Sheldon v. Chi. Bonding & Sur. Co.

• Decision Date: 08 February 1921
• Docket Number: No. 33208.,33208.
• Citation: 181 N.W. 282,190 Iowa 945
• Parties: SHELDON ET AL. v. CHICAGO BONDING & SURETY CO. ET AL.
• Court: Iowa Supreme Court

190 Iowa 945

181 N.W. 282

SHELDON ET AL.

v.CHICAGO BONDING & SURETY CO. ET AL.

No. 33208.

Supreme Court of Iowa.

Feb. 8, 1921.

Appeal from District Court, Story County; G. D. Thompson, Judge.

Action by plaintiffs against defendant Chicago Bonding & Surety Company and against 61 claimants and mechanics' lienholders who had, or claimed to have, liens against the property, for the purpose of holding the Bonding Company liable for loss plaintiffs sustained because of the alleged violation of two building contracts with the contractor, W. D. Lewis & Co., and to have the two building contracts and surety bonds treated and enforced as one contract and one bond as to the Surety Company. An accounting with all defendants was asked, and that the valid liens against the property be ascertained and fix the liability of the Bonding Company, and for damages arising out of the contracts for construction, and for judgment against the Bonding Company for the amount of all claims provable against the plaintiffs or the property, in excess of the amount owing by plaintiffs, after deducting all proper credits, and to quiet plaintiffs' title to the building and the real estate. The controversy arises out of the construction of a four-story hotel building upon lots 27 and 28, in block 10, owned by the Munns, and lots 29 and 30, owned by Sheldon. Some of the defendants made default. The trial court considered and passed upon all the claims of the contesting parties; fixed the contract price, with extras; and, after allowing credits and striking a balance, that plaintiffs together had been damaged by the default of W. D. Lewis & Co., the contractor, and its surety, the Chicago Bonding & Surety Company, in the sum of $12,879.02, and awarded a recovery in favor of plaintiff Parley Sheldon in the sum of $6,890, and in favor of the Munns for $5,988.74, for which amounts judgment was rendered against the said Surety Company. The court also found that the defendant and cross-petitioner, American Fire Proofing Company, failed to file its mechanic's lien within 30 days from the furnishing of the last material or labor under its contract with the Lewis Company, and as there were no funds in the hands of the owners, after satisfying the liens, that were properly filed, the cross-petition was dismissed. As to the claim of the Concrete Engineering Company, the court found for plaintiffs, allowing a deduction from the amount claimed by said engineering company of $500 for defective work, and that whatever labor and materials were furnished within 30 days prior to the date of the filing of the lien were furnished or performed on account of improper performance of the contract originally, and that the lien of said Engineering Company was not filed in time. Plaintiffs have also appealed from the allowance of the claim of the Loetscher-Burch Manufacturing Company. Since the entering of the decree, the judgments and liens allowed, with the exception of that of the Loetscher-Burch Manufacturing Company, have been paid by plaintiffs, and all rights thereunder against the Bonding Company, assigned to the plaintiffs. The Bonding Company, the Fire Proofing Company, and the Concrete Engineering Company have all appealed. Plaintiffs have also appealed, claiming that the trial court should have allowed them $9,200 for delay in the construction of the building, instead of the $6,000 which the trial court did allow therefor, and in limiting plaintiffs to $500 attorney's fees in defending against the liens, whereas, as they claim, such allowance should have been $1,500. Affirmed on all appeals.Coffin & Rippey, of Des Moines, and E. H. Addison, of Nevada, Iowa, for appellant Chicago Bonding & Surety Co.

R. E. Nichol, of Ames, for appellant American Fire Proofing Co. and appellees Smith-Carr Hardware Co., Crown Iron Works, and Geo. Wyckoff.

Stipp, Perry, Bannister & Starzinger, of Des Moines, for appellant Concrete Engineering Co. and appellee Pittsburg Plate Glass Co.

C. G. Lee, C. W. Garfield, and T. G. Garfield, all of Ames, for appellees Sheldon and Munn.

Roy E. Cubbage, of Des Moines, for appellees Loetscher-Burch Mfg. Co. and American Three-Way Prism Co.

C. H. Pasley, of Ames, for appellees, Dragoun, Counter, and Loughran.

Strock & Wallace, of Des Moines, and Harry Langland, of Nevada, Iowa, for appellees Wallace & Linnane.

B. B. Welty, of Nevada, Iowa, for appellee Des Moines Bridge & Iron Works.

F. L. Ferris, of Sioux City, for appellees Hunt-Schuetz Co.

J. Y. Luke, of Ames, for appellees H. L. Munn Lumber Co.

Seneca Taylor, of St. Louis, Mo., and Harry Langland, of Nevada, Iowa, for appellee Hessing.

Graeser & Piper, of Des Moines, for appellees American & Venetian Marble Co.

PRESTON, J.

