People v. Storm

• Decision Date: 22 April 1930
• Docket Number: 5422
• Citation: 287 P. 689,49 Idaho 246
• Parties: THE PEOPLE OF THE STATE OF IDAHO on the Relation of ROY S. WHITE, Doing Business as WHITE HARDWARE COMPANY, Suing for the Use and Benefit of Himself, Respondent, v. W. E. STORM, Defendant, and H. R. NEITZEL, F. H. NEITZEL, J. M. NEITZEL and A. J. FLACK, Appellants
• Court: Idaho Supreme Court

287 P. 689

49 Idaho 246

THE PEOPLE OF THE STATE OF IDAHO on the Relation of ROY S. WHITE, Doing Business as WHITE HARDWARE COMPANY, Suing for the Use and Benefit of Himself, Respondent, v. W. E. STORM, Defendant, and H. R. NEITZEL, F. H. NEITZEL, J. M. NEITZEL and A. J. FLACK, Appellants

No. 5422

Supreme Court of Idaho

April 22, 1930

HIGHWAYS-CONSTRUCTION BOND-LABOR AND MATERIAL COVERED-ACTION ON BOND-SUFFICIENCY OF COMPLAINT-LIABILITY OF SURETIES-ESTOPPEL.

1. Complaint, on highway contractor's bond for labor and material furnished in prosecution of work, held not defective for failure to allege use in constructing work. (C. S., sec 7341.)

2. Obligations, affecting cashier's check deposited in lieu of statutory bond for public work, are determined by statute. (C. S., sec. 7341.)

3. Bond for public work covers labor or materials contributing to work though not actually entering into permanent structure. (C. S., sec. 7341.)

4. Incidental repairs to machinery and truck for washing and conveying gravel for highway, held covered by highway contractor's bond. (C. S., sec. 7341.)

5. Clothing and tools not consumed or destroyed in construction of highways held not covered by highway contractor's bond. (C. S., sec. 7341.)

6. Sureties on highway contractor's bond, paying accounts for labor and material and promising to pay balance, held estopped from contesting items of account sued on.

7. Allegations that labor or materials were furnished at request of sureties on highway contractor's bond not demurred to held sufficient to admit evidence of estoppel against sureties.

8. Sureties, on highway contractor's bond given after completion of contract as substituted for cashier's check deposited, held liable for claims for labor and material.

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Clinton H. Hartson, Judge.

Action on highway construction contractor's bond. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent.

Wm. B Davidson, for Appellants.

The bond sued upon is a bond provided to be given by C. S., sec 7341, and is a statutory bond. The liability on a statutory bond does not extend beyond statutory obligation. (Miles v. Baley, 170 Cal. 151, 149 P. 45; Zellars v. National Surety Co., 210 Mo. 86, 108 S.W. 548; Fogarty v. Davis, 305 Mo. 288, 264 S.W. 879; Salo v. Pacific Coast Casualty Co., 95 Wash. 109, 163 P. 384, L. R. A. 1917D, 613; Duke v. National Surety Co., 130 Wash. 276, 227 P. 2; Monona County v. O'Connor, 205 Iowa 1119, 215 N.W. 803.)

A surety on bond given on public works is not liable for the purchase price of machinery or other materials which constitute a part of the plant or outfit of the contractor, and which is not from its nature necessarily wholly consumed in the work, and this is true even though it may be wholly consumed in a particular work. (Franzen v. Southern Surety Co., 35 Wyo. 15, 46 A. L. R. 496, 503, 246 P. 30; Beals v. Fidelity & Deposit Co., 76 A.D. 526, 78 N.Y.S. 584; Nye-Schneider-Fowler Co. v. Bridges, Hoye & Co., 98 Neb. 27, 151 N.W. 942; Kansas City v. Youmans, 213 Mo. 151, 112 S.W. 225; Standard Boiler Works v. National Surety Co., 71 Wash. 28, 127 P. 573, 43 L. R. A., N. S., 162; Ninneman v. Lewiston, 23 Idaho 169, 129 P. 1073.)

A bondsman is not liable for repairs of an outfit required to be furnished by the contractor. (Besser v. Title Guaranty & Surety Co., 159 Mich. 329, 123 N.W. 1126; Empire State Surety Co. v. Des Moines, 152 Iowa 531, 132 N.W. 837; Smith v. Oosting, 230 Mich. 1, 203 N.W. 131.)

Karl Paine, for Respondent.

It is a correct rule in declaring upon a statute to describe the cause of action, whatever it may be, in the words of the statute. (Fair v. Home Gas & Electric Co., 13 Cal.App. 589, 110 P. 347.)

According to the majority rule all labor and materials that contributed directly or indirectly to the completion of the work are covered by the bond, although the materials did not enter into the permanent structure and become a component part thereof.

