Union Indemnity Co. v. Covington
| Decision Date | 03 December 1928 |
| Docket Number | 23 |
| Citation | 12 S.W.2d 884,178 Ark. 533 |
| Parties | UNION INDEMNITY COMPANY v. COVINGTON |
| Court | Arkansas Supreme Court |
Appeal from Pope Chancery Court; W. E. Atkinson, Chancellor reversed in part.
Cause remanded.
Buzbee Pugh & Harrison and Ward & Caudle, for appellant.
Richard M. Priddy, J. H. A. Baker, George F. Hartje, Robert Bailey, and C. M. Wofford, for appellee.
The building committee of the Russellville Masonic Lodge, on behalf of the lodge, entered into a contract on September 10 1926, with the T. P. Miller Construction Company, to erect a Masonic temple in the city of Russellville, and on September 27, 1926, a bond was executed by the construction company, with the Union Indemnity Company as surety, to the building committee as obligee, in the sum of $ 30,500, which recited the building contract, and obligated the contractor and the indemnity company to "save harmless the said obligee from any pecuniary loss resulting from the breach of any of its terms" on the part of the contractor, with the provision, however, that the bond was issued subject to the following conditions:
The bond was conditioned that no liability should attach to the surety unless, in the event of any default, the obligee should, within thirty days after being advised thereof, deliver written notice of the default to the surety. The bond provided also that, in case of default, the surety should have the option to complete the contract, in which event the surety should be subrogated "to all the rights and properties of the principal arising out of the contract, including all deferred payments and retained percentage." It was also provided that "in no event shall the surety be liable to other than the obligee, or for a greater sum than the penalty of this bond, or be subjected to any suit, action or other proceeding thereon that is instituted later than the first day of August, 1927."
Notwithstanding the fact that the bond was executed September 27, 1926, it was not filed with the clerk of the circuit court of the county in which Russellville is situated until May 18, 1927.
On May 11, 1927, the Twin City Brick & Tile Company filed a claim for a lien for material furnished against the temple building, and suit was brought to enforce this lien on October 30, 1927. The surety company was not made a party to this suit.
On September 3, 1927, Willie T. Covington brought suit against the building committee and the surety company, praying judgment for the amount of certain material used in the construction of the building. This suit was for putting on the roof, which was completed about March 1, 1927.
The suit of the brick company, praying a lien against the building, and that of Covington, praying judgment against the surety company, were consolidated, and several material furnishers intervened in the consolidated case and were made parties thereto. Certain of these interveners filed their accounts with the clerk of the circuit court as required, and within the time limited by § 6922, C. & M. Digest, and, upon the assumption that the bond of the surety company was a statutory bond, inuring to the benefit of all persons who had furnished material or performed labor on the building, they prayed judgment for the amount of their respective demands. Other interveners, who did not within ninety days file their accounts with the clerk of the circuit court, prayed judgment upon their interventions filed after the expiration of that time against the surety company, upon the theory that the bond had been executed pursuant to § 6915, C. & M. Digest, and that suit might be brought upon the bond at any time within six months after the completion of the building.
A member of the building committee testified that the building was completed, so far as the contractor was concerned, on July 25, 1927, although some work was done after that date.
The court below decreed that, inasmuch as the brick company had proceeded to enforce and foreclose its lien before the bond of the surety company had been filed with the clerk of the circuit court as the statute required, its right to a lien became fixed, and was not displaced by the subsequent filing of the bond, but that, after the filing of the bond, the right to foreclose a lien ceased, and the material furnishers and laborers, except the brick company, were relegated to a suit on the bond of the surety company, and upon this theory rendered judgment against the contractor and the surety company for the amount of all claims except that of the brick company.
The surety company has perfected an appeal, and the Masonic lodge has prayed and perfected a cross-appeal.
It is necessary, first, to determine the character of the bond executed by the surety company. It is insisted that it was executed under § 6915, C. & M. Digest, and that any cause of action arising under it could have been sued on at any time within six months after the completion of the building, and that the filing of this bond displaced the right of the plaintiffs and interveners in this suit to assert a lien against the building, and that the plaintiff brick company should have sued on this bond, and that the others properly did so. We are of the opinion, however, that the bond is not a statutory bond, and, if it were, the applicable statute is not § 6915, C. & M. Digest, but is § 6912, C. & M. Digest.
Act 446 of the Acts of 1911 (Acts 1911, page 462) contains three sections relating to the execution of a bond by the principal contractor, whereby any building, etc., under construction may not be subject to the liens provided for in § 6906, C. & M. Digest. These sections of the act of 1911 became and are §§ 6912, 6913 and 6915, C. & M. Digest.
Section 6912 is applicable to buildings generally, that is, all buildings, etc., not covered by § 6913 or by § 6915, C. & M. Digest, and it has been held that, in cases where § 6912 is applicable, it is optional on the part of both the owner and the contractor to make a bond, that is it is a matter of...
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... ... 6, 123 So. 271; Fort Smith & ... Van Buren District v. Johnson, 25 S.W.2d 417; Union Indemnity ... Co. v. Covington, 178 Ark. 533, 12 S.W.2d 884; F. & D. Co. v ... Crane, 178 Ark ... ...
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