Streator Clay Mfg. Co. v. Henning-Vineyard Co.

• Decision Date: 19 January 1916
• Docket Number: 30085
• Citation: 155 N.W. 1001,176 Iowa 297
• Parties: STREATOR CLAY MANUFACTURING COMPANY, Appellant, v. HENNING-VINEYARD COMPANY et al., Appellees
• Court: Iowa Supreme Court

155 N.W. 1001

176 Iowa 297

STREATOR CLAY MANUFACTURING COMPANY, Appellant, v. HENNING-VINEYARD COMPANY et al., Appellees

No. 30085

Supreme Court of Iowa, Des Moines

January 19, 1916

REHEARING DENIED FRIDAY, MAY 12, 1916.

Appeal from Linn District Court.--MILO P. SMITH, Judge.

ACTION brought by a subcontractor on a surety bond given by a principal contractor. The opinion states the facts. Judgment for defendant in the court below. Plaintiff appeals.

Reversed.

Crosby & Fordyce, for appellant.

A. T Cooper and Dawley, Jordan & Dawley, for appellees.

GAYNOR J. DEEMER, LADD and SALINGER, JJ., concur.

OPINION

GAYNOR, J.

In January, 1914, the plaintiff filed in the office of the district court of Linn County, Iowa, the following amended and substituted petition:

"'That on or about the 23d day of February, 1911, the defendant Henning-Vineyard Company entered into a written contract with the town of Mt. Vernon, for the constructing of town sewers, etc., and among other things agreed in said contract, as follows:

"'The said Henning-Vineyard Company agrees and guarantees to pay for all material used in or about the construction of such sewers which may become a lien upon the consideration thereof or claim against said town, and the fulfillment of this agreement and guaranty as a part of this contract shall be secured by the bond of the contractor.' . . .

"That afterwards, on or about the 23d day of February, 1911, the defendant Illinois Surety Company and said Henning-Vineyard Company duly executed and filed with the treasurer of said town a bond in the sum of $ 14,300, conditioned that the said Henning-Vineyard Company should perform all the obligations of said contract. That afterwards, at the special instance and request of the defendants Henning-Vineyard Company, . . . this plaintiff furnished and delivered materials to be used in the performance of said contract. . . . That all of said materials so furnished the said defendants Henning-Vineyard Company . . . were actually used in and about the construction of said sewers, in accordance with the terms of said contract, and said materials were accepted by said town of Mt. Vernon and now form a part of the sewer system of said town. That the said defendant, Illinois Surety Company, has by its own act interpreted said bond and contract, which is a part thereof, and has taken security, securing it against the claim of the plaintiff herein in the following manner and by the following acts, to wit: That in August, 1912, the defendant Illinois Surety Company duly filed a bill of complaint in the District Court of the United States, Northern District of Iowa, Cedar Rapids Division, against the defendants Henning-Vineyard Company, Edwin C. Henning and Carl D. Vineyard, and Incorporated Town of Mt. Vernon, Iowa, and others, in an action entitled The Illinois Surety Company, a corporation, complainant, vs. The Incorporated Town of Mt. Vernon, Iowa, The Henning-Vineyard Company, a co-partnership composed of Edwin C. Henning and Carl D. Vineyard et al., defendants. And in said bill of complaint the said Illinois Surety Company made the following allegations, to wit:

