U.S. Fidelity & Guaranty Co. v. Yeilding Bros. Co. Department Stores

• Decision Date: 19 May 1932
• Docket Number: 6 Div. 932.
• Citation: 225 Ala. 307,143 So. 176
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. YEILDING BROS. CO. DEPARTMENT STORES ET AL.
• Court: Alabama Supreme Court

143 So. 176

225 Ala. 307

UNITED STATES FIDELITY & GUARANTY CO. v. YEILDING BROS. CO. DEPARTMENT STORES ET AL.

6 Div. 932.

Supreme Court of Alabama

May 19, 1932

Rehearing Denied June 23, 1932.

Appeal from Circuit Court, Jefferson County; Roger Snyder, Judge.

Action by the Yeilding Bros. Company Department Stores, Inc. against the United States Fidelity & Guaranty Company, in which H. Lewis and others intervened. From the judgments rendered, defendant appeals, and named intervener cross-assigns error.

Corrected and affirmed in part, and in part reversed and remanded.

Coleman Coleman, Spain & Stewart, of Birmingham, for appellant.

White E. Gibson, Cabaniss & Johnston, F. D. McArthur, David J Davis, J. E. Bowron, London, Yancey & Brower, J. K. Jackson, Harris & Cook, Miller, Graham & Wingo, John S. Foster, E. M. Creel, Thos. J. Judge, and Morton Nesmith, all of Birmingham, and Frank B. Embry, of Pell City, for appellees.

FOSTER J.

The original suit was commenced by Yeilding Bros. Co. Department Stores, Inc., upon a surety bond executed by the defendant, a surety company, under authority of section 28 of the Acts of 1927, page 356 et seq., known as the Highway Code.

The complaint alleged that the performance of the contract was completed December 10, 1929, and that said contract "has been completely performed and finally settled for.' It did not allege the exact date of the final settlement. It is not necessary to do this, if its date is approximately shown and that it occurred within sixty days before the suit was commenced (December 13, 1929). If the contract was completely performed on December 10th, and final settlement made before December 13th, which could not be done until the contract was completely performed, those occurrences took place, as alleged, on December 10th as to one, and after that date and before December 13th as to the other. Such allegations sufficiently comply with the rules of pleading. Fleischmann Const. Co. v. U. S., 270 U.S. 349, 46 S.Ct. 284, 70 L.Ed. 624.

If the suit is begun within sixty days after the complete performance of the contract and final settlement thereof, the status of it is fixed, and it is not necessary that the interveners shall make such averment in their petitions of intervention.

A final estimate was dated September 9, 1929, showing final balance due the contractor. Approved for payment by Finnell, highway director, Bibb Graves, Governor, without apparent date, and by Charles E. McCall, examiner of accounts on December 10, 1929.

Appellant argues that it does not appear that suit was filed within sixty days after September 9th, which was the date of final settlement. This claim is directly contrary to our case of United States F. & G. Co. v. Andalusia Mfg. Co., 222 Ala. 637, 134 So. 18. But appellant attacks the soundness of that holding because he claims the approval of the Governor and examiner of accounts is not required to fix the amount due the contractor; and that, when the director of the highway department approves it, the amount is determined. But we cannot agree. The amount is not determined until it is approved by such state officers as are necessary, under administrative regulations, to authorize the issuance of a warrant for it. Such funds are disbursed with the consent and approval of the Governor. Acts 1927, pp. 349, 350, § 6, and page 353, § 17. The examiner is required to examine and audit vouchers and records of all departments disbursing funds. Code, § 736. See Lambert Lumber Co. v. Jones Engineering & Const. Co. (C. C. A.) 47 F. (2d) 74. If the executive has prescribed a policy which requires the approval of the examiner before his approval, it is not in the province of the courts to hold that the necessary administrative officers have determined the amount due, when all have not done so pursuant to the practice of that department. Such time should be a matter of record and readily ascertainable, and it is of the utmost importance that there shall be no uncertainty in respect to it. The suit should not be commenced before that date, nor after sixty days succeeding it. The final settlement does not depend upon the consent of the contractor. It does not require a settlement between the state and contractor of the amount in fact due the contractor. That remains a question of which the contractor may have judicial determination. Illinois Surety Co. v. U. S., 240 U.S. 214, 36 S.Ct. 321, 60 L.Ed. 609; U.S., to Use of Stallings v. Starr (C. C. A.) 20 F. (2d) 803. But the record of the fact that the administrative officers have so far as the state is concerned determined the amount due, and the date of such determination, controls and fixes the right of claimants for labor, material, feedstuffs, and supplies to commence a suit. So long as that record is lacking the approval of all those executive or administrative officers required by the executive department finally to determine and fix the amount due so far as the state is concerned, the question is not finally settled. And the fact that certain administrative officers have so approved is evidence that their approval is necessary to make the fixation final.

