State v. Southern Surety Co., 3 Div. 907.

• Decision Date: 20 March 1930
• Docket Number: 3 Div. 907.
• Citation: 221 Ala. 113,127 So. 805
• Parties: STATE, FOR USE OF WADSWORTH ET AL., v. SOUTHERN SURETY CO.
• Court: Alabama Supreme Court

127 So. 805

221 Ala. 113

STATE, FOR USE OF WADSWORTH ET AL., v. SOUTHERN SURETY CO.

3 Div. 907.

Supreme Court of Alabama

March 20, 1930

Rehearing Denied April 17, 1930.

Appeal from Circuit Court, Autauga County; George F. Smoot, Judge.

Action on surety bond by the state of Alabama, for the use of C. D Wadsworth, doing business as Prattville Service Station against the Southern Surety Company, and intervention by the Standard Oil Company and others. From a judgment sustaining demurrer to the complaints, plaintiff and interveners appeal.

W Douglas Arant Bradley, Baldwin, All & White, and Kingman C Shelburne, all of Birmingham, for appellants.

Knox, Acker, Sterne & Liles, of Anniston, Hill, Hill, Whiting, Thomas & Rives, Walton H. Hill, and Weil, Stakely & Cater, all of Montgomery, Sims, Deedmeyer & Harrison and F. D. McArthur, all of Birmingham, Farmer, Merrill & Farmer, Lee & Tompkins, and Hill & Calhoun, all of Dothan, and T. B.

Ward and J. M. Ward, both of Tuscaloosa, amici curiæ.

R. E. Smith and R. C. Brickell, both of Huntsville, and Goodwyn & Goodwyn, Steiner, Crum & Weil, and Rushton, Crenshaw & Rushton, all of Montgomery, for appellee.

Coleman, Coleman, Spain & Stewart, of Birmingham, amici curiæ.

THOMAS J.

The original complaint, several petitions for intervention, and demurrers sustained thereto present the questions thoroughly argued by many of counsel. These pleadings, the appeal, and assignments of error directly raise the argued questions.

The first is whether the labor, material, gas, oil, tires, feedstuffs, and the supplies named in the complaint or interventions, and alleged to have been used in the execution of the work provided for in the original contract and suretyship, were such as were within the purview of the provisions of the road contractors' bond on which the suit was brought. It will not be necessary that we reexamine this group of assignments of error, or arguments and authorities thereon, other than to say the liberal construction of the statute and the effect of such bond and liability thereunder bring the articles, material, labor, etc., and the value thereof, within the purview of the provisions of the bond under the law. That is, that section 28 of Act of 1927, pp. 348, 356, has been liberally construed to the effect of the manifest purpose of the statute, and that the public interest required such construction. Union Indemnity Co. v. Handley (Ala. Sup.) 124 So. 876; Union Indemnity Co. v. State, for Use of R. S. Armstrong & Bro. Co., 218 Ala. 132, 118 So. 148; Pettus v. Dudley Bar Co., 218 Ala. 163, 118 So. 153; Jefferson County Board of Education v. Union Indemnity Co., 218 Ala. 632, 119 So. 837; Union Indemnity Co. v. State, for Use of McQueen Smith Farming Co., 217 Ala. 35, 114 So. 415. The federal cases are: United States, for Use of Hill, v. Amer. Surety Co., 200 U.S. 197, 26 S.Ct. 168, 50 L.Ed. 437; Mankin v. United States to Use of Ludowici-Celadon Co., 215 U.S. 533, 30 S.Ct. 174, 54 L.Ed. 315; Brogan v. National Surety Co., 246 U.S. 257, 38 S.Ct. 250, 62 L.Ed. 703, L. R. A. 1918D, 776; Fleischmann Const. Co. v. United States, 270 U.S. 349, 46 S.Ct. 284, 70 L.Ed. 624. We have no desire to recede from the construction given our statute as affecting the classes of "labor, material and supplies" falling within the contractor's bond and its suretyship. Union Indemnity Co. v. State for Use of R. S. Armstrong & Bro. Co., 218 Ala. 132, 118 So. 148, and authorities. We will again advert to perishable materials like gas and oil. The rulings of the trial court in sustaining demurrer to the complaint and interventions are not justified in that the labor, material, and supplies furnished and used by said contractors were not within the purview of the bond under the law.

The second and new question presented and fully argued is whether the original contractor and his sureties are liable for labor, material, feedstuffs, gas, oil, tires, etc., that were supplied to, used and consumed by subcontractors of the original contractor, and used, consumed, and employed in the projection of the public work covered by the contract and bond of such original contractor and his sureties. The answer to this phase and grouping of rulings on demurrer to the original complaint and interventions will require an extended consideration.

