S. Sur. Co. v. Metro. Sewerage Comm'n

• Decision Date: 13 January 1925
• Citation: 187 Wis. 206,201 N.W. 980
• Parties: SOUTHERN SURETY CO. v. METROPOLITAN SEWERAGE COMMISSION ET AL.
• Court: Wisconsin Supreme Court

187 Wis. 206

201 N.W. 980

SOUTHERN SURETY CO.

v.METROPOLITAN SEWERAGE COMMISSION ET AL.

Supreme Court of Wisconsin.

Jan. 13, 1925.

Appeal from Circuit Court, Milwaukee County; Walter Schinz, Judge.

Action by the Southern Surety Company against the Metropolitan Sewerage Commission and others for determination of plaintiff's liabilities as surety under contract with named defendant and distribution of funds withheld by Commission on principal's default. From the judgment rendered, plaintiff and certain claimants appeal. Reversed and remanded, with directions.

August 24, 1922, defendant Metropolitan Sewerage Commission, a body created by the Legislature and duly authorized so to do, entered into a written contract for the construction of a main sewer in Milwaukee county at a price of some $100,000 with the MidWest Construction Company and the plaintiff as surety. Work proceeded under such contract until October 5, 1923, when the contractor gave formal notice of its inability to continue, defaulted and became bankrupt. Thereafter the plaintiff as such surety continued and completed the work at an expense of about $3,600. About $26.000 of said contract price was withheld by the commission after such default.

By the written contract the construction company agreed:

“To furnish all the materials, tools, and plant, and to perform all labor necessary to complete the work.”

The plaintiff as surety agreed:

“That the said contractor shall and will well and truly execute and perform this agreement * * * and truly pay on demand to said commission any and all damages and sums of money which the said contractor shall be liable to pay to the said commission under this contract.”

The contractor and sureties agreed:

“To protect the commission against compensation to the employés of said contractor or surety or employés of any subcontractor under them” as provided in the “Workmen's Compensation Act”; also “to indemnify and save harmless the commission from * * * and against any and all claims and liabilities, actions and causes of action, costs, charges, and mechanic's liens, for labor performed or tools and materials furnished in the construction of the work, and any and all costs, charges, and expenses incurred in defending such suits or acts, or procuring such liens to be discharged and satisfied.”

The commission was expressly authorized to retain from the contract price all amounts which may be expended by it for work done or materials furnished in carrying out any of the work done which the contractor failed so to do, etc., and all amounts which it may be necessary to pay for labor, tools, plant, and materials engaged and used upon the construction of the work, and for which the contractor has failed to pay * * * and all other sum or sums as by the terms of said agreement, or by any act of the Legislature then in force, it is or may be authorized to reserve or retain.

This action was brought to have determined and adjusted all questions of liability of the plaintiff as surety under the said contract to any claimants and for the proper distribution of the balance of the purchase price withheld by the commission. A large number of claimants were made defendants, cross-complaints interposed, various issues raised, and other actions started and consolidated herewith. After trial judgment was entered disallowing certain of the claims, allowing a number of others not here questioned, directing the pro rata distribution among certain claimants of the balance of the contract price that had been withheld by the commission, and directing judgment against the plaintiff in favor of several of the claimants for the balance of their adjusted claims left unpaid after such pro rata distribution.

The plaintiff appeals from so much of the judgment as related to certain of the claims and Gerret T. Thorne and Hunter Machinery Company, claimants, seek to review certain parts of said judgment.

Joseph E. Tierney, of Milwaukee, for appellant.

Albert B. Houghton, Otjen & Otjen, Ottomar Kloetzner, McGovern, Hannan, Devos & Reiss, Connell & Weidner, Lines, Spooner & Quarles, Roehr & Steinmetz, William J. Morgan, John W. McMillan, and Raymond J. Cannon, all of Milwaukee (Julius E. Roehr, of Milwaukee, of counsel), for respondents.

ESCHWEILER, J. (after stating the facts as above).