We might have a different presumption, if the suit had been commenced without the approval of the examiner, and the defendant were claiming that the right had not accrued until such approval. In that event, the burden would be upon defendant to show that his approval was necessary. But, when he has approved, we think the burden should also be on defendant to show that his approval was not required. Otherwise the existence of such approval is prima facie evidence that it was required.

The complaint in this case alleges that S. C. Taylor was the original contractor for the road work, and the bond sued on was executed by him and defendant as surety, that he made default in the construction of the highway, and that defendant undertook to complete the project in accordance with the contract, and in its performance it employed R. S. Taylor as contractor to aid it in discharging its obligations as the surety of S. C. Taylor. The materials and supplies were so used in the execution of the work provided for in said contract. The record also shows that defendant had R. S. Taylor execute a bond with surety payable to it conditioned for the performance of his contract, etc., in form similar to the statutory bond. Defendant demurred to the complaint because it does not show a liability on the bond executed by it.

Section 28 of the Highway Act directs that the materialmen, etc., there mentioned who supply the same to the contractor shall have a right of action on the bond. R. S. Taylor was not the contractor mentioned in the bond, but was the contractor for defendant who had assumed a performance of the contract. Defendant was therefore in the position and shoes of the contractor, and R. S. Taylor in the position and shoes of a subcontractor, though not so in form. Certainly the bond and its statutory effect would apply to supplies furnished defendant in the performance of the contract, as held in Mullin v. U.S. (C. C. A.) 109 F. 817.

It has been held that, when the contractor goes into receivership, and the receivers are in the act of completing performance of the contract, they are the representatives of the contractors, and the surety is responsible for labor and material sold them for its completion, to the same extent as though they were purchased by the contractor. Bricker v. Rollins & Jarecki, 178 Cal. 347, 173 P. 592.

The whole spirit of the law, the bond, and its statutory effect would seem to extend to one furnishing supplies to a contractor with this defendant as surety on such bond after it had begun its performance. The law should be liberally construed in this respect. Griffith v. Rundle, 23 Wash. 453, 63 P. 199, 55 L. R. A. 381; U.S. v. Rundle (C. C. A.) 100 F. 400.

Before announcing ready, defendant objected to going to trial without a jury because a demand for a jury "had been made by the defendant as to certain interveners in the cause"; also moved to transfer the cause to the jury docket; also to continue the cause for the same reason. Each such objection and motion was overruled, and defendant excepted. The bill or exceptions does not show that defendant specified the interventions in which such demand had been made.

It has been held that under the federal act a suit by a claimant in the name of the United States is to proceed as a single case, in which the several claimants are not entitled to separate trials as of right, although in exceptional instances for special and persuasive reasons the distinct causes of action may be made the subject of separate trials. Whether this reasonably may be done in any particular instance rests largely in the court's discretion. Miller v. American Bonding Co., 257 U.S. 304, 42 S.Ct. 98, 66 L.Ed. 250; Arnold v. U. S., 263 U.S. 427, 44 S.Ct. 144, 68 L.Ed. 371.

They are not in the same situation as when several actions are consolidated, wherein the pleadings in all are taken and considered as one. 1 Corpus Juris, 136. It rather resembles an intervention properly so-called where a third party is interested in the distribution of funds. Section 9485, Code. For this reason some courts held at first that chancery was the proper forum; but the United States Supreme Court has settled the question under the federal statute, and held that the law court is the proper forum. Illinois Surety Co. v U. S., 240 U.S. 214, 224, 36 S.Ct. 321, 60 L.Ed. 609, 615; Arnold v. U.S., supra. But the proceeding has some of the elements usually enforced in equity, as for the proper appropriation of the amount of the liability fixed in the bond among those entitled to it. National Surety Co. v. Graves, 211 Ala. 533, ...