1. The record, with nine abstracts and additional abstracts, and twelve arguments, including supplemental arguments and responses thereto, makes a voluminous record, and somewhat complicated. The statement of the issues and of the facts alone, as stated and restated by counsel in the different briefs, comprises 150 pages. Of course, it would not be practical, within the proper limits of an opinion, to go into and state the evidence, or even the details of all the different propositions argued. The principal appeal has reference to the liability of the appellant Bonding Company, and its chief reliance for a reversal is its claim that the hotel building in question was in fact two separate and distinct buildings. They concede that architecturally it was but one building, but they say that legally there were two, and they contend that since there were two contracts with the contractors, one between it and Sheldon, and the other between it and the Munns, and two bonds issued by the Bonding Company to Sheldon and the Munns, that the abandonment, as the Bonding Company says, of that arrangement and the building of the hotel as one proposition, amounts to such a variation of the contract or contracts as to release the Surety Company. There was a contract between Sheldon and the Munns themselves in regard to building the hotel, and providing for their interest therein, and how the building should be constructed and used. Such contract was entered into before, but at about the time of, the making of the plans and specifications of the contract with the contractor and the issuance of the bonds by the appellant Bonding Company. The trial court found that, while the contracts as between the plaintiff Sheldon and the Munns were several, yet as to the lienholders, contractor, and the Bonding Company they were joint; that it was in fact understood by the contractor, the Bonding Company as surety, and the plaintiffs that the two contracts would be performed as one contract, and that the same were in fact so undertaken by the contractor, and all contracts with subcontractors were made as single contracts for material or labor to be used or performed promiscuously or interchangeably for the entire building, as one structure, and that as between the plaintiffs and the contractor and the defendant Bonding Company it was agreed and understood that the plaintiff Sheldon should be liable for 53 1/2 per cent. of the expense of constructing said building, and that the Munns should be liable for 46 1/2 per cent. thereof. It is contended by this appellant that neither it nor its representative Coder knew of these fractions, but it is undisputed that the amount fixed which Sheldon and the Munns should pay of the original contract price, of which, we shall see later, the Bonding Company did have knowledge, was based upon the proportion of the original contract price, represented or arrived at by the use of these fractions. It is argued by this appellant Surety Company that every mechanic's lien is founded upon, and arises by virtue of, a contract with the owner for the construction of the building or improvement, and that the original contract with the principal contractor is the fundamental law that governs all subcontractors. Section 3089, Code of 1897; Redman v. Williamson, 2 Iowa, 488, 491;Getty v. Tramel, 67 Iowa, 288, 25 N. W. 245;Wilkins v. Litchfield, 69 Iowa, 465, 466, 29 N. W. 447;Templin v. Chicago, B. & P. Ry. Co., 73 Iowa, 548, 35 N. W. 634;Littleton Bank v. Osceola Land Co., 76 Iowa, 660, 39 N. W. 201;Hoag v. Hay, 103 Iowa, 291, 72 N. W. 525;Webster City Co. v. Chamberlin, 137 Iowa, 717, 115 N. W. 504;Beach v. Stamper, 44 Or. 4, 74 Pac. 208, 102 Am. St. Rep. 597;McAdow v. Sturtevant, 41 Mo. App. 226.

And that a subcontractor who furnishes material or labor for any building or improvement is charged with notice and knowledge of the terms of the contract between the owner and the principal contractor. Kilbourne v. Jennings, 38 Iowa, 533;Stewart v. Wright, 52 Iowa, 335, 3 N. W. 144;Jones Lumber Co. v. Murphy, 64 Iowa, 165, 171-172, 19 N. W. 898;Blanding v. D. I. & D. Ry., 88 Iowa, 225, 231, 233, 55 N. W. 81;Iowa Stone Co. v. Crissman, 112 Iowa, 122, 83 N. W. 794;Garrison G. & L. Co. v. Farmers', etc., Co., 181 Iowa, 568-575, 164 N. W. 791.

That the contract between the owner and the principal contractor being the basis of a mechanic's lien, a subcontractor cannot secure a lien that the principal contract would not be entitled to. Stoltze v. Hurd, 20 N. D. 412, 128 N. W. 115, 30 L. R. A. (N. S.) 1219, Ann. Cas. 1912C, 871;Beach v. Stamper, 44 Or. 4, 74 Pac. 208, 102 Am. St. Rep. 597;Knauft v. Miller, 45 Minn. 61, 47 N. W. 313-314.

That the Sheldon-Munn Hotel is, in fact and in law, two separate buildings, and these separate buildings are simply being used together for a temporary common purpose. Rhodes v. McCormick, 4 Iowa, 368, 68 Am. Dec. 663;McCormick v. Bishop, 28 Iowa, 233, 238;Ottumwa Lodge v. Lewis, 34 Iowa, 67, 11 Am. Rep. 135;Jackson v. Burns, 129 Iowa, 616-619, 106 N. W. 1, 3 L. R. A. (N. S.) 510;Shirley v. Crabb, 138 Ind. 200, 37 N. E. 130, 132, 46 Am. St. Rep. 376;Lax v. Peterson, 42 Minn. 214, 44 N. W. 3;Phillips v. Gilbert, 101 U. S. 721, 25 L. Ed. 833;Badger...