Ramsay Steel for the erection of some of the steel.

The record discloses that Mr. Fred McCrory, the general credit manager for O'Neal Steel, Inc., the latter hereinafter designated as O'Neal Steel, identified account No. 824 as the job of the Pascagoula School construction; that there was due and owing a balance of $17,600. He identified every piece of material as cut on specific order from Ramsay Steel. He testified that purchase order No. 824 was assigned on the original invoice and kept separate on the books of O'Neal Steel. He identified all related invoices and documents, totaling twenty-five in number. Delivery receipts were also identified for specific materials, including beams, welded tubing, and structural steel cut to specifications designated by Ramsay Steel.

Mr. Raymond Quinn, Manager of O'Neal Steel, stated that O'Neal Steel specially cut the various pieces of steel in lengths and sizes for Ramsay Steel's specific use on the job, and that Ramsay Steel's fabricator punched the holes therein; that he knew what construction it was for and identified the construction as Job A-824, the white elementary school, Pascagoula, Mississippi. This witness further testified that Ramsay Steel had a fabricating shop with portable equipment, consisting of welding machines, iron workers, a punch, a shear, bar benders, facilities to paint the steel, and also trucks with an 'A' frame and boom pole for lifting and erecting the steel. Mr. Quinn stated that he examined the plans in the office of Ramsay Steel and filled the order according to those plans; that Ramsay Steel was the fabricator and that he examined the appellee's Exhibit 5 (appellant's Exhibit B), which constituted the erection contract written on the letterhead of Miles, Inc.

Fred Ramsay, President of Ramsay Steel, who was called as an adverse witness, testified that his corporation was bankrupt; that it had erected all the steel and that he had employed and paid a firm named McGuffey & Sons, of Vicksburg, Mississippi, hereinafter referred to as McGuffey, to do some of the erection of the steel purchased from O'Neal Steel; that he did deliver the steel to the job in accordance with his contract with Miles, Inc. He stated: 'I hired that man to come down here to erect that steel.'

The record discloses that the erection price to be paid was $3,850 when the job was completed according to specifications. Ramsay Steel was furnished the specifications, either by Architect Claude H. Lindsley, or by Miles, Inc. The record further indicates that there was no basic difference in the contract which Ramsay Steel had with McGuffey and the one it had with Miles, Inc., to erect the steel for the price of $3,850.

Leon C. Miles, President of Miles, Inc., as an adverse witness, also aldmitted that Ramsay Steel was there on the job to construct and erect the steel part of the building; that Ramsay Steel was under his control, but that he 'couldn't control him;' and that he had set a figure for the amount of the steel and a figure for the amount of the construction and erection of the steel. He stated he knew Ramsay was erecting the steel, lifting it up and putting bolts into it and that it became a part of the building. He stated he told Ramsay what building it was going in by giving him the shop drawing and that Ramsay's foreman was there and he was the general contractor. He further testified that the architect outlined, to begin with, what steel had to be used, and that Ramsay had the plans and specifications.

The record indicates that the school building was completed on or about May 31, 1962. The appellant instituted suit on May 18, 1963, for $17,621.48, the amount claimed to be due and owing by the appellees.

Appellees in their brief tersely and unequivocally 'submit that the issue in this case is single and simple. Is the Ramsay Steel & Supply Corporation a materialman or a subcontractor?' Appellant's brief also clearly concedes this to be the issue. We are in complete accord with the astute and analytical conclusion of the appellees that the sole issue here for determination is whether or not Ramsay Steel was a subcontractor. This question turns upon whether or not Exhibits A and B are merely purchase orders which any materialman could fill, or whether or not, irrespective of their designation as purchase orders, they are in essence contracts utilizing the materials and services of a subcontractor. Exhibit A is as follows:

Exhibit B is as follows:

A careful review of the testimony in this record clearly and conclusively shows that Exhibit A was a contract calling for the fabrication and delivery of certain structural steel parts. The record discloses that many of these parts had to be cut, welded and assembled in strict compliance with the plans and specifications submitted by Architect Claude H. Lindsley; that some of the fabrication took place approximately two hundred miles from the plant of Ramsay Steel located in Jackson, Mississippi; that portable steel equipment belonging to Ramsay Steel was utilized in the fabrication of these materials subsequent to their transportation to Pascagoula. The fabricating and assembling of the steel materials to be used in the building were made in strict compliance with the plans and specifications, and all were subject to the inspection and approval of the...