Sauve v. Title Guaranty & Surety Co. of Scranton, Pennsylvania

• Decision Date: 25 May 1916
• Citation: 158 P. 112,29 Idaho 146
• Court: Idaho Supreme Court
• Parties: HAZEL SAUVE, Appellant, v. TITLE GUARANTY & SURETY COMPANY OF SCRANTON, PENNSYLVANIA, a Corporation, Respondent

158 P. 112

29 Idaho 146

HAZEL SAUVE, Appellant, v. TITLE GUARANTY & SURETY COMPANY OF SCRANTON, PENNSYLVANIA, a Corporation, Respondent

Supreme Court of Idaho

May 25, 1916

CAREY ACT CONTRACT - CONSTRUCTION CONTRACT - BOND - FAILURE TO COMPLETE CONTRACT-DAMAGES-ORIGINAL LOCATORS-CONSTRUING TERMS OF CONTRACT - SURROUNDING CIRCUMSTANCES - SEC. 1623, REV CODES - CAREY ACT BOND - PURPOSE - MANNER OF ENFORCEMENT-REMEDY-DUTY OF STATE LAND BOARD-RESORT TO BOND-PROTECTION AND BENEFIT TO ALL SETTLERS ON PROJECT.

1. A corporation known as the Big Lost River Land & Irrigation Company, Limited, made a Carey Act construction contract with the state, and sold for cash and on time a number of water right contracts to settlers, among which was the contract of appellant. Subsequently it became insolvent and transferred to one Speer all its interest under such state contract. Speer thereupon made a new contract with the state, and gave the bond of the respondent corporation for the completion of the contract. Held, that although there are provisions in the contract entered into between Speer and the state other than such as are contained in the ordinary Carey Act contract which provisions are set out in full and referred to in the opinion of the court, yet that contract is a construction contract only.

2. Held, that the bond given by Speer when he entered into the contract with the state to well and truly perform or cause to be performed all the covenants, conditions and stipulations of his contract with the state, and to keep harmless and protect the state against all loss by reason of the nonfulfilment of his contract and of any claims, defects errors, liens and encumbrances arising therefrom, is a construction bond only, conditioned for the fulfilment of the terms and conditions of the contract with the state according to the plans and specifications thereof.

3. Held, that the provisions inserted in the contract between Speer and the state with reference to the contractual relations between the original construction company and the original locators were intended to carry out and fulfil all contracts for water rights theretofore sold and contracted to be furnished upon the same terms and conditions as had been agreed to between the original construction company and the original locators.

4. Held, that it was not the intention of the state or Speer with whom it made said contract, that the original locators should stand in any different position from that of other and subsequent locators under the project as far as regards damages which they might sustain by failure to complete the contract.

5. In the construction of a written contract, if there is room for doubt as to its true meaning, the facts and circumstances out of which such contract arose should be considered, and the contract construed in the light of such facts and circumstances.

6. Under sec. 1623, Rev. Codes, the purpose of a Carey Act bond is declared and the manner of its enforcement provided for. The liability and the remedy being created by the same statute, said remedy is exclusive, and the obligor of the bond is in a position to insist that the statutory remedy be followed.

7. Under the provisions of sec. 1623, Rev. Codes, upon the failure of the construction company to complete the irrigation works according to the terms of its contract with the state, it became the duty of the register of the state land board to give such construction company written notice of such failure, and if, after a period of sixty days from the giving of such notice, the company failed to proceed with the work or to conform to the provisions of its contract with the state, then the contract and the bond and all works constructed thereunder would be forfeited to the state. It was the duty of the state land board to follow the provisions of this statute to advertise and accept proposals for the completion of the irrigation works and to proceed to sell the partially completed works, and apply the moneys received therefrom as provided by law.

8. Under the provisions of the statutes of this state, all settlers on the Big Lost River Project were entitled to the protection of the construction bond; and the entire amount of it was intended to guarantee the completion of the project. The bond cannot be resorted to for the purpose of reimbursing individual locators for damages sustained by failure to complete the works, but must be resorted to by the state for the benefit of all the locators on the project.

APPEAL from the District Court of the Third Judicial District for Ada County. Hon. Carl A. Davis, Judge.

Action to recover upon a Carey Act construction bond. Ruling of the trial court sustaining demurrer affirmed.

Judgment affirmed. Costs awarded to respondent.

Edwin Snow and Perky & Brinck, for Appellant.

Those covenants wherein Speer expressly bound himself to carry out and fulfil the settlers' contracts were covenants directly for the benefit of these settlers. If it was to that extent a contract made directly for the benefit of these settlers, under the statutes of Idaho the settlers can sue directly in their own names upon that contract and upon the bond given to secure its fulfilment. (Sec. 3313, Rev. Codes; Pomeroy on Code Remedies, 4th ed., p. 105; 2 Elliott on Contracts, sec. 1411.)

