Tug River Lumber Co v. Smithey

• Decision Date: 14 May 1929
• Docket Number: (No. 6455.)
• Citation: 148 S.E. 850
• Parties: TUG RIVER LUMBER CO. et al. v. SMITHEY et al.
• Court: West Virginia Supreme Court

148 S.E. 850

TUG RIVER LUMBER CO. et al.

v.SMITHEY et al.

(No. 6455.)

Supreme Court of Appeals of West Virginia.

May 14, 1929.

As Modified, on Denial of Rehearing, July 19, 1929.

(Syllabus by the Court.)

Appeal from Circuit Court, McDowell County.

Suit by the Tug River Lumber Company and others against Charles H. Smithey and the American Surety Company of New York. Decree for plaintiffs, and defendant Surety Company appeals. Affirmed.

Campbell & McClintic, of Charleston, for appellant.

Arthur F. Kingdon, of Bluefield, for appellees Bailey Lumber Co., Mingo Lime & Lumber Co., Emmons-Hawkins Hardware Co., Kingsport Brick Corporation, and Virginia School Supply Co.

Jos. M. Crockett, of Welch, for appellees Tug River Lumber Co., Welch Plumbing & Heating Co., E. F. Fulp, and C. B. Propst.

WOODS, P. This is a suit upon a bond executed by Charles H. Smithey, as principal, and American Surety Company of New York, as surety, seeking to recover from American Surety Company for labor and materials furnished by the several plaintiffs in the construction of a certain school building, on which Smithey was the contractor. The cause was referred to a commissioner, who reported the debts for labor and materials furnished for the building of the structure, which amounted to approximately $20,000. There is no contention but that the debts so found represented correct amounts due. The court confirmed the commissioner's report, and decreed that the surety company was liable therefor under the bond executed by it. It is from this decree that the surety company appeals.

The controlling items in this case are: (1) The contract entered into on October 4, 1927, between Smithey and the board of education; (2) the bond given in pursuance thereof, on the 7th day of October, 1927; and (3) section 12, chapter 75, Code, prescribing the taking of a bond to cover the cost of material used and labor employed in such cases. The material part of the contract, after reciting the consideration of $31,790, provides on the part of the first party:

"First. The contractor agrees to furnish all necessary material and perform all work and labor in the erection of a two-story brick building in the town of Jenkinjones, McDowell county, West Virginia, known as 'Jenkinjones School Building, Jenkinjones, West Virginia, ' said material to be furnished and work performed in accordance with plans and specifications therefor hereto attached, marked 'Specifications for School Building, Jenkinjones, West Virginia.' 'Plan 15-949, ' and made a part of this contract the same as if said specifications were fully set forth herein. * * *

"Third. The contractor agrees to furnish an indemnifying bond in some solvent insurance company in the penalty of at least $31,-790.00 conditioned that the contractor will indemnify the owner against any loss directly arising by reason of the failure of the contractor to faithfully perform this contract according to terms, covenants and conditions herein contained, and to deliver the said building to the owner free from any liens or encumbrances on account of labor performed and materials furnished in connection with the erection of said building. * * * "

The bond recited that the principal had entered into the aforesaid contract, "a copy of which is hereto annexed, " and that the principal and surety were firmly bound unto the said board of education in the sum of $31,-790, conditioned "that if the principal shall indemnify the obligee against any loss or damage directly arising by reason of the failure of the principal to faithfully perform said contract, then this obligation shall be void; otherwise to remain in full force and effect." It was the standard form of bond executed in ordinary cases, and containing the usual condition precedent which the surety company relies on here: "That no right of action shall accrue upon or by reason hereof, to or for the use or benefit of any one other than the obligee herein named; and that the obligation of the surety is, and shall be construed strictly as, one of suretyship only; that this obligation shall be executed by the principal before delivery, and shallnot, nor shall any interest therein or right of action thereon, be assigned without the prior consent, in writing, of the surety."

The question resolves itself into a legal one of whether the company is liable therefor under said bond. The surety company contends that the bond in question was not given in pursuance to the section of our Code heretofore mentioned, but is for the sole protection and benefit of the board of education. On the other hand, the appellees contend that the bond in question was given for the purpose and with the intention of complying with the spirit and meaning of this statute, and was not for the sole protection and benefit of the board of education. Thus is presented the chief issue.

What were the circumstances under which the bond was given? It was executed by the contractor pursuant to an agreement in his contract with the board that he would furnish an indemnifying bond. The board of education is a statutory body. By the plain mandate of the statute (section 12, chapter 75; Code) the board is enjoined in such case to require a good, solvent, and sufficient bond to be executed, and filed with its secretary, to cover cost of the material used and labor employed in the construction of such public building. The patent reason for such bond is that the lien imposed by law to secure payment for such furnishings does not attach to public structures. J. E. Moss Iron Works v. County Court, 89 W. Va. 367, 109 S. E. 343, 26 A. L. R. 319. The surety company was requested to furnish a bond to the board of education under these circumstances, and was it not bound to know the nature of the condition it would become liable upon if broken. Our attention is directed to the fact that chapter 45, § 52, Code, requires persons entering into contracts with boards of education for the building and repairing of schoolhouses, where the contract price exceeds $100, to execute bond with approved security in double the amount of the contract price. It is argued by counsel for the appellant that this bond is to be given solely for the protection of the board of education. The statute does not so state. The fact that it is for double the amount of the contract price negatives such legislative intention. The two sections of the statute, read together, are not inconsistent, but evince a purpose to protect all concerned in performance of the project. Then section 12 of chapter 75 is specifically designed to protect those furnishing labor and material in all buildings of a public nature. When the Legislature revised chapter 45 relating to education in 1919, section 52 was evidently enacted in the light of such provision. It is, of course, conceded that a surety company may, in dealing with private citizens, with a free hand,...