The National Surety Co. v. W. H. Holliday Co.

• Decision Date: 10 February 1931
• Docket Number: 1679
• Citation: 42 Wyo. 407,295 P. 913
• Parties: THE NATIONAL SURETY CO. v. W. H. HOLLIDAY CO
• Court: Wyoming Supreme Court

295 P. 913

42 Wyo. 407

THE NATIONAL SURETY CO. v. W. H. HOLLIDAY CO

No. 1679

Supreme Court of Wyoming

February 10, 1931

ERROR to District Court, Albany County; VOLNEY J. TIDBALL, Judge.

Action by the W. H. Holliday Company against F. A. Bundy and The National Surety Company. There was judgment for plaintiff and the last named defendant brings error.

Affirmed.

For the plaintiff in error there was a brief by W. O. Wilson, of Cheyenne, Wyoming, and oral argument by Mr. Wilson.

The petition was insufficient to support the judgment against plaintiff in error, The National Surety Company, in that it did not allege compliance with Ch. 132, Laws 1925, requiring service of notice upon the principal and his sureties within sixty days after the publication and posting of the notice referred to in Chapter 151, Laws 1921. Service of notice of claim before the completion of publication and posting of notice by the highway commission of completion of the work is premature. The notice referred to in Ch. 132, Laws 1925 is a jurisdictional pre-requisite to a right to sue on the contractor's bond and the publication and posting of notice provided for in Ch. 151, Laws 1921, is a jurisdictional pre-requisite to the service of a notice provided for in Ch. 132, Laws 1925. These must be alleged in order to sustain a cause of action on the bond. They were not alleged in the petition under consideration. Performance of conditions precedent are necessary to a right of action against a surety. 21 R. C. L. 463, 466, 31 Cyc. 107; Board v. Board, 6 Wyo. 254; Houtz v Commrs., 11 Wyo. 152; Frank v. Stratford, et al., 13 Wyo. 37; Commissioners v. Denebrink, 15 Wyo. 342; Pacific-Wyo. Oil Co. v. Carter Oil Co., 31 Wyo. 314; Lusk Lumber Co. v. Independent Producers Consol., et al., 35 Wyo. 381; Town of Hudson v. Ladd; 37 Wyo. 419; O'Connor v. City of Fond du Lac, 85 N.W. 327; Benware v. Town of Pine Valley, 10 N.W. 695; Milburn v. Co., 34 S.E. 848; Ary v. Chesmore, 84 N.W. 965; Root v. Childs, et al., 70 N.W. 1087; Albers v. Co., 66 N.W. 1040; McGlauflin v. Warmser, 72 P. 428. The petition shows on its face that the notice of claim was served prematurely. Dickerson v. Flanagan, 136 S.W. 854. The defect is jurisdictional. Fry v. Bidwell, 74 Ill. 381; State v. Miller, 126 So. 422; Corp. v. Highway Co., 168 N.E. 865; Ricketts v. Hyde Park, 85 Ill. 110, 20 R. C. L. 343; Hay v. Hudson, 224 P. 840. The action of defendant in error was prematurely commenced, because of failure to serve legal notice upon plaintiff in error. Surety Co. v. Schmidt, et al., 158 N.E. 1; U. S. ex rel. Cement Co. v. McCord, 233 U.S. 157. Service by publication is complete when the time prescribed for publication has expired, and the time within which a party notified must act, is computed from that date. Hahn v. Bank, 25 Wyo. 467. The judgment is contrary to law. Dewil v. Company, 120 So. 654; Delfelder v. Bank, 38 Wyo. 481.

For the defendant in error, there was a brief by Corthell, McCollough and Corthell, of Laramie, Wyoming, and oral argument by Mr. A. W. McCollough.

