Southern Surety Company v. National Lumber Company

• Decision Date: 01 April 1919
• Docket Number: 9,763
• Citation: 122 N.E. 686,73 Ind.App. 592
• Parties: SOUTHERN SURETY COMPANY v. NATIONAL LUMBER COMPANY
• Court: Indiana Appellate Court

122 N.E. 686

73 Ind.App. 592

SOUTHERN SURETY COMPANY v. NATIONAL LUMBER COMPANY

No. 9,763

Court of Appeals of Indiana

April 1, 1919

Rehearing denied June 20, 1919.

Transfer denied July 7, 1920.

From St. Joseph Circuit Court; Walter A. Funk, Judge.

Action by the National Lumber Company against the Southern Surety Company. From a judgment for plaintiff, the defendant appeals.

Reversed.

Floyd A. Deahl and Louis M. Hammerschmidt, for appellant.

Eli F Seebiert and Daniel D. Schurtz, for appellee.

OPINION

ENLOE, J.

This was an action upon a contractor's bond. It appears from the record that in April, 1913, the city of South Bend, by its board of public works, entered into a contract with the Interstate Construction Company for the construction by said company of a public improvement, known and designated as Bowman Creek Trunk Sewer; that shortly thereafter said construction company, with the consent of said board of public works, assigned its said contract to Samual L. Sheets and George Stewart, a copartnership, doing business under the firm name and style of Stewart, Sheets and Company, who constructed said sewer. Appellant was surety on the construction bond of Stewart, Sheets and Company.

Thereafter said Stewart, Sheets and Company sublet to one R. C. Koegan, a portion of its said contract-- labor in excavating and filling ditches and in laying brick--in the construction of said sewer.

If further appears that said Koegan procured of appellee certain lumber to be used for "sheeting and bracing," in the trenches to be by him excavated, and that appellee delivered the same on the ground and along the trench where said Koegan under his contract was to labor. This lumber and material not having been paid for, suit was brought by appellee against the appellant on its bond and also against Stewart, Sheets and Company, and R. C. Koegan. The complaint was in four paragraphs; to the first, second and third of which several demurrers were addressed by appellant for want of facts, and which demurrers were overruled. Appellant then answered in five paragraphs, to the second of which a demurrer was sustained, and appellee replied in general denial to the third, fourth and fifth paragraphs of appellant's answer.

The issues thus formed were submitted to the court for trial, which, at the request of the parties, made a special finding of the facts and stated its conclusions of law thereon, to which conclusions of law the appellant duly excepted, and, over appellant's motion for a new trial, judgment was rendered in favor of plaintiff and against each of the defendants, in the sum of $ 294.19 and costs, from which judgment the Southern Surety Company prosecuted this appeal.

The errors assigned and not waived challenge: (1) The correctness of the conclusions of law upon the facts found; (2) overruling the motion for a new trial; (3) errors, severally, in overruling demurrers to first, second and third paragraphs of complaint.

There is no material contention between the parties hereto as to the ultimate facts of this case, but they have widely different views as to the law which should govern these facts. This requires an analysis of the facts found by the court that we may correctly apply the law thereto.

The contention of the appellant herein centers around two propositions, viz.: (1) That, as the lumber and materials sold and in question in this suit, did not, as shown by the special finding, enter into and become a part of the completed work, but were only used as appliances to hold the banks and prevent the sides of the trench from caving in while the work of excavating said trench was being performed, and were thereafter removed from said trench; that they were simply the property of such subcontractor, and not within the terms of said contract and bond, providing for the payment for "all labor and materials used in said work." (2) That the special findings show that the material in question was sold to a subcontractor to be by him used as an appliance for the carrying on of his work, and that therefore the payment for the same is not, as to appellant, within the terms of said contract and bond in suit.

In determining these questions it becomes material at the outset to notice the language of the contract and bond, for they must be construed together in determining the undertaking and consequent liability of appellant.

The contract as entered into between the city of South Bend and the Interstate Construction Company provided, among other things that "said party of the second part, agrees to pay for all labor and material used in said work, except engineering, * * *." When said contract was, by the Interstate Construction Company, assigned to Stewart, Sheets and Company, they accepted such assignment, and in such written acceptance agreed as follows: "We do hereby contract and agree to carry out, construct and complete all the work contemplated by said contract, and by the specifications and plans which are made a part thereof, and to do and perform all as in said contract provided."

The bond given to secure the performance of said contract, signed by appellant as surety thereon, provided:

"Now, if the above bounden Stewart, Sheets & Company shall faithfully comply with the attached contract (and the drawings and specifications therein referred to) made and entered into by the Interstate Construction Company, on the 11th day of April, 1913, with the City of South Bend, Indiana, for the construction of said Bowman Creek Trunk Sewer, and shall fulfill all the conditions and stipulations therein contained, according to the true intent, and meaning thereof in all respects, then this obligation shall be void, otherwise," etc.

The contract between Stewart, Sheets and Company and R. C. Koegan, so far as material to the questions now before us for consideration, was as follows:

"We make you this proposition--to give you 60c per yard for all dirt taken out of the trench where pipe is to be laid, and $ 7.00 per thousand for all brick lain in pipe, and to furnish you all the work you can do clear through to the completion of the Bowman Creek Sewer job, in the city of South Bend, Indiana. Said work to be done under the supervision and to the entire satisfaction of the City Engineer, and the Board of Public Works of the City of South Bend, Indiana,--60c is to include all sheeting and bracing, filling and surfacing of streets, and disposing of surplus dirt."

The trial court found that R. C. Koegan purchased of appellee the lumber in question, amounting to the sum of $ 294.19, telling appellee at time of purchase that it was to be used in constructing Bowman Creek Sewer; that appellee delivered the lumber to Koegan, at or near the place where he was to construct the part of sewer contracted by him; that part of the lumber so furnished was used for sheeting and braces to prevent the earth from caving or falling into the excavated trench; that the sheeting was an appliance used by said Koegan to facilitate his work in digging the trench; that no part of lumber used as sheeting and braces went into the permanent construction of said sewer, nor became in any manner a part of said sewer, nor remained in the sewer or trench, after the sewer was completed, nor was consumed in the construction of said sewer; that Koegan took away and removed a portion of said lumber, after he abandoned his contract; that the lumber used for sheeting and braces was removed from said trench by Stewart, Sheets and Company and placed in a pile near said trench; that thereafter Stewart, Sheets and Company did not use or appropriate any part of the lumber delivered by appellee to said Koegan.

The particular question presented for our consideration seems not to have received consideration heretofore, by either our Supreme or Appellate Court, but has been considered by courts in other jurisdictions.

In the case at bar, no mechanic's lien could have been taken against the property, it being a public improvement, but, while this is true, we find the language used in the contract and bond in case at bar to have been frequently used in cases where liens could have been asserted against the land and improvements thereon, and courts have frequently declared the meaning and application of such contracts. Also, we find, numerous statutes giving a right to assert a lien against the property for materials "used, " or "furnished to be used" in the construction or improvements.

In the case of Stimson Mill Co. v. Los Angeles Traction Co. (1903), 141 Cal. 30, 74 P. 357, which was a suit to foreclose a lien for materials furnished by plaintiff in the construction of a bridge, it appeared that a part of the number furnished went into a temporary structure and was afterward carried away by the contractors. The court in passing upon the matter said: "The contention of the appellant on this point must, we think, be sustained. It is settled by many decisions in this state that to entitle a materialman to a lien under section 1183 of the Code to Civil Procedure, the materials must be furnished to be used, and must actually be used, in the construction of the building or other structure against which...