State Bank of Wheatland v. Turpen

• Decision Date: 26 June 1934
• Docket Number: 1838
• Citation: 34 P.2d 1,47 Wyo. 284
• Parties: STATE BANK OF WHEATLAND v. TURPEN, ET AL
• Court: Wyoming Supreme Court

34 P.2d 1

47 Wyo. 284

STATE BANK OF WHEATLAND v. TURPEN, ET AL

No. 1838

Supreme Court of Wyoming

June 26, 1934

APPEAL from District Court, Platte County; CYRUS O. BROWN, Judge.

Action by the State Bank of Wheatland against James F. Turpen and Fidelity & Deposit Company of Maryland, in which Shoshoni Garage, Inc., intervened. From the judgment, defendant Fidelity & Deposit Company of Maryland appeals.

Affirmed.

For the appellant there was a brief by Kinkead & Pearson, of Cheyenne, Wyoming, and an oral argument by Mr. Kinkead.

The action was brought by the plaintiff below against Turpen, a contractor, and his surety, upon two causes of action, the first being a claim against Turpen by Colorado Builders' Supply Company for material supplied to Turpen in the construction of a bridge for the Wyoming State Highway Department in the sum of $ 4,349.77, assigned to plaintiff for cash in that amount; the second cause of action was upon a claim against Turpen, assigned to plaintiff by Shoshoni Lumber Company for the sum of $ 7,160.25, for materials used in the construction of the same bridge, together with interest accrued on said claims. The amount representing said claims was paid to plaintiff by the State Highway Commission. There was a judgment against the surety company, appellant for $ 13,304.36. It is the contention of plaintiff that the claims assigned to it have been paid from funds advanced by the Highway Department, although plaintiff attempted at the trial to show that the funds advanced by the Highway Department were applied in the payment of other claims held by the bank against Turpen, the contractor, connected with the construction of said bridge. Appellant was under a duty to apply money received from the State, known to be proceeds of the contract involved herein, to the extinguishment of obligations which it held under the contract and for which both Turpen and the surety might be liable, rather than to obligations of Turpen alone, not coming within the liability of the bond. Appellant further contends that, under the alleged assignments from the Shoshoni Lumber Company, there was a splitting of causes of action which precludes recovery by plaintiff from the defendant's surety company. Also that plaintiff is estopped, proclaiming that the items involved in the first and second causes of action have not been paid for, and that the evidence is insufficient to authorize a judgment in favor of plaintiff on its first and second causes of action. At the time the contract was made Turpen was indebted to the bank where he maintained a checking account. The payments made by the Highway Department were received by the bank and credited to Turpen's account. In this manner proceeds from the Turpen contract were used for other purposes than that for which the surety was liable. This method of handling proceeds of a contract was obviously unfair to the surety for the reason that the surety had a right to have the proceeds of the contract applied upon the cost of labor and materials used in the performance of the contract. A case in point is that of Detroit Fidelity and Deposit Co. v. Equipment Co., 1 F.Supp. 845. The following cases also support appellants' contention: Fulghun v. State, (Fla.) 114 So. 367; Marshfield v. U. S. F. & G. Co., (Ore.) 274 P. 503; 21 R. C. L. 93, 30 Cyc. 1252; Southern Surety Co. v Bank, (Ind.) 176 N.E. 846; Crane Co. v. Pacific Heating and Power Co., (Wash.) 78 P. 460; Merchants Ins. Co. v. Herber, (Minn.) 71 N.W. 624; Columbia Digger Co. v. Sparks, 274 F. 780; 227 F. 784; U. S. v. Trust Co., 89 F. 925; Alexander Lumber Co. v. Liability Co., (Ill.) 129 N.E. 871; Cox v. Ins. Co., 247 F. 955. Probably no two cases are more frequently cited and the principle thereof more frequently applied than the United States Supreme Court cases of Prairie National Bank v. U.S. 41 L. ed. 412; Henningsen v. U. S. F. & G. Co., 52 L. ed. 547, both of which support appellants' contentions. Plaintiff bank, in advancing funds to Turpen for miscellaneous use, was a mere volunteer; Southern Surety Co. v. Holder, 14 F.2d 411; Bank v. Pesha, (Neb.) 157 N.W. 924. A materialman has an equitable lien on the funds in the hands of the State, but the doctrine of subrogation passes to the surety paying claims of such materialman: Trust Co. v. Bonding Co., 1 F.2d 136; Columbia Digger Co. v. Rector, 215 F. 618. The State warrants that came into the bank's hands would have more than satisfied the claims which it held by assignment, and, it having notice of the equitable lien of the bonding company, disbursed the same at its hazard: Alexander Lumber Co. v. Liability Co., 129 N.E. 871. As to plaintiff's second cause of action, there was clearly a splitting of causes of action, which precludes recovery against the bonding company. An open, continuous running account constitutes a single demand which cannot be split: Piper v. Trust Co., (Mo.) 198 S.W. 109; Lessler v. Uger, 186 N.Y.S. 825; Banner Grain Co. v. Supply Co., (Minn.) 202 N.W. 740; U. S. F. & G. Co. v. G. S. Pet. Co., (Ok.) 222 P. 560; German v. Bullene, (Kas.) 33 P. 467; Jensen v. Gamble, (Mich.) 157 N.W. 440; Vineseck v. Ry. Co., (Minn.) 161 N.W. 494; Kinart v. Seabury Co., (Ia.) 183 N.W. 586; City of Pueblo v. Dye, (Colo.) 96 P. 969; Milroy v. Mining Co., (Mich.) 5 N.W. 287. Plaintiff was estopped, as against this surety, to claim that the items involved in its first and second causes of action had not been paid. The alleged assignments were actual loans by plaintiff to Turpen for which the surety is not liable: U. S. F. & G. Co. v. Company, (R. I.) 167 A. 143; People v. Southern Surety Co., (Colo.) 230 P. 397; Hardaway v. Surety Co., 211 U.S. 552; Cadenasso v. Anonelle, (Cal.) 59 P. 765; Peoples Bank v. Cores, (Tenn.) 182 S.W. 917.

