Schisel v. Marvill, 35747.

• Decision Date: 13 March 1924
• Docket Number: No. 35747.,35747.
• Parties: SCHISEL v. MARVILL ET AL.
• Court: Iowa Supreme Court

198 Iowa 725

197 N.W. 662

SCHISEL

v.MARVILL ET AL.

No. 35747.

Supreme Court of Iowa.

March 13, 1924.

Appeal from District Court, Winnebago County; M. F. Edwards, Judge.

This is an action on a contractor's bond by a person not a party thereto to recover damages for personal injuries resulting to plaintiff from the tortious or negligent act of the contractor's employees. There was a demurrer to the petition, which was sustained. The plaintiff appeals. Affirmed.Thompson, Loth & Lowe, of Forest City, for appellant.

Blythe, Marley, Rule & Smith, of Mason City, and Tom Boynton, of Forest City, for appellees.

EVANS, J.

It appears from the petition that the defendant Marvill entered into a contract with the supervisors of Winnebago county for the graveling of certain highways. The consideration of the contract was $24,508. Pursuant to the statute a contractor's bond for such exact amount was given for the full performance of the contract. The defendants Larson and Dray were employees of the contractor, and the other defendants were sureties on the contractor's bond. The petition avers that the employees, Larson and Dray, were engaged in hauling gravel over the highway in performance of the contract; that Dray was driving easterly, and that Larson, at some distance away, was driving westerly; that both were driving at an excessive rate of speed and in excess of 30 miles an hour; that the plaintiff was proceeding easterly over the same highway, and that he overtook said Dray; that he undertook to pass the said Dray upon the highway, but was unable to do so because of Dray's excessive speed; that while so proceeding alongside of Dray, and on his left side, he met Larson with his truck coming from the east; that he was unable to turn to the right and escape contact with Larson because of the presence of Dray's truck; that a collision resulted at the point of meeting with Larson; that such collision was wholly the result of the negligence of Larson and Dray; and that the plaintiff was damaged thereby in the sum of $10,000. The question presented is whether the surety on the contractor's bond is liable to the plaintiff for these damages. The question as presented divides itself into three phases: (1) May liability be predicated upon terms and conditions of a statutory bond which are beyond the requirements of the statute? (2) Does the statute by its terms contemplate a liability of a surety on a contractor's bond for such damages as are claimed herein? (3) Does the statutory bond given herein by its terms contemplate such liability?

[1] The bond under consideration, without any doubt, is and purports to be a statutory bond. Whether a statutory bond may be voluntarily enlarged so as to include other binding conditions and penalties not provided by statute is a question upon which the great body of authority is in hopeless conflict. Many authorities hold that such additional obligations may be enforced as common-law obligations voluntarily assumed. The weight of authority, however, in our judgment, is that a statutory bond is a creature of the statute, and that common-law obligations cannot be added to it. There are many cogent reasons for this holding, but we shall not take the time or space to enumerate them. As in this case, statutory bonds are usually taken pursuant to statute by public bodies whose duties in relation thereto are defined by the statute, and whose powers in relation thereto do not extend beyond the terms of the statute.

The question at this point received our careful consideration in U. S. Fidelity Co. v. Iowa Telephone Company, 174 Iowa, 476, 156 N. W. 727. In that case we aligned ourselves with what we deemed to be the weight of authority and reason. The following excerpt from the opinion of Weaver, J., in that case will be sufficient indication of our holding and the reasons therefore:

“In no case cited to us and in none falling under our observation, where a statute provides for the giving of a bond and prescribes its conditions, and the bond in the decided case contains all the statutory conditions, has it been held that the inclusion in such bond of other or nonstatutory conditions has the effect to convert it into a common-law obligation. Indeed, the entire trend of the cases is to the contrary. In the first place, where the bond is given as a statutory obligation, the court will construe it, so far as it properly may, to sustain the statutory purpose; and even though it be informal or contain terms which, considered alone, might indicate an absolute, rather than a contingent, liability, yet, if it be clear that the intention was to comply with the statute, it will be so treated and enforced. This was the distinct holding in Field v. Schricher, 14 Iowa, 119. It is indeed thoroughly well settled that in such, if the added or nonstatutory conditions are separable from those required by the statute, they will be treated as surplusage and of no effect. [Citing many authorities.] To quote the language of this court in the Field Case: ‘When, from the language used, a legitimate statutory object and purpose can be seen to have been intended, it will not be presumed that the parties voluntarily made a bond good only at common law.’ And it would be an anomalous holding to say that a bond may be enforced as a statutory obligation and also as an obligation at common law.”

The effect of this holding is that the liability of a surety, under a statutory bond, is measured and defined by the statute; and that a construction of the statute is a construction of the bond. In such a case, the statute becomes a guide to the surety as to the extent of the obligation assumed. Manifestly, if a bond required by statute for purposes defined by statute and in an amount fixed by the statute may be extended voluntarily to cover other obligations than those required by the statute, such extraneous obligations might of themselves absorb the full penalty of the bond and defeat the statutory purpose for which the bond was required.

If it be found, therefore, that the purported obligation of the bond by its terms extends beyond the limits fixed by the statute, such excess provisions will be deemed as surplusage, and the bond will be enforced in accord with the statute. The authorities are fully reviewed in the cited case, and we shall not repeat them.

[2] II. Does the statute by its terms contemplate a liability of the surety on a contractor's bond for such damages as are claimed herein? In setting forth herein the pertinent sections of the statute we shall cite them under the numbered sections of the Compiled Code. This is not strictly a proper course, and we resort to it only from the pressure of present convenience as conforming to the course largely adopted in the briefs of counsel. Section 8427, Compiled Code, is as follows:

“Whenever any public body, board, committee, officer or other public representative now or hereafter empowered by law to enter into a contract, for and on behalf of the public, for the purpose of constructing any public building, or for the purpose of making any public improvement, or for the making of any additions thereto, or for the finishing, furnishing or repairing of any such buildings or public work, such body, board, committee, officer or other public representative, whenever the contract price is in excess of one thousand dollars, shall require as a condition precedent to the making of such contract that the person, firm or corporation to whom the contract is awarded furnish and file a bond, as hereinafter provided, in a sum of not less than the contract price, the amount to be determined by those representing the public, signed by the contractor and a responsible surety company authorized to do business in Iowa, which bond shall run to said body, board, committee, or other public representative, for its use and benefit and for the use and benefit of all persons, firms and corporations who shall perform any labor or furnish any material, including fuel, in the carrying out of such public contract, and shall have as one of its conditions, the following paragraph:

‘Now, therefore, the condition of this obligation is such that if the principal shall faithfully perform the contract on his part, and satisfy all claims and demands, incurred for the same, and shall fully indemnify and save harmless the owner from all cost and damage which he may suffer by reason of failure so to do, and shall fully reimburse and repay the owner all outlay and expense which the owner may incur in making good any such default, and shall pay all persons who have contracts directly with the principal for subcontractors for labor or materials, then this obligation shall be null and void; otherwise it shall remain in full force and effect.’

The foregoing condition shall at all times be additional to those conditions and requirements now or hereafter required by statute to be a part of such bonds. The provisions and requirements of this section and the three following sections shall not be modified or annulled by contrary provisions in any such bond or contract.”

Section 2919, Compiled Code:

“In the award of contracts, due consideration shall be given not only to the prices bid, but to the mechanical and other equipment, and financial responsibility of the bidder and his ability and experience in the performance of like or similar contracts. The board may reject any or all bids and may re-advertise for bids, or, with the written consent of the state highway commission, may let by private contract, or with such consent may proceed to the construction (except in case of paving) by day labor at a cost not to exceed the lowest bid received. In any event, all contracts entered into under the provisions of this chapter shall be approved by the state highway commission before they shall become effective.

The form and conditions of all contracts, the form and conditions of all bonds taken or required for the full...