The pertinent provisions of the Alabama statute are taken from the federal statute, as a comparison thereof will show. Some of counsel seem to concede that the state statute was borrowed from the federal statute, others of counsel deny this. However, a display of the essential provisions of the two statutes in parallel columns is a conclusive answer to that difference of opinion among counsel.

The Federal Statute.

"Any person or persons entering into a formal contract with the United States for the construction of any public building, or the prosecution and completion of any public work *** shall be required, before commencing such work, to execute the usual penal bond, with good and sufficient sureties, with the additional obligation that such contractor or contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract." U.S. C., Title 40,§ 270; United States Code Ann. (1928) and authorities collected.

The Alabama Statute.

"Any person, firm or corporation entering into a contract with this State *** for the *** construction *** of any public building or public work *** shall be required, before commencing such work, to execute a bond *** with good and sufficient surety *** conditioned that such contractor or contractors *** shall promptly make payment to all persons supplying him or them with labor, material *** in the execution of the work provided for in such contract." Gen. Acts Ala. 1927, page 356, Sec. 28, approved August 23, 1927; see Acts 1927, page 37, approved February 10, 1927; Acts 1927, p. 394 (adopting the same policy as to counties).

In the first place, such other portions of the statute that are dissimilar deal with matters of procedure, and, in the second place, the differences are slight variations in unessential phrases. After the enactment of the statute construed in United States, for Use of Hill, v. Amer. Surety Co., 200 U.S. 197, 26 S.Ct. 168, 50 L.Ed. 437 (which was the Act of August 13, 1894, c. 280, 28 Stat. 278), Congress enacted an amendment, being Act of February 24, 1905, c. 778, 33 Stat. 811 (40 USCA § 270). The latter statute introduced the difference of verbiage from the former statute (as appellee's counsel contend constitutes a difference between the Alabama statute and the federal act of August 13, 1894). The federal decisions indicate the difference in phraseology in the two statutes, and to these decisions we now advert.

The Supreme Court of the United States in Mankin v. United States, 215 U.S. 533, 30 S.Ct. 174, 54 L.Ed. 315, affirming 158 F. 1021 (5th C. C. A.), holds that this difference in verbiage was immaterial so far as concerns liability for materials sold to subcontractors; that the rule in the Hill Case, supra, remains unaffected by the amendment. Both the Hill and the Mankin Opinions were written by Mr. Justice Day. The learned Justice said:

"It is the contention of the plaintiffs in error that the act of February 24, 1905, differs from the act of August 13, 1894, in that a copy of the contract and bond is to be furnished for the purpose of suit to the 'person or persons supplying the contractor with labor and materials,' *** whereas, in the act of August 13, 1894, it is provided that any person or persons making an application therefor, and furnishing an affidavit to the Department that the labor and materials for the prosecution of such work had been supplied by him or them, payment for which had not been made, shall have a certified copy of the contract and bond for the purpose of bringing suit thereon."

That is to say, the insistence was that:

"The additional phrase used in this connection, 'the person or persons supplying the contractor with labor and materials,' it is contended, shows that only those who furnish labor and materials directly to the contractor come within the benefit of the act. We cannot agree with this contention. The phrase, 'person or persons supplying the contractor with labor and materials,' are the words embodied in both statutes alike in the requirement of a bond for their benefit. In the Hill Case [200 U.S. 197, 26 S.Ct. 168, 50 L.Ed. 437] it was distinctly held that 'persons supplying the contractor with labor and materials' included not only the subcontractor, but anyone who furnished labor and materials to the subcontractor for carrying out the work contracted for. There is nothing in the provision as to who shall have a copy of the bond for the purpose of suit which changes or limits the obligation of the bond under identical requirements in both statutes, alike embracing, as construed in the Hill Case, persons furnishing labor and materials to a subcontractor." (Italics supplied.) Mankin v. U.S. use of Ludowici-Celadon Co., 215 U.S. 533, 30 S.Ct. 174, 176, 54 L.Ed. 315.

This is an affirmation of the principle enunciated in the Hill Case, that the material requirement of the statute is that the contractor shall give bond to secure payment to persons supplying him with labor, material, and supplies, and that he is as much supplied with material by one selling to the subcontractor who, in turn, supplies it to the contractor, as he would be by one selling directly to the contractor. Upon this, Mr. Justice Day said:

"If a construction is given to the bond so limiting the obligation incurred as to permit only those to recover who have contracted directly with the

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