We submit, therefore, that the judgment of the district court should be reversed and judgment ordered in favor of the surety company and against the plaintiff.

BLUME, Justice. KIMBALL, Ch. J., and RINER, J., concur.

OPINION

BLUME, Justice.

This is an action brought by the State Bank of Wheatland, a corporation, hereinafter referred to as the bank, against James F. Turpen and the Fidelity and Deposit Company of Maryland, a corporation, the latter hereinafter being referred to as the Surety or the Surety Company. The court entered judgment against the Surety Company for the sum of $ 13,304.56, and judgment against Turpen for a somewhat larger amount, and from the judgment so entered the Surety Company has appealed.

On July 2, 1929, Turpen entered into two contracts with the State of Wyoming for the construction of a bridge over Wind River on the Wind River-Shoshoni road. One was for the sub-structure, and the other for furnishing and erecting structural steel for a steel truss over the river. The latter is not in controversy in this case, except incidentally. The contracts provided for monthly estimates and payments as the work progressed, 15% of the estimates to be retained until the work was fully completed; that before making final payment, the State Highway Commission should require the contractor to show that all debts were paid; that a notice should be given of the completion of the work and that the final estimate and the 15% retained should not become due and payable until after that time. Turpen gave a bond in the usual form, pursuant to Sec. 95-201, Rev. St. 1931, with the Fidelity and Deposit Company of Maryland as surety, which provided that it should be for the use of the obligee as well as for the use and benefit of all persons performing work or labor or furnishing any material in the execution of the contract, and that all labor and material furnished for the work should be paid. The surety had no assignment of the money arising under the contract and no agreement how it should be applied. Nor does our statute make any provision therefor, at least in specific terms. The contract was completed some time during the summer of 1930 and due notices of the claimants for work and material were filed. There is no controversy in this case as to the sums involved in the final estimate and the 15% retained by the state pursuant to the contract.

Prior to the commencement of the work, Turpen, who was unable to finance the project, made an arrangement with the State Bank of Wheatland, plaintiff herein, through Mr. Brice, its president, that money should be loaned him from time to time so as to be able to carry on and complete the work. It was thought at that time that Turpen would make a profit out of the contract in the sum of approximately $ 15,000. Brice agreed to make these loans, provided, however, that the bank would be made secure. He loaned Turpen, commencing with July 25, 1929, up to and including January 10, 1930, the total sum of $ 23,500. The proceeds thereof were apparently all used on the contract in question. In addition thereto, the plaintiff took an assignment of the claim of the Colorado Builders' Supply Company, which furnished steel for the work in question, amounting to the sum of $ 5482.55 less $ 1132.78 paid thereon, and the balance due on that claim constitutes the first cause of action herein. Plaintiff also took five different assignments of claims of the Shoshoni Lumber Company for cement, lumber and other material furnished for the work. These claims are sued on in the second cause of action herein, and in the aggregate amount to $ 8159.77 less $ 999.52 paid thereon.

The State made certain payments to Turpen as the work progressed. Warrants were issued for them. Most of them were deposited in the plaintiff bank and credit given Turpen therefor. Two of them were issued directly to the bank. The others were sent directly to the bank and endorsed by Brice as agent for Turpen. The total amount of warrants...