When an obligation is inserted in a public contract for the benefit of third parties, in pursuance of some moral obligation attaching to the board or officer making the contract on behalf of such third parties, then, even though such an additional obligation for the benefit of such third parties is not strictly pursuant to the statute, the contract, being voluntarily entered into, is good quite outside of the statute, and the bond given to secure the contract is enforceable as a common-law obligation. (Knapp v. Swaney, 56 Mich. 345, 56 Am. Rep. 397, 23 N.W. 162; People's Lumber Co. v. Gillard, 136 Cal. 55, 68 P. 576; United States Gypsum Co. v. Gleason, 135 Wis. 539, 116 N.W. 238, 17 L. R. A., N. S., 906; Connor Co. v. Aetna Indemnity Co., 136 Wis. 13, 115 N.W. 811; Williams v. Markland, 15 Ind.App. 669, 44 N.E. 562; Kaufmann v. Cooper, 46 Neb. 644, 65 N.W. 796; Knight & Jillson Co. v. Castle, 172 Ind. 97, 87 N.E. 976, 27 L. R. A., N. S., 573; Fitzgerald v. McClay, 47 Neb. 816, 66 N.W. 828.)

"Where the statutory remedy is not adequate, there is no implication that it was intended to be exclusive, and resort must be had for the execution of the power or the enforcement of the right to the ordinary judicial proceeding." (Johnston v. City of Louisville, 74 Ky. (11 Bush) 527; Mapel v. John, 42 W.Va. 30, 57 Am. St. 839, 24 S.E. 608, 32 L. R. A. 800; Jaffe v. Fidelity & Deposit Co., 7 Ala. App. 206, 60 So. 966; Westervelt v. Dives, 231 Pa. 548, 80 A. 1054.)

John F. Nugent, S. H. Hays and P. B. Carter, for Respondent.

If the settler enters land, he takes it subject to the acts of the state acting as his agent, and must be considered as adopting and approving these acts. (Idaho Irr. Co. v. Pew, 26 Idaho 272, 141 P. 1099.)

The bond in question is a bond required by statute. The amount of the penalty is fixed by law, also the method of forfeiture. It is, therefore, a statutory bond. (Lowe v. City of Guthrie, 4 Okla. 287, 44 P. 198; San Francisco Lumber Co. v. Bibb, 139 Cal. 192, 72 P. 964.)

In cases where there is matter placed in a statutory bond or a contract which it secures in addition to those things required by the statute, the conditions not authorized will be rejected as surplusage and the residue sustained as a good statutory bond. (Macready v. Schenck, 41 La. Ann. 456, 6 So. 517; State v. Findley, 10 Ohio 51; Pratt v. Wright, 13 Gratt. (Va.) 175, 67 Am. Dec. 767, and note 1, on page 772.)

The bond must be taken to be given under the terms of the statute and to contain such an obligation as is called for thereby. (Judge of Probate v. Ordway, 23 N.H. 198; 5 Cyc. 756.)

In construing the new state contract under which the claim is made in this case, we must take into consideration the surrounding conditions. (Twin Falls Orchard etc. Co. v. Salsbury, 20 Idaho 110, 117 P. 118; State v. Twin Falls Canal Co., 21 Idaho 410, 121 P. 1039.) The interest which the settlers were to obtain in the project was a proportionate interest under the statute. (Sec. 1615, Rev. Codes; State v. Twin Falls Canal Co., supra.)

The method of recovery on this bond is a special one, suitable in such cases and in conformity with the plan of the statute. A statute creating a remedy of this character is exclusive. (Fourth Nat. Bank v. Francklyn, 120 U.S. 747, 7 S.Ct. 757, 30 L.Ed. 825; Jessup v. Carnegie, 80 N.Y. 441, 36 Am. Rep. 643; Sudbury Meadows v. Proprietors of Middlesex Canal, 23 Pick. (40 Mass.) 36; Dodge v. Essex County, Commissioners, 3 Met. (44 Mass.) 380; Elder v. Bemis, 2 Met. (43 Mass.) 599; Calking v. Baldwin, 4 Wend. (N. Y.) 667, 21 Am. Dec. 168.)

A third person cannot recover on a bond unless the bond was made for the direct and primary benefit of such person. (Parker v. Jeffery, 26 Ore. 186, 37 P. 712.)

BUDGE, J. Sullivan, C. J., and Morgan, J., concur.

OPINION

BUDGE, J.

This is an action by one of the purchasers of water rights under the Big Lost River Carey Act Project to determine whether or not she is entitled to recover damages upon a bond given to the state of Idaho in connection with the contract between the state and one George S. Speer. The action was brought upon four causes of action; three having been assigned.

It appears from the record that a corporation known as the Big Lost River Land & Irrigation Company, Limited, organized under the laws of this state, on April 30, 1907, entered into a contract with the state for the purpose of constructing irrigation works under the terms...