Standard Oil Co. v. Federal Surety Co.

• Decision Date: 17 September 1928
• Docket Number: No. 8035.,8035.
• Citation: 28 F.2d 489
• Parties: STANDARD OIL CO. (Indiana) v. FEDERAL SURETY CO.
• Court: U.S. Court of Appeals — Eighth Circuit

28 F.2d 489 (1928)

STANDARD OIL CO. (Indiana) v. FEDERAL SURETY CO.

No. 8035.

Circuit Court of Appeals, Eighth Circuit.

September 17, 1928.

William B. Bostian, of Kansas City, Mo. (R. R. Brewster, of Kansas City, Mo., on the brief), for appellant.

David A. Murphy, of Kansas City, Mo. (John T. Harding and R. C. Tucker, both of Kansas City, Mo., on the brief), for appellee.

Before VAN VALKENBURGH and BOOTH, Circuit Judges.

BOOTH, Circuit Judge.

This is an appeal from a decree disallowing the claim of appellant against the appellee, surety on a road contractor's bond. The general facts in relation to the suit are set out in the opinion in the case of Exchange Bank v. Federal Surety Co., 28 F.(2d) 485, filed at the same time with this opinion. The appellant furnished to the contractor gasoline which was used as fuel in the operation of trucks, tractors, a concrete mixer, and pumps, all of which machines were used in connection with the construction of the road; also oil which was used for lubricating said machines; also kerosene which was used in lamps and lanterns utilized in connection with said work, and as fuel for cooking by the laborers on said road, who lived in temporary quarters.

The special master held that the materials so furnished were not within the purview of the Kansas statute relating to contractors' bonds. The trial court affirmed the ruling.

The statute referred to reads as follows: "That whenever any public officer shall, under the laws of the state, enter into contract in any sum exceeding one hundred dollars, with any person or persons for the purpose of making any public improvements, or constructing any public building or making repairs on the same, such officer shall take from the party contracted with a bond with good and sufficient sureties to the state of Kansas, in a sum not less than the sum total in the contract, conditioned that such contractor or contractors shall pay all indebtedness incurred for labor or material furnished in the construction of said public building or in making said public improvements." Section 60 — 1413, R. S. Kansas 1923.

The contention of appellant is that the gasoline, oil, and kerosene supplied by it were "material furnished * * * in making said public improvements." Though the condition of the bond was that the contractor should "pay all indebtedness incurred for labor or material furnished in the construction," we assume that it should be construed as if the words "furnished in the construction" read "furnished in making said public improvements."

At the outset we may state that the federal cases cited by appellant, viz. Brogan v. National Surety Co., 246 U. S. 257, 38 S. Ct. 250, 62 L. Ed. 703, L. R. A. 1918D, 776; U. S. Fidelity Co. v. United States, 231 U. S. 237, 34 S. Ct. 88, 58 L. Ed. 200; United States v. Lowrance, 252 F. 122 (C. C. A. 8), and City Trust, etc., Co. v. United States (C. C. A.) 147 F. 155, are not of controlling force in the present controversy. They all deal with bonds of contractors given under the Act of Congress of August 13, 1894 (28 Stat. 278, c. 280), or under the amendatory Act of February 24, 1905 (33 Stat. 811, c. 778; 40 USCA § 270). Those statutes provided that bonds given by persons contracting with the United States for the construction or repair of public buildings or public works should be conditioned that the contractors would "promptly make payments to all persons supplying * * * labor and materials in the prosecution of the work provided for." In the cases cited it was recognized that these federal statutes were broader in scope than the usual mechanic-lien laws of the states. In the Lowrance Case, supra, this court said (page 123):

"The act of Congress and the surety bonds given according to its provisions should be liberally, not narrowly, construed. The typical lien laws of the states and the decisions of the courts upon them should for the most part be put aside. Generally they limit the labor to direct employment on the work and the materials to those which have become constituents of the completed structure. The language of the act of Congress, `labor and materials in the prosecution of the work,' is of broader import and embraces much that is not directly reflected or physically discernible in the resulting permanent structure."

The same view was expressed in the City Trust, etc., Co. Case, supra.

The construction placed upon the statutes of Kansas by the Supreme Court of that state is, of course, binding upon the federal courts. St. L. & S. F. R. Co. v. Quinette, 251 F. 773 (C. C. A. 8); Southern Surety Co. v. Holden Co., 14 F.(2d) 411 (C. C. A. 8). While we have been cited to no decision of the Supreme Court of the state of Kansas which passes upon the precise question involved in the case at bar, yet there are a number of decisions which have a bearing upon the question.