The contract in question and the obligation of the plaintiff surety as to the several claims here involved require the consideration of two separate provisions found in chapter 289, entitled “Liens,” namely, section 3327a providing for the form of contract, bond to be given, and remedy thereon, in contracts involving public works, and section 3347dd providing for the pro rata payment to claimants out of any withheld balances on account of public work.

The substantial issues between the parties here is as to what may or may not be allowed as within such respective statutes and particularly as to an amendment in 1917 of said section 3327a.

[1] Prior to section 3327a, c. 388, Laws of 1917, provided, in substance, that contracts, let for the erection, construction, equipment, repairs, protection, or removal of any building of the state, shall contain provision for the payment by the contractor of all claims for labor and materials, and the giving a bond conditioned for the faithful performance of the contract, and the payment of all the claims for work or labor performed and materials furnished in and about the erection, construction, equipment, repairs, protection, or removal of such building to each and every person entitled thereto. It also, then as now, contained provisions, not material here, for the bringing of an action against the contractor and the surety to recover any such liability. Such statute had been repeatedly construed by this court, and held that it afforded to those who had been engaged in the kind of work therein designated for the state no other or greater right, so far as the kind or nature of the work done or materials furnished was concerned, than was afforded under the general lien statute found in the same chapter for those who performed work or furnished materials or supplies in and about contracts by individuals or corporations. It being established doctrine that public funds, such as were involved in work done for the state, and the same applied to municipal or quasi municipal corporations, were not, in the absence of specific legislative consent and authority, subject to the remedies in the nature of garnishment or equitable impounding of the same.

In Wisconsin Brick Co. v. National Surety Co., 164 Wis. 585, 160 N. W. 1044, L. R. A. 1917C, 912, the history of this then section was given and its intention declared to be that the remedy thereby provided went no further as to kind or nature of claims than did the general mechanic's lien remedy. In that case it was also held that neither under the statute nor the bond there given pursuant thereto were railroad freight charges for transporting of materials which were used in the construction, on behalf of the state, of two buildings for the University recoverable against the surety on such bond. Declaring also that such railroad company would clearly not be entitled to a mechanic's lien for such a charge, and that it had waived its common-law lien for freight charges as a carrier by the delivery of the material without prior payment, a similar conclusion as to freight charges for transporting brick for city pavement was reached in Union Traction Co. v. Kansas Cas. & S. Co., 112 Kan. 774, 213 P. 169;30 A. L. R. 464, with note at page 466.

At the close of the opinion in the Wisconsin Brick Co. Case, supra, decided January 16, 1917, at page 589 (160 N. W. 1045), it was said:

“If we are wrong in our construction of the legislative intention, our error can be readily and easily corrected by the Legislature itself.”

February 12, 1917, a bill proposing an amendment of said section 3327a was introduced. So far as deemed material for consideration here, it proposed striking out the words, “ erection, construction, equipment, repairs, protection, or removal of any building of the state,” and inserting in lieu thereof the following, “ performance of any work or labor or furnishing any materials when the same is of any of the classes or cases of the character enumerated in section 3314 of the statutes (the general Mechanic's Lien Law), and when the same pertains to and is for or in or about any public building, public improvement, public road, alley or highway, or other public work of the state, or of any county, city, village, town, school district, or of any public board or body.

” A substitute amendment followed which struck out of the clause above quoted from such original amending bill the words, “ when the same is of any of the classes or cases of the character enumerated in section 3314 of the statutes, and.” Such changes were in the act, chapter 388 of 1917, as finally passed. Another change was made in the statute, so far as affecting the liability of the contractor and the surety by substituting for the provision in the old section, supra, “ and the payment of all the claims for work or labor performed, and material furnished in and about the erection, construction, equipment, repairs, protection, or removal of such building to each and every person [ or party] entitled thereto,” by now providing in lieu thereof the phrase “ of all the claims for work or labor performed, and materials furnished for or in or about or under such contract.” Respondents here contending for the view held by the trial court that, by such amendment chapter 388 of 1917, there was an enlargement, not only of the classes or kinds of principals or owners, but also a substantial widening of the classes or kinds of possible liens.

Emphasis is laid in such construction upon the provision appearing in said amendment that the remedy is for work or labor performed and materials furnished “ for or in * * * or about *...