The obligation of the bond is not limited to labor and materials which would have been secured by a lien if supplied for a private structure. (Franzen v. Southern Surety Co., 35 Wyo. 15, 46 A. L. R. 496, 246 P. 30; Eagle Oil Co. v. Altman, 129 Okla. 98, 263 P. 666; Mapes v. Foster, 38 Wyo. 244, 266 P. 109; Fidelity & Deposit Co. of Maryland v. Mason, 145 Va. 138, 133 S.E. 793; Hicks v. Randich, 106 W.Va. 109, 144 S.E. 887; United States v. Aetna Indemnity Co., 40 Wash. 87, 82 P. 171; Pacific Wood & Coal Co. v. Oswald, 179 Cal. 712, 178 P. 854.)

VARIAN, J. Givens, C. J., and Budge, Lee and McNaughton, JJ., concur.

OPINION

VARIAN, J.

On August 13, 1927, one W. E. Storm entered into a contract with the State of Idaho for the construction of a portion of the Old Oregon Trail Highway in Payette county designated as Federal Aid Project No. 27. Pursuant to the terms of said contract and C. S., sec. 7341, the defendant H. R. Neitzel deposited with the Commissioner of Public Works a cashier's check for $ 4,200 in lieu of the surety bond required by said section. The work was completed and final settlement made with the contractor on or about December 13, 1927, and no suit on the contract or bond was brought within six months thereafter, or at all, by the state. Under date of August 29, 1927, defendant Storm assigned all moneys due or to become due under said contract to H. R. Neitzel, authorizing the state auditor to draw all warrants due thereunder payable to said Neitzel. On December 13, 1927, the said defendant H. R. Neitzel authorized the Commissioner of Public Works to pay to defendant Storm, without releasing Neitzel's liability under his cash bond, the retained percentage provided for in said contract and amounting to the sum of $ 726.07. Thereafter, pursuant to an agreement of even date therewith, on March 31, 1928, defendant H. R. Neitzel substituted a personal bond, with defendants H. R. Neitzel, F. H. Neitzel, J. M. Neitzel and A. J. Flack as sureties, in the penal sum of $ 4,200, in lieu of said cashier's check for $ 4,200, and reciting all the steps theretofore taken leading up to the giving of said cashier's check in lieu of the bond required by C. S., sec. 7341; and that--

"It is understood and agreed that this bond shall be substituted in lieu of the said cashier's check, and that this bond shall be held for any and all purposes for which said cashier's check has been or would be held and shall be for the protection against any contingency past or future arising out of said contract of August 13, 1927, or any failure of whatsoever nature on the part of said W. E. Storm to fully perform all of the covenants of said contract and the failure to pay all legal claims chargeable to or against the contract price to be paid by the State of Idaho to said W. E. Storm.

"Now therefore, the conditions of the above obligations is such that if the said W. E. Storm shall well and truly perform the terms and provisions of said contract and shall promptly make payments to all persons supplying him with labor and materials in the prosecution of the work provided in said contract that this obligation shall be void otherwise to remain in full force and effect, and it is specifically understood and agreed that this bond shall be liable in any event to all intent and purposes as though this bond had been originally given for the faithful performance of said contract."

This, then, is an action by one furnishing labor and materials for a public improvement, upon the bond required to be given by said C. S., sec. 7341. The contractor, defendant Storm, owed H. R. Neitzel $ 1,000 on a truck he had purchased, which he agreed to pay out of the profits of this contract. He also agreed to pay Neitzel ten per cent of the contract price as a premium for furnishing the bond.

The relator, Roy S. White, is engaged in the hardware business at New Plymouth, Idaho. R. G. Tuttle is a blacksmith at New Plymouth. Luce and Lewis operated the New Plymouth Garage, and the Van Petten Lumber Company had a lumber and coal yard at the same place. The claims of these creditors were all assigned to plaintiff. Storm's contract called for the furnishing of gravel in place by him, and he erected a plant to crush and screen the gravel necessary to fulfill his contract. This plant was at a gravel bed some three miles from the place the gravel was to be deposited, and gasoline trucks were employed to haul the gravel from the plant to the highway. The items embraced in the accounts are made up of lumber and supplies in constructing a platform and wooden "chute" to feed the rock-crusher, certain items of labor and repairs furnished for the plant itself, coal used in the operation of the plant, oils, gasoline, repairs including labor expended upon the trucks, and a few small items like tools, cotton gloves, etc. It is conceded that all of the repairs were not wholly consumed in the present operation, some being in existence after the completion of the contract. Further mention will be made of the facts established by the evidence in dealing with specific questions raised by the appeal.

Defendant W. E. Storm defaulted, and findings and decree were entered in accordance with relator's complaint, the court further finding that defendants H. R. Neitzel and F. H. Neitzel were "estopped to deny that said labor, goods, wares, merchandise and materials, or any item thereof, were supplied in the prosecution of the work."

The first two paragraphs of C. S., sec. 7341, read:

"Any person or persons entering into a formal contract with the state, any county, city, town, school or irrigation district or any quasi public corporation of the state, for the construction, alteration or repair of any...