Plaintiff in error contents itself with raising jurisdictional questions for the first time in this court, rather than raising them in the lower court. It is apparently contended that the statutes, especially Chap. 132 of the Laws of 1925, creates the right to sue; that without such a statute, no suit could have been brought; that a breach of agreement gave no right of action, whatsoever, until the 1925 act was passed. In short, that the sole purpose of the statute is to protect the surety company, and make it possible for it to evade payments under its bond. An important distinction exists between a statutory basis of a right, and a right existing independent of statute, but the enforcement of which is regulated and limited by law. The rule is that the latter condition is waived, unless raised by defendant's answer, or by special demurrer. The authorities supporting the text in R. C. L. Vol. 21, page 462, upon examination, disclose that they involved strictly statutory rights, instead of rights independent of statute, but regulated as in the present case. The right of action here was not created by statute. All of the Wyoming cases cited in the brief of plaintiff in error, involved rights created by statute. The Denebrink case is typical, the right there being purely statutory. The brief also seems to contend that the construction of this statute must be in accordance with the intent of the parties. We are unable to agree with that doctrine. The alleged prematurity in filing notice of claim, was a matter of defense that should have been set up by answer. Burnet v. Alvarez, 226 U.S. 145, 159; Goodale v. Valentine, (Wash.) 124 P. 691; Lumber Co. v. Nickerson, (Wash.) 93 P. 24. Defendant having failed to raise the question by demurrer or answer, will be deemed to have waived the same. A general demurrer is not sufficient to raise the question of legal capacity of a foreign corporation to maintain an action. Heller v. Smith, 188 N.W. 878; City v. Co., 212 F. 353; City v. Darden, (Ala.) 55 So. 1014; Schmulbach v. Caldwell, 196 F. 16; Piatt Co. v. Wilmer, (Mont.) 288 P. 1021; the case of State v. Miller, (La.) 126 So. 422; Fry v. Bidwell, 74 Ill. Rep. 381; Corp. v. Highway Imp. Co., 168 N.E. 865; Surety Co. v. Schmidt, 158 N.E. 1; and other authorities along the same line, do not support the contentions of the plaintiff in error. It is to be noted in the case at bar, that the notice had been prepared and was being published. It is presumed that the notice was also posted on the work as required by statute. 10 R. C. L. 880; State v. Port, (Ore.) 124 P. 637. The evident purpose of the legislature was to set a time beyond which, laborers and material men were precluded from serving notice. Davies v. Miller, 130 U.S. 284; Bellion v. Durand, (Utah) 117 P. 798; Carey-Lombard Co. v. Fullenwider, (Ill.) 37 N.E. 899; In re Wittkowsky's Land, 55 N.E. 617. In the case at bar the notice was published September 3, 10, and 17th, 1927. Suppose counsel could show that it was not posted, and should then prevail upon the department to post the notice on November 18, 1927. It would then be impossible for the creditor to comply with the statute, because a sixty-day interval would have elapsed between the publishing and the posting, and the creditor could not then serve notice complying with the conjunctive requirement of the statute. It is clear that the provisions of Section 1, Chapter 151, Laws 1921, were intended for the protection of creditors of contractors in filing claims with the highway commissioner. Also, that the posting of notice on the works was intended for the benefit of laborers. These sections in themselves, have no application to the case of creditors who have brought these suits, since plaintiffs are not relying on the fund remaining at the completion of the work, to the credit of the contractor or the surety company, in the hands of the highway commission. The Delfelder case, 38 Wyo. 481, was not concerned with notice to creditors, but with a question of presentation of a claim to an executrix, before suit. In the case at bar, the claim was presented, and the question raised is whether its presentment, prior to the final publication of notice of completion of the work, was such a premature presentment that it may be wholly disregarded. No authority whatever is cited by plaintiff in error on this phase of the question. There is nothing in the statute, indicating the precise time when the right of a creditor to serve notice of claim, for materials supplied for a highway contract commences. It is submitted that the petition is sufficient to sustain the judgment.

KIMBALL, Chief Justice. BLUME and RINER, JJ., concur.

OPINION

KIMBALL, Chief Justice.

This case was first brought to this court by appeal, and the appeal dismissed. 42 Wyo. 61, 289 P. 1094. The defendant in error, as plaintiff below, obtained judgment against the plaintiff in error and F. A. Bundy for a sum alleged to be due for materials furnished in the execution of a contract between defendant Bundy and the State Highway Commission for the construction of a federal aid highway project. The plaintiff in error is the surety on the bond given by Bundy to guarantee the performance of the contract. The sole question is whether the petition is sufficient to support the judgment against the plaintiff in error.

The bond was given pursuant to Section 329, W. C. S. 1920, for the benefit not only of the State Highway Commission but also of those who, like the plaintiff, furnished materials in the execution of the contract. Section 332, before amendment, provided that no action should be maintained on any such bond unless within 90 days after the furnishing of the last item of material, the plaintiff should serve upon the principal and his sureties a written notice specifying the nature and amount of his claim, nor unless the action be begun within one year after the cause of action accrued. Section 1 of Chapter 151, Laws of 1921 provides:

"Hereafter whenever any public work is let by contract, the commission board or person under whose direction or supervision such work is being carried on and conducted and upon whose approval mean and final estimates are paid for the construction of such work, shall, ninety days before such final estimate shall be paid, cause to be published in a newspaper of general circulation, published nearest to the point at which such work is being carried on, once a week for three consecutive weeks, and also to post in three conspicuous places on such work, a notice setting forth in substance, that it has been reported to such commission, board or person that such work has been completed and that the contractor is entitled to final settlement...