Pond Creek Coal Co. v. Citizens' Trust & Guaranty Co.

• Citation: 186 S.W. 494,170 Ky. 601
• Parties: POND CREEK COAL CO. v. CITIZENS' TRUST & GUARANTY CO.
• Decision Date: 06 June 1916
• Court: Court of Appeals of Kentucky

186 S.W. 494

170 Ky. 601

POND CREEK COAL CO. v. CITIZENS' TRUST & GUARANTY CO.

Court of Appeals of Kentucky.

June 6, 1916

Appeal from Circuit Court, Pike County.

Action by the Pond Creek Coal Company against the Citizens' Trust & Guaranty Company. From a judgment for defendant plaintiff appeals. Affirmed.

Auxier Harmon & Francis, of Pikeville, for appellant.

J. J Moore, of Pikeville, and Goodykoontz & Scheer, of Williamson W. Va., for appellee.

THOMAS J.

The appellant, Pond Creek Coal Company (whom we shall refer to as "plaintiff"), on the 2d day of June, 1913, entered into a written contract with W. A. Liller (who we shall refer to as the "contractor") by which the contractor undertook to construct for the plaintiff a number of residences for the use of the hands engaged in and about the mining plant of plaintiff. The total sum which the contractor was to receive for doing this work was $200,000, and he was to have it completed by the 1st day of the following January. Under the contract payments were to be made to the contractor by the plaintiff as the work progressed in stipulated installments, but not to exceed in the aggregate 90 per cent. of the contract price; the remaining 10 per cent. to be due and payable 30 days after the completion and acceptance of the work. It was agreed that the plaintiff should have the right at any time after as much as 20 per cent. of the work had been finished, or commenced and under way, to cancel the contract, but, in the event it should do so, it agreed to take all of the remaining material which the contractor had purchased at the cost price. After the contractor had completed a number of the houses and had commenced the construction of others, which, when completed, together with those already completed, would cost under the contract price the sum of $172,843.87, the plaintiff notified him that it would not require the entire number of houses to be constructed, but would excuse him from further work under the contract after the completion of those under process of construction. The payments to be made as the work progressed were stipulated to be for materials necessary to the construction of the buildings and for labor in doing the work.

Among the various stipulations in the contract, we find the following:

"The contractor shall furnish the architects with duplicate bills of all materials received, to the date upon which payment is based, ten days before he shall be entitled to demand any payment for said materials."

And also this one:

"It is further agreed by the parties hereto that in all cases before the contractor shall be entitled to demand or receive payment for the said work or materials or any portion thereof, done or furnished under this contract, he shall produce at any time on demand of the owner written statement giving the names and address of all parties furnishing materials or labor and the amount due or to become due, and said written statement shall be under oath and verified by the affidavit of the contractor."

And further:

"It is hereby agreed that the owner shall furnish the contractor with duplicate bills of all materials so purchased, and the contractor hereby agrees to furnish owner with duplicate bills of all materials purchased by him from any other person than the owner."

And the still further one:

"The contractor further agrees to deliver said houses to the owner free from any and all liens of any kind, either on material or labor furnished, and agrees to furnish the owner with duplicate receipted bills of all materials purchased by him from persons other than the owner, and the owner reserves the right to at any time refuse to pay the amounts provided to be paid for materials, unless said receipted bills are delivered to it before said payments are due.

It is further agreed that upon completion of the work and before payment of any balance due the contractor which may have been withheld as security for the faithful fulfillment of this contract or otherwise, the contractor shall produce and deliver to the party of the second part, a full and complete release from all persons who have furnished materials or labor in connection with the making of improvements or the construction of buildings contemplated hereunder. And shall execute any and all affidavits which the owner may require touching on the right of any party or parties whomsoever to have or to obtain a lien or liens upon said improvements or land upon which same is situated as a result of any materials furnished or labor done in connection with said improvements. And the contractor further agrees that he will submit his labor payrolls to the auditor of the Pond Creek Coal Company for his inspection at any and all times he may be requested or required to do so, and produce and deliver to the auditor of the owner for his inspection receipts for all amounts paid for labor."

It was agreed in the contract that the contractor should execute bond to the plaintiff guaranteeing the performance of the contract on his part, which he did with the appellee (defendant) as his surety, the bond was for the total sum of $30,000, and it was agreed therein as follows:

"The obligee herein shall keep and perform said contract upon its part. If, at any time, it appears that the above-named principal has abandoned the work, or will not be able, or does not intend, to carry out said contract as and within the time specified, the obligee shall, within a reasonable time, not exceeding ten days, so notify the surety in writing, by registered mail, prepaid, addressed to the surety at its principal office in Parkersburg, West Virginia, and the surety, at its option, shall have the right to assume said contract and to sublet or complete the same, and to use, in so doing, all the plant, equipment and machinery of the principal, and thereafter all moneys due or to become due, including percentages provided to be withheld by the contract, shall, as the same become due, in accordance with the terms of the said contract, be paid to the surety, and the surety shall be subrogated to all the rights of the principal."

On April 30, 1914, this suit was brought against the contractor and the defendant as surety on his bond, seeking to recover the sum of $14,104.64. This amount was arrived at by alleging that plaintiff had paid to the contractor as the work progressed and up to its completion, after the notice mentioned, the sum of $193,948.51, which it averred was $21,104.64 above the contract price; that it credited the contractor with $14,000 worth of material which he had on hand at the time it notified him to construct no more buildings, which sum, deducted from the alleged excess value of the work, left $7,104.64. It alleged that afterwards it had to pay for threatened labor liens the sum of $7,000 which, with the excess payment, after a credit for the material, made up the sum sued for. The contractor was not served with process, but the defendant surety company interposed a demurrer to the petition as amended, which was sustained...