Union Indem. Co. v. State

• Citation: 118 So. 148,218 Ala. 132
• Decision Date: 07 June 1928
• Docket Number: 3 Div. 845
• Court: Supreme Court of Alabama
• Parties: UNION INDEMNITY CO. v. STATE, for Use of R.S. ARMSTRONG & BRO. CO.

118 So. 148

218 Ala. 132

UNION INDEMNITY CO. v. STATE, for Use of R.S. ARMSTRONG & BRO. CO.

3 Div. 845

Supreme Court of Alabama

June 7, 1928

Rehearing Denied June 28, 1928

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Action by the State of Alabama, for the use of the R.S. Armstrong &amp Bro. Company, against the Union Indemnity Company, for breach of a bond made by defendant as surety for John Monaghan. Judgment for plaintiff, and defendant appeals. Affirmed.

Weil Stakely & Cater, of Montgomery, for appellant.

Walton H. Hill and Hill, Hill, Whiting, Thomas & Rives, all of Montgomery, for appellee.

THOMAS J.

The suit was grounded on a construction contract bond of like import to that considered by this court in Union Indemnity Co. v. McQueen-Smith Farming Co. (Ala.Sup.) 114 So. 415,

and the insistences now made by appellant are in the nature of a rehearing as to that decision.

In that opinion there was recitation of the facts of that case--the contract terms of the guaranty for payment of sums due for labor, materials, and supplies used in the performance of the contract--held to embrace piling and sway braces used for scaffolding in the river to (1) support the men at work and the materials of the superstructure while being constructed (2) ferriage in transporting men and material across the river in the course of construction; (3) and hire of men; (4) hire of team and wagons for hauling machinery, timbers, and supplies for the contractor in connection with the building of the bridge as a part of the public highway.

The claims or demands for which suit was brought and on which judgment was rendered in the case were (1) rentals of equipment used in the construction of the bridge; (2) the small sums for reasonable expenditures for repairs to machinery; (3) and freight on the return of the equipment to the contractor.

It would appear that the latter charge of freight on the equipment repaired and returned finds analogy to the item of ferriage in transporting men and material across the river that was sustained and allowed in Union Indemnity Co. v. McQueen-Smith Farming Co., supra. There is analogy to be found in the general authorities collected in the note 30 A.L.R. 466, 470, and the allowance of freight charges on material, as being within lien statutes "for labor or material" as within a contractor's bond securing such claims.

Likewise, the question of rental of equipment as covered by the terms of the bond was passed upon by the McQueen-Smith Farming Co. Case, holding, as it did, that the hire of men and conveyances for men, material, supplies, etc., employed and used in connection with or in the construction of the bridge, were within the terms of the contract of the parties. A well-founded distinction cannot exist between the hire of conveyances (as teams and wagons) in the one case, and the hiring of equipment employed in the instant case in doing and performing such construction work.

The authorities cited by Mr. Justice Bouldin illustrate this. In Ill. Surety Co. v. John Davis Co., 244 U.S. 376, 383, 37 S.Ct. 614, 61 L.Ed. 1206, the items sustained and held recoverable were for rental of cars, track, and equipment, expense of loading the plant, and freight on the equipment used in the prosecution of the work. See, also, Title Guaranty & T. Co. v. Crane Co., 219 U.S. 24, 31 S.Ct. 140, 55 L.Ed. 72, 77; Taylor v. Connett (C.C.A.) 277 F. 945; Port Deposit Quarry Co. v. U.S. (C.C.A.) 277 F. 1019; U.S., for Use of Boyer, v. Port Deposit Quarry Co. (D.C.) 272 F. 698, for rent of a derrick or lighter for transporting stone to the place of deposit; Shannon v. Abrams, 98 Kan. 26, 157 P. 449, Ann.Cas.1918E, 502, for dynamite, coal consumed in an engine operating rock crusher, lumber, and rent of tools and the quarry, wherein the surety company was held liable under the bond; County of Multnomah for Use of McMahan v. U.S. Fidelity & G. Co., 87 Or. 198, 170 P. 525, L.R.A.1918C, 685, embraced rent of a road engine hired by the subcontractor for use in the prosecution of the work of construction.