"'That on the 23d day of February, 1911, the said Henning-Vineyard Company, entered into a certain contract in writing with the town of Mt. Vernon, for furnishing all materials and labor for the construction of sewers, etc., a correct copy of which contract is hereto attached marked Exhibit "A" and made a part hereof. That, on the 27th day of February, 1911, the contractors as principal and your orator as surety, made, executed and delivered to the said incorporated town of Mt. Vernon, a certain bond to secure the performance of the contract, a correct copy of which said bond is hereto attached and made a part of this orator's bill of complaint. That, after the execution and delivery of the contract and bond, the said contractors duly entered upon the performance of the work contemplated by said agreement and did, except as to the making of payments and discharge of claims for labor performed and material furnished as hereinafter alleged, fulfill the stipulations of said agreement and conform to the requirements thereof, and fully performed the same, and the said work was completed and accepted by the incorporated town of Mt. Vernon on the 11th day of May, 1912. That said town did fulfill and perform the stipulations of said agreement on its part to be performed and paid up all except the amount of $ 19,500, which amount the town withheld out of the contract price and still withholds said amount. That said contractors have not nor has anyone for them or on their behalf, performed the stipulations of said contract with reference to making payment for all materials and labor used in and about the construction of said sewers which may become a lien upon the consideration therefor or claim against said town, but have wholly failed and refused and still refuse to do so; that there is due to various persons for labor done and material furnished in the construction of said sewers a large sum of money aggregating in value $ 12,000. That the Streator Clay Manufacturing Company, a corporation, has brought suit against your orator in the district court of Linn County, Iowa, to recover the sum of $ 4,270.18, alleged to be due it for labor performed and materials furnished in the construction of said sewers in accordance with the contract above referred to, and it is alleged by many others of said claimants that your orator will be compelled to satisfy their said claims, together with interest due thereon, and said claimants threaten to and will institute suits against your orator for the purpose of enforcing said alleged claims against your orator, and your orator is threatened with multiplicity of suits by reason thereof. Your orator further alleges that said contractors and each of them are insolvent and unable to pay off the debts so contracted for labor done and materials furnished in the construction of said sewers. . . . That any rights, if any, which the said contractors or either of them may claim to have to said funds so being held, are subordinate and subject to the rights of your orator to have said fund applied to the payment of claims for labor performed and materials furnished in the construction of the work in completing of said sewers. Your orator further says that it is without adequate remedy at law; that the circumstances in this case are such that it is without relief save in a court of equity; that there is involved in this case property or funds which it has a right to or interest in or equitable lien upon; that the same is in danger of being lost, removed or materially injured; that the appointment of a receiver is herein prayed to take charge of said funds, and ascertain and pay off the debts and claims due for labor performed and material furnished in said work. Your orator further says that it has no desire to avoid payment of any just debt for labor performed or material furnished for the construction of said sewers for which it may be legally liable, but only seeks to prevent misapplication of said funds and to secure the proper application thereof; that the question here presented involves a common or general interest of many persons; that the said creditors are numerous and it is impracticable to bring them before the court within a reasonable time. And your orator prays that it may have the relief in the premises to which in equity it is entitled to as the same shall appear upon the facts to be just and equitable and that it may have such relief the same as if it were here and now made the subject of a specific prayer; and to the end therefore that your orator may obtain relief in the premises, it humbly prays, first, that it be adjudged and decreed that, by reason of the premises, the money coming from said town is a fund which the complainant as surety is entitled to have applied to the satisfaction of lawful debts for work done and materials furnished for said work.'

"That said complaint was duly verified and summons duly issued and served upon the said defendants in said action, and that afterwards, the said incorporated town of Mt. Vernon filed therein its answer to said bill of complaint, in which the said incorporated town admitted the allegations herein set out, except that it denies that it had in its possession the sum of $ 19,500, but admitted that it had in its possession about $ 9,000 in cash and about $ 10,000 in assessment certificates, and further in said answer averred as follows:

"'This answering defendant denies that it is liable or may be made liable for any unpaid claims for labor and materials furnished the said contractors in the construction of said sewers and plant, but alleges and avers that said claims might become a lien upon the funds in the possession of this answering defendant and which was to be paid by said contractor under the terms of said contract.'

"That such proceedings were had in said suit so brought by the said Illinois Surety Company in the said United States District Court, that on the application and at the instance of the Illinois Surety Company the said district court entered and rendered a decree therein, providing among other things as follows, to wit:

"'It is ordered, adjudged and decreed by the court that the said complainant, the Illinois Surety Company, is entitled to have the sum of $ 5,000 of the fund now withheld by the incorporated town of Mt. Vernon, Iowa, retained in the possession of said town until the alleged claim asserted by the Streator Clay Manufacturing Company against the said complainant, on its said bond be adjudicated and determined. That in the event it should be held that the said Streator Clay Manufacturing...