In Road Supply & Metal Co. v. Bechtelheimer, 119 Kan. 560, 240 P. 846, suit was brought upon a contractor's surety bond. Plaintiff had leased to the contractor certain tools, machinery, and equipment for the construction of a highway. The contractors' bond was conditioned that it should "pay all indebtedness incurred for labor and material furnished" in the construction of the highway. In denying plaintiff's right to recovery under the bond, the court said (119 Kan. 563 240 P. 847):

"Plaintiff argues that it should recover under the conditions of the bond that the contractor `shall pay all indebtedness incurred for labor and material furnished' in the performance of the contract. This condition of the bond required by R. S. 60-1413, is for the benefit of laborers and materialmen, and is in lieu of their right to liens upon public property under the statute pertaining to mechanic's liens (Comm'rs of Jewell Co. v. Manufacturing Co., 52 Kan. 253, 34 P. 741; Griffith v. Stucker, 91 Kan. 47, 136 P. 937); hence, in determining what items are lienable, we look to those statutes (R. S. 60-1401 et seq.). Plaintiff contends that its machines and implements performed work, hence that its claim for use of the machines should be regarded as labor. The term `labor' as used in the mechanic's lien statute refers to physical labor (Traction Co. v. Brick Co., 112 Kan. 774, 776, 213 P. 169 30 A. L. R. 464), or the specific kind of labor mentioned in the statute. The rental or use of tools and machinery such as is sought to be recovered in this action is not labor of the character mentioned or referred to in the statutes. The right to a mechanic's lien is purely statutory. A party does not have such a lien unless the statute gives it to him, hence, in order to be entitled to a lien the party claiming it must show himself to be within the terms of the statute.

"Plaintiff next argues that the use of the machinery and equipment for which recovery is sought in this case is material within the meaning of our mechanic's lien statute. Material, within the meaning of our statute, is that which enters into, becomes a part of, and remains with the completed work. United Sash & Sales Co. v. Early et al., 117 Kan. 425, 232 P. 232, and cases there cited. And see Bunting Hardware Co. v. Baker et al., 116 Kan. 683, 229 P. 72, where a claim for rent upon a steam shovel used in road construction work was not allowed as a lienable item. Cases are cited from the federal court involving contracts under federal statutes and from Oregon and Washington involving the statutes of those states, where it is held that the rental value of the use of machinery and equipment should be regarded as material entering into the completed work. But these decisions are under statutes which differ materially from our own, and which specifically state that the use of machinery shall be regarded as material, or are fairly open to that interpretation, and for that reason are not controlling."

The statute of Kansas referred to relating to mechanics' liens reads, so far as here material, as follows:

"Any person who shall under a contract with the owner of any tract * * * of land * * * perform labor or furnish material for the erection, alteration, moving or repair of any building, improvement or structure thereon, * * * shall have a lien," etc. Section 60-1401, R. S. Kansas 1923.

Union Traction Co. v. Brick Co., 112 Kan. 774, 213 P. 169, 30 A. L. R. 464, was a suit by the traction company against a surety company and others. The surety company was surety on a contractor's bond conditioned for the payment of all claims for labor and material used in the paving of certain streets in the city of Independence. The items for which recovery was sought were freight charges on paving brick from Coffeyville to Independence which the traction company had paid. The court in denying recovery against the surety company said (112 Kan. 776 213 P. 169):

"The appellant's main argument is that the transportation of the carloads of brick was labor, and in a certain sense that is true; but it can hardly be said that transportation by rail carriage and electric motive power was the sort of labor the Legislature had in contemplation in the enactment of the statute. The gist of the decided cases is that the labor protected by the statute is manual labor for which a daily wage is to be paid, or similar compensation for a quantum of physical toil."

The court further said:

"In Neodesha Nat. Bank v. Insurance Co., 109 Kan. 562, 200 P. 281, and in Union School District v. Cloepfil, ante, 112 Kan. 188, 210 P. 192, this court declined to extend the provisions of the mechanic's lien act to cover moneys loaned to pay for labor and material used in constructing a building. The present case, while not strictly analogous, is bound by the same limitations. All through the mechanic's lien act, both in its original and amended form, the concern of the Legislature seems to have been for the artisan and the day laborer, and while the legislative purpose is remedial and entitled to liberal interpretation, yet...