It will be noted that in 44 A.L.R. 381, the general authorities pro and con are collected. The states holding that rental of equipment is not within the terms of a contractor's bond are Iowa, Maryland, Nebraska, Oklahoma, and Wisconsin. The states holding that such statutory bonds are broad enough to include claims for rental of equipment are Oregon v. Security Const. Co. (D.C.1925), 3 F. (2d) 274 (involving Oregon statute); French v. Powell (1902) 135 Cal. 636, 68 P. 92; Sherman v. American Surety Co. (1918) 178 Cal. 286, 173 P. 161; Bricker v. Rollins (1918) 178 Cal. 347, 173 P. 592; Shannon v. Abrams (1916) 98 Kan. 26, 157 P. 449, Ann.Cas. 1918E, 502; Miller v. American Bonding Co. (1916) 133 Minn. 336, 158 N.W. 432; Dawson v. Northwestern Const. Co. (1917) 137 Minn. 352, 163 N.W. 772; Multnomah County v. U.S. Fidelity & G. Co. (1918) 87 Or. 198; 170 P. 525, L.R.A.1918C, 685; Multnomah County v. U.S. Fidelity & G. Co. (1919) 92 Or. 146, 180 P. 104; National Surety Co. v. Bratnober Lumber Co. (1912) 67 Wash. 601, 122 P. 337; Hurley-Mason Co. v. American Bonding Co. (1914) 79 Wash. 564, 140 P. 575; State Bank v. Ruthe (1916) 90 Wash. 636, 156 P. 540; King County v. Guardian Casualty & G. Co. (1918) 103 Wash. 509, 175 P. 166; Ledingham v. Blaine (1919) 105 Wash. 253, 177 P. 783.

Under the rule of the federal statute (8 Fed Stat. Anno. [2d Ed.] p. 374 [[40 USCA § 270]), the earlier cases were to the effect that such rentals were not within the terms, "all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract," as U.S. ex rel. McAllister v. Fidelity & D. Co. (1903) 86 A.D. 475, 83 N.Y.S. 752; U.S. v. Conkling (1905) 68 C.C.A. 222, 135 F. 508. However, since the decision in Ill. Surety Co. v. John Davis Co. (1917) 244 U.S. 376, 37 S.Ct. 614, 61 L.Ed. 1206, affirming U.S., for the Use of John Davis Co., v. Ill. Surety Co., 141 C.C.A. 409, 226 F. 653, it now appears that the rental of equipment is considered, within the terms of the contract, an undertaking of the contractor's construction bond; that is to say, the John Davis Co. Case, supra, was an action against the surety on the bond of the contractor, given to secure the performance of work pursuant to a contract with the Navy Department, and cars, track, and equipment used in the work were treated as material, and a claim for rental was held within the bond. The obligation under the statute was declared to cover not only labor and material that went into the completed structure, but all labor and material furnished in the prosecution of the work provided for in the contract. Such was the broad view taken and declared by this court in McQueen-Smith Farming Co. Case (Ala.Sup.) 114 So. 415. It is unnecessary to repeat the discussion so well conduced in that decision under the law and the contract that is before us.

The conclusion of the circuit court was on oral evidence, and the trial was by the court without a jury. The prima facie case was made out by plaintiff's witness Mertz, as to the receipt and use of the machinery by the contractor in the construction of the substructure of the bridge or approaches thereto, to warrant the trial court in entering judgment for rentals, etc., as claimed and as embraced in the provisions of the contract for materials and supplies. The plaintiff's witness thus states, as to the bill for repairs and freight on the machinery for that purpose:

"Repairs and freight on the return of equipment amounting to $217.07. When Monaghan returned the machinery he did not prepay the freight. We paid the freight. Part of these repairs were made in Atlanta and the other charges are for repairs showing the actual labor. All the items we made any repairs on were made in Atlanta. There was an accident to one hoisting engine, in the river, and he shipped it back to us, and we returned it to him. I think we had a big repair bill on one hoist."

In the case of Ill. Surety Co. v. Davis Co., supra, the court said:

"In every case which has come before this court, where labor and materials were actually furnished for and used in part performance of the work contemplated in the bond, recovery was allowed, if the suit was brought within the period prescribed by the act. Technical rules otherwise protecting sureties from liability have never been applied in proceedings under this statute. As the basis of recovery is supplying labor and material for the work, he who has supplied them to a subcontractor may claim under the bond, even if the subcontractor has been fully paid. Mankin v. United States, 215 U.S. 533, 30 S.Ct. 174, 54 L.Ed. 315. If Schott had formally sublet the contract to the engineering company, the surety company would clearly be liable."

And many cases are cited, among which are Title Guaranty Co. v. Crane Co., 219 U.S. 24, 31 S.Ct. 140, 55 L.Ed. 72; American Surety Co. of N.Y. v. Lawrenceville Cement Co. (C.C.) 110 F. 717. It would appear from these and other cases to be considered that the allowance of a claim for repairs is often attended with difficulty and dependent upon the particular facts entering into such a claim.

The case of Standard Boiler Works v. National Surety Co., 71 Wash. 28, 127 P. 573, 43 L.R.A. (N.S.) 162, was that of disallowance of repair bill on a steam shovel that "was used for a day or two upon the works" when the contractor became a bankrupt and the machinery was otherwise used; the decision rested upon the fact that the repairs made did not in any manner become a part of the improvement, nor were the repairs made the equivalent of labor and material used in the improvement. Equitable Surety Co. v. U.S for Use of McMillan, 234 U.